Sales PromotionWeek 10

W. Rofianto, ST, MSi

An extra

incentive to buy

A tool to

speed up sales

An extra

incentive to buy

A tool to

speed up sales

Targeted to

different parties

Sales Promotion

“A direct inducement that offers an extra value or

incentive for the product to the sales force,

distributors, or the ultimate consumer with the

primary objective of creating an immediate sale.”

Samples

Coupons

Premiums

Contests/sweepstakes

Refunds/rebates

Bonus Packs

Price-off deals

Frequency programs

Cooperative advertising

Trade allowances

Training programs

Contests, dealer incentives

Point-of-purchase displays

Trade shows

Sales Promotion Vehicles

Consumer-Oriented Trade-Oriented

Event marketing

Samples

Coupons

Premiums

Contests/sweepstakes

Refunds/rebates

Bonus packs

Price-off deals

Loyalty programs

Trade allowances

Training programs

Contests, dealer incentives

Point-of-purchase displays

Trade shows

Event marketing

Long-Term Allocations of Promotions

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

‘94 ‘95 ‘96 ‘97 '98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05

Consumer Promotions

Media Advertising

Trade Promotions

Percent of Total Promotional Dollars, 3-year Moving Average.

Growing power of retailers

Declining brand loyalty

Increased promotional sensitivity

Brand proliferation

Fragmentation of consumer markets

Short-term focus of marketers

Increased accountability

Competition

Clutter

Competition

Increased accountability

Short-term focus of marketers

Fragmentation of consumer markets

Brand proliferation

Increased promotional sensitivity

Declining brand loyalty

Growing power of retailers

Reasons for Increase in Sales Promotion

Reasons

To increase

consumption of an

established brand

To target a specific

segment

Enhance IMC

efforts and build

brand equity

To defend

(maintain) current

customers

To obtain trial and

purchase

To target a specific

segment

To defend

(maintain) current

customers

To increase

consumption of an

established brand

To obtain trial and

purchase

Objectives of Consumer-Oriented Sales Promotion

Objectives

The products are

of relatively low

unit value, so

samples don’t cost

much

The products are

divisible and can be

broken into small

sizes that can reflect

the products features

and benefits

The purchase

cycle is relatively

short so the

consumer can

purchase in a

relatively short

time period

The products are

of relatively low

unit value, so

samples don’t cost

much

The products are

divisible and can be

broken into small

sizes that can reflect

the products features

and benefits

Sampling

Sampling Works Best

When

Event sampling

Door-to-door

Direct mail

Central location distribution

In-store sampling

Cross-product sampling

Co-op package distribution

With newspaper/magazine

Internet sites

Event sampling

With newspaper/magazine

Co-op package distribution

Cross-product sampling

In-store sampling

Central location distribution

Direct mail

Door-to-door

Sampling Methods

Methods

Advantages and Limitations of Coupons

Advantages Disadvantages

Appeal to price sensitive

consumer

Can offer price break without

retailers coop

Can be effective way to induce

trial of new or existing

products

Can be way to defend market

share and encourage

repurchase

Coupons are often used by

loyal consumers who may

purchase anyway

Misredemption and fraud

Difficult to determine how

many consumers will use

coupons and when

Declining redemption rates

and high costs of couponing

Appeal to price sensitive

consumer

Can offer price break without

retailers coop

Can be effective way to induce

trial of new or existing

products

Can be way to defend market

share and encourage

repurchase

Coupons are often used by

loyal consumers who may

purchase anyway

Difficult to determine how

many consumers will use

coupons and when

Declining redemption rates

and high costs of couponing

Free Premiums:

Only require purchase of

the product

Self-liquidating

Premiums: require

consumer to pay some or

all of the cost of the

premium

Free Premiums:

Only require purchase of

the product

Premium: an offer of an item of

merchandise or service either free or at a

low cost that is an extra incentive for

customers

Premiums

Two Types of Premiums

Contests and Sweepstakes

Contest: a promotion where consumers compete for prizes or money on

the basis of skills or ability. Winners are determined by judging entries or

ascertaining which entry comes closes to some predetermined criteria

Sweepstakes/games: a promotion where winners are determined purely

by chance and cannot require a proof of purchase as a condition for entry.

Winners are chosen by random selection from a pool of entries or

generation of a number to match those held by game entrants.

Bonus Packs

Frequency/

Loyalty

Programs

Event Marketing

Price-off Deals

Refunds and

Rebates

Frequency/

Loyalty

Programs

Price-off Deals

Bonus Packs

Refunds and

Rebates

Other Popular Consumer Sales Promotion Tools

OtherPromotional

Tools

Summary of Consumer-Oriented Promotions and Market Objectives

Encourage retailers to

display

existing brands

Encourage retailers to

display

existing brands

Obtain distribution of new products

Maintain trade support for existing products

Build retail inventories

Maintain trade support for existing products

Obtain distribution of new products

Trade-Oriented Sales Promotion Objectives

Objectives

Trade ShowsTrade Shows

Contests and IncentivesContests and Incentives

Trade Allowances

Point-of-Purchase Displays

Sales Training Programs

Cooperative Advertising

Types of Trade-Oriented Promotions

Buying Allowances

Promotional Allowances

Slotting Allowances

Buying Allowances

Promotional Allowances

Trade Allowances

Point-of-Purchase Displays

Sales Training Programs Slotting Allowances

The Sales Promotion Trap

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