Promotion

4p’s of marketing mix

Product Price Place Promotion

promotion

Promotion is the coordination of all seller initiated efforts to set up channels of information & persuasion in order to sell goods & services or promote an idea

promotion tools/ Promotion Mix

Advertising

Sales promotion Public relations/Publicity Personal selling Direct marketing

Sales Promotion - Definition

Sales promotion has been defined as “ a direct inducement that offer 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.”

The oldest & most widely used SP tool is the Cents-off coupon.

Coupon have been around 1895 P& G began using coupons in 1920 McDonald launched its happy meals in 1979

Sales Promotion

Sales promotion utilizes a variety of incentive tools for a predetermined,

limited period of time in order to stimulate trial, increase consumer or

trade demand, and motivate and reward sales force, such as samples,

coupons, discounts, premiums, refunds and rebates, contest and

sweepstakes, trade deals, and sales contests for sales people etc.

In most cases, the objectives are generally short-

term sales related rather than long-term brand

building.

The Scope & Role

1) involves some type of inducement that provides an extra incentive to buy

2) is an essentially an acceleration tool design to speed up the selling process that maximize sales volume

3) targeted to different parties in the marketing channels

can be broken into two major categories

Sales promotion Short term incentives to encourage the

purchase or sale of product or service. Discounts Coupons Displays Demonstrations

Two major Types- 1) Consumer-oriented – targeted to the

ultimate user of a product /service 2) Trade-oriented - targeted towards

marketing intermediaries

3) Targeted towards sales executives

Consumer-oriented promotions Short term incentives Sample coupons Premiums contests/sweepstakes refunds/rebates bonus pack price-offs loyalty programs Event marketing

Obtaining trial & repurchase

Increasing consumption of an established brand

Defending current customers

Targeting a specific mkt segment

Enhancing integrated mkting communication & building brand equity

Objectives of Consumer oriented Sales Promotion

Trade-oriented promotion

Short term incentives contests & dealer incentives trade allowances POP displays training programs Trade shows Cooperative advertising

Obtain distribution for new products – encourage retailers

to give shelf space to new pdts

Maintain trade support for established brands

Encourage retailers to display established brands –

promotional display are an excellent way to generate sales

Build retail inventories –

wholesalers & retailers are more likely to push the product when they have high inventory level rather than storing it in their wherehouses

- they will not run out of stock & thus miss sales opportunities

- enables manufacturer to smooth out seasonal fluctuations

Objectives of Trade oriented Sales Promotion

Reasons for Sales Promotion Growth

The role of sales promotion has increased dramatically within the last 15 years.

Intense Competition

Brand Proliferation

Declining Brand Loyalty

Growing Power of Resellers

Advertising has Become Less Effective

Increased promotion sensitivity

Fragmentation of consumer market

Short term focus

Reasons for Sales Promotion Growth

increased accountability

Competition

Clutter

Some of the important objectives of sales promotion include:

Increase sales volume

Attract new customers

Launch new product and increase trial

Encourage repeat purchase

Clearance of excessive inventories

Motivate dealers to stock and sell more

To gain advantageous shelf-space

To increase store traffic

To block competitors’ moves

Motivate sales force

Sales Promotion Objectives

Coupons

Clip and bring to the store to exchange

Induce loyalty Repeat purchase Keeps the consumers

“locked”

Bonus Packs

Like bundle pricing but this is temporary

Adds value

Refund / Rebate Promotion

If the product does not perform, then its money back

Or consume X number of products and get Y FREE

Increases consumer confidence

Loyalty program

Sweepstakes

Chance game where the consumer has the chance to win something big through purchases

The more purchases, the more tickets

Creates loyalty

Sampling

Used when the consumer is unaware of the brand or product

Product buying is prone to retail channel based trial

Use when the product can be broken down into smaller dimensions

Price off promotion

Use for slow moving items

Excess inventory Off season Dislodge

competitors

Trade-oriented promotion

Short term incentives contests & dealer incentives trade allowances POP displays training programs Trade shows Cooperative advertising

Sales Promotion Tools

Manufacturer announced consumer promotions constitute “pull” strategy and retailer promotions are based on “push” strategy.

Sales promotions are more effective when combined with advertising and “pull-push” strategies are used at the same time.

Promotional Mix Strategies

Push versus Pull and More

Influences

Push Strategy calls for using the sales force and trade promotion.

The producer promote the product to channel members to induce them to carry the pdt & to promote it to final consumer

Influences

Pull Strategy

calls for spending on advertising and sales promotion to

build consumer demand.

If the pull strategy is effective consumer then demand the pdt from channel members who will in tern demand the product from producer

Push Strategy:

Persuade wholesalers and retailers to carry brands. Give a brand shelf space. Promote a brand in coop advertising.

Producer Wholesaler Retailer Customer

Push Tools:

Deals- Allowances, Price-offs and Discounts Displays and Point of Purchase Dealer Premiums Samples and Free Goods Buy-Back Guarantees Cooperative Advertising Advertising Material Dealer Meetings and Contests Specialty Advertising Items

Promotion techniques usedPromotion techniques used

run ads in trade magazines to make wholesalers run ads in trade magazines to make wholesalers aware of the productaware of the product

provide incentives to retailers to carry the item “… provide incentives to retailers to carry the item “… free case of cold drinks with each 2 cases it buys…” free case of cold drinks with each 2 cases it buys…”

run contests for salespeople to win prizes for selling run contests for salespeople to win prizes for selling the productthe product

Pull Strategy:

Entice customers to try a new product. Attract customers from competitive products. Hold and reward loyal customers.

Producer Wholesaler Retailer Customer

Pull Tools:

Sampling---in-store, events, newspaper, in-pack Cents Off Promotions and Coupons (-2%) Continuity/Frequency and Loyalty Programs Premiums Point of Purchase Displays Contests, Games and Sweepstakes Rebates and Cash refunds FSI’s (Free-Standing Inserts) Advertising Specialty Items

Promotion techniques usedPromotion techniques used

run TV commercials so customers directly learn about the product - run TV commercials so customers directly learn about the product - then they go to the store and ask for it, or call around to find out then they go to the store and ask for it, or call around to find out where it is soldwhere it is sold

give free samples to potential customersgive free samples to potential customers

Cooperative Advertising

A system by which Ad costs are divided between two or more parties usually such programs offered by manufacturer to their wholesalers or retailers as a mean of encouraging those parties to advertise the pdt.

Manufacturer will reimburse the retailers in part or full of ad expenditure

Ad with store name Advertise at a local rate Usually cheaper than the national rate can buy more

time & space for less money Powerful tool for small business owners that cuts ad

costs

Public relations