13 Sales Promotion Kenneth E. Clow & Donald Baack Integrated Advertising, Promotion &...

13Sales Promotion

Kenneth E. Clow & Donald Baack Integrated Advertising, Promotion & Marketing Communications – 2nd ed.

Chapter

Afjal HossainAssistant Professor

Department of MarketingPatuakhali Science & Technology University

MKT 425: Selling and Sales Promotion

Sales Promotion

• Also refers to consumer promotion.

• Are the incentives aimed at a firm’s customers.

• This type of promotions are directed toward individuals or firms that use the product and do not resell it to another business.

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Why Consumer promotion?

• Stimulate purchase

• Introduce as a trial

• Create new users

• Increase repurchase from occasional customers

• Reward loyal customers

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General Categories of Promotions

1. Consumer franchise – building

To increase awareness & loyalty of a brand.

Goal: Build a favorable image by pointing out unique featuresEx: style, design etc.

2. Consumer Sales – building promotions

Focus on immediate sales.

Ex: discount, coupon etc.

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Promotions that Work

• Unique, Desirable Offering or Premise

• They make you believe you can win!

• Simple to Enter / Participate

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– Coupons– Premiums– Contests & Sweepstakes– Refunds & Rebates– Free samples/ Sampling– Bonus Packs– Price-offs– Specialties– Price Reductions

Types/ Forms of Consumer Promotions

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• Coupons

price reduction offer to a consumer for achieving another thing.

It may be percentage off the retail price. Three types of coupons are:

1. Instant redemption coupons:2. Bonus-back coupons:3. Scanner-delivered coupons:

Types of Consumer Promotions ---

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• Coupons: Three types of coupons

1. Instant redemption coupons:This type of coupons are given out along with free samples of a product to encourage consumers to try a new brand.

2. Bonus-back coupons:This type of coupons are given inside packages to encourage repeat purchase.

3. Scanner-delivered coupons:Firms issue coupons at cash register by triggering an item being scanned. The item being scanned is normally a competitor’s product. It is used to brand switching.

Types of Consumer Promotions ---

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• Coupons: Problems

1. Reduced revenuesUsing coupon it is to reduce price of the product in case of the loyal customers in the next purchase. So, total revenue is reduced.

2. Mass-cuttingThis problems occurs only for a fraudulent retail outlet/ illegal coupon ring.

3. CounterfeitingCoupons are copied & send back to the manufacturers. Newspaper generated black & white coupons are easiest to counterfeit.

4. MisredemptionsIt is of misrepresenting the coupon for a wrong size cane. Coupon for 250 gm cane rather than 500 gm cane.

Types of Consumer Promotions ---

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• Coupons: Tactics to Improve Coupons Effectiveness

1. The Face value of the coupon: Higher value

2. Distribution method: Free standing inserts (FSI)

3. Attractiveness

Types of Consumer Promotions ---

Leon G. Schiffman & Leslie Lazar Kanuk “Consumer Behavior” 8th edition, Prentice Hall – 2006 10

• Premiums

prizes, gifts/ other special offers consumer receive while purchasing products

In this case consumers pay full price of the product. Four types of premiums are:

1. Free-in-the-mail premiums2. In or on-package premiums3. Store or manufacturer premiums4. Self-liquidating premiums

Types of Consumer Promotions ---

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• Premiums: Four types of premiums

1. Free-in-the-mail premiumsGifts, individuals receive for purchasing goods. To receive the gift, the customer must mail in a proof or purchase to the manufacturer, who then mails the gift back to the consumer. Sometimes, more than one purchase is required to receive the gift.

2. In or on-package premiumssmall gifts such as toys in cereal boxes. Sometimes, the gift is disguised or packaged so the consumer must buy the product to find out which premium it contains. Ex: Package of blades with the purchase of razor.

3. Store or manufacturer premiumsGifts given by either the retail store or manufacturer when the consumers purchase a product. Ex: Fast-food restaurants offer children a toy with the purchase of child’s meal.

4. Self-liquidating premiumConsumers purchase when the manufacturers bear the shipping or handling costs just paying for the products price.

Types of Consumer Promotions ---

Leon G. Schiffman & Leslie Lazar Kanuk “Consumer Behavior” 8th edition, Prentice Hall – 2006 12

• Premiums: Problems

1. Time FactorThe offers would be for a small time otherwise it will face a huge loss.

2. CostHigher cost premiums create more sales but cost more to provide.

Types of Consumer Promotions ---

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• Premiums: Building successful Premium Programs

1. Match the premium to the target market2. Carefully select the premiums (avoid fads, try for exclusivity)3. Pick a premium that reinforces the firm’s product and image4. Integrate the premium with other IMC tools (especially

advertising & POP displays)5. Don’t expect premiums to increase short-term profits

Types of Consumer Promotions ---

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• Contests & Sweepstakes

Types of Consumer Promotions ---

Contests Sweepstakes

Purchase is required to enter No purchase is required to enter

Consumers/ Participants to perform some type of activity

Participants need not to perform any activity

The winner is selected based on who performs best or provides the most correct answers

The chance of winning a sweepstakes are based on a probability factor

Can’t be restriction for the purchase of the products

Can be restricted for the customers to one entry per visit to the store or some other location

Consumer goods related Sports related

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• Contests & Sweepstakes: Problems

1. Coststo provide prize, entry forms, legal statements, supportive advertising etc.

2. Consumer IndifferenceState lotteries, internet gambling create individual difference.

3. ClutterMany companies can offer at a given time

Types of Consumer Promotions ---

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• Contests & Sweepstakes: Creating successful C & S

1. Finding the right prize

2. Undertake an advantage of a special eventsports contest or celebration of any renowned person

Types of Consumer Promotions ---

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• Refunds & Rebates

cash returns offered to consumers for the purchase of a product

Consumers pay full price for the product but can mail in some type of proof of purchase and then the manufacturer refunds a portion of the purchase price.

1. Refunds2. Rebates

Types of Consumer Promotions ---

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• Difference between Refunds & Rebates

Types of Consumer Promotions ---

Refunds Rebates

Cash returns on “soft goods” Cash returns on “hard goods”

Soft goods are – food or clothing Hard goods are – ticket items i.e. automobiles

Refunds are of small amount of money

Rebates are of large amount of money

Refund on a food item is Tk. 50 Rebate on a car is Tk. 2,000

Refund is always on products Rebates is for both products & services

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• Refunds & Rebates: Problems

1. Costsmailing & record keeping cost involved.

2. Lost revenuetotal revenue is decreased.

3. Diminished Effectivenessno new purchase is evolved.

Types of Consumer Promotions ---

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• Refunds & Rebates: Creating effective RR

1. Visibility

2. Perceived newness

3. An impact

Types of Consumer Promotions ---

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• Sampling

encourage consumers to try new product

Sampling is the delivery of actual product to consumers for their use or consumption. Samples are provided free of charge. Often, companies provide samples of products to potential clients. Sampling can be used in service sector i.e. Saloon or Dentist. Seven types of sampling:

1. In-store distribution2. Direct sampling3. Response sampling4. Cross-ruff sampling5. Media sampling6. Professional sampling7. Selective sampling

Types of Consumer Promotions ---

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• Sampling: Seven types of sampling

1. In-store samplingwhen food product companies have personnel, cooking the food and passing it out to individuals in the store

2. Direct samplingsamples are mailed or delivered door to door to consumers.

3. Response samplingsamples are made available to individuals or businesses responding to a media offer on television, on the internet or from a magazine etc.

Types of Consumer Promotions ---

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• Sampling: Seven types of sampling

4. Cross-ruff samplingsamples of one product on another.

5. Media samplingsamples are included in the media outlet.

6. Professional samplingsamples are delivered by professionals, doctors provide free samples to patients.

7. Selective samplingsamples are distributed at a site i.e. state fair, parade, hospital, restaurant, sporting event etc.

Types of Consumer Promotions ---

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• Sampling: Problems

1. CostSamples are mailed, adding to the expense of the program.

Types of Consumer Promotions ---

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• Sampling: Effective use of samples

1. It introduces a new product or a new version/ an existing product to a new target market or a prospect.

2. Willing to switch brands if the trial use of the product was a positive experience.

Types of Consumer Promotions ---

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• Bonus Packs

encourage to buy existing product with an extra unit

when an additional extra number of items is placed in a special product package then it is called bonus packs. Ex: Buys 4 pens for the price of 3 pens in a bonus pack.

Types of Consumer Promotions ---

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• Bonus Packs: Problems

1. When the bonus is small consumers often believes the price of the product has not truly changed.

2. When the bonus is large, consumers tend to believes that the price was first increased up to compensate for the additional quantity.

3. The size of the bonus catches the consumer’s attention, it may not convey the desired message.

4. Bonus packs are costly because, additional amounts of product sell for the same or a similar price.

Types of Consumer Promotions ---

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• Bonus Packs: Effective use of Bonus Packs

1. A retailer can build a good relationship with a manufacturer that uses a bonus pack to increase brand switching.

2. Consumers like bonus packs because they get additional product at the same price.

3. Reduce brand switching at a minimal cost for existing product.

Types of Consumer Promotions ---

Leon G. Schiffman & Leslie Lazar Kanuk “Consumer Behavior” 8th edition, Prentice Hall – 2006 29

• Price-offs

encourage an display sales more not the actual product

A price-off is a temporary reduction in the price of a product to the consumer. It is not on actual item but on a POP display, sign or shelf. It stimulates

1. Sales of an existing product. 2. Work well in the B2B area.

Types of Consumer Promotions ---

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• Price-offs: Problems

1. Too many price-off offers can create a detrimental impact on the firm’s image.

2. It devastates for profit margins

Types of Consumer Promotions ---

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• Price-offs: Effective use of price-offs

1. It has an appeal of a monetary savings to consumers

2. The reward is immediate

Types of Consumer Promotions ---

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• Specialties

1. Items given free to consumers and other stakeholders to help keep a brand’s name top-of-mind.

2. These are normally low cost items, i.e. calendars, rulers, coffee mugs, T-shirts, pens etc.

3. Basically non-profit organizations use specialties for opening new facilities.

Types of Consumer Promotions ---

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• Price Reductions

1. A featured price that is lower than regular price.

2. Ex: Buy one get one free, 30 more for same price etc.

3. Sometimes the retailers sacrifices some of its profits to clear the stock.

Types of Consumer Promotions ---

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