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1-2McGraw-Hill/Irwin Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.

Chapter 18Chapter 18

• Consumer and Trade Sales PromotionConsumer and Trade Sales Promotion• Consumer and Trade Sales PromotionConsumer and Trade Sales Promotion

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• Explain the role and significance of sales promotion in the marketing communications mix.

• Understand why sales promotion expenditures account for a significant portion of many firms’ marketing communications budgets.

• Discuss the objectives and techniques of consumer sales promotion.

After studying this chapter you should be able to:

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• Discuss the objectives and techniques of trade sales promotion.

• Explain the limitations of sales promotion.

• Realize how deceptive and fraudulent sales promotion victimizes both consumers and marketers.

After studying this chapter you should be able to:

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The Role of Sales Promotion

• Sales Promotion:– Consists of media and non-media marketing

communications employed for a predetermined, limited time to stimulate trial, increase consumer demand, or improve product availability.

• Consumer Sales Promotion:– Directed at Consumers

• Trade Sales Promotion:– Directed at Resellers

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The Significance of Sales PromotionThe Significance of Sales Promotion

Sales Promotion Expenditures

Consumer Factors

Impact of Technology

Increased Retail Power

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The 10 Commandments of Creative Sales Promotion

The 10 Commandments of Creative Sales Promotion

1. Set specific objectives2. Know how basic promotion techniques work3. Use simple, attention-getting copy4. Use contemporary, easy-to-track graphics5. Clearly communicate the concept6. Reinforce the brand’s advertising message.7. Support the brand’s positioning and image.8. Coordinate promotional efforts with other

marketing plans.9. Know the media you work with.10. Involve the trade.

1. Set specific objectives2. Know how basic promotion techniques work3. Use simple, attention-getting copy4. Use contemporary, easy-to-track graphics5. Clearly communicate the concept6. Reinforce the brand’s advertising message.7. Support the brand’s positioning and image.8. Coordinate promotional efforts with other

marketing plans.9. Know the media you work with.10. Involve the trade.

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Consumer Sales PromotionConsumer Sales Promotion

Objectives of Consumer Sales Promotion:

• Stimulate trial• Increase consumer inventory and

consumption• Encourage repurchase • Neutralize competitors• Increase sales of complementary

products• Stimulate impulse purchasing • Allow flexible pricing

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Consumer Sales Promotion Techniques

Consumer Sales Promotion Techniques

• Price Deals • Coupons • Rebates• Cross-Promotions• Contests, Sweepstakes,

Games• Premiums• Sampling• Advertising Specialties

• Price Deals • Coupons • Rebates• Cross-Promotions• Contests, Sweepstakes,

Games• Premiums• Sampling• Advertising Specialties

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Trade Sales PromotionTrade Sales Promotion

Objectives of Trade Sales Promotion:• Gain/maintain distribution• Influence resellers to promote product• Influence resellers to offer price discount• Increase reseller inventory• Defend against competitors• Avoid reduction of normal prices

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Trade Sales Promotion TechniquesTrade Sales Promotion Techniques

• Trade Allowances• Dealer Loaders• Trade Contests• Point-of-Purchase Displays• Trade Shows• Training Programs• Push Money

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Limitations of Sales PromotionLimitations of Sales Promotion

• It typically cannot reverse a genuine declining sales trend.

• Marketers cannot reasonable expect sales promotion to convert refection of an inferior product into acceptance.

• Sales promotion may even weaken the brand image.

• Sales promotion has also been blamed for encouraging competitive retaliation.

• It typically cannot reverse a genuine declining sales trend.

• Marketers cannot reasonable expect sales promotion to convert refection of an inferior product into acceptance.

• Sales promotion may even weaken the brand image.

• Sales promotion has also been blamed for encouraging competitive retaliation.

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Limitations of Sales PromotionLimitations of Sales Promotion

• Short-term volume gain at the sacrifice of profits.– Forward Buying:

• People buy more than they need at the deal price.

– Pay-for-Performance Trade Promotions:• Retailers are rewarded for making sales to

consumers rather than making purchases from manufacturers.

• Short-term volume gain at the sacrifice of profits.– Forward Buying:

• People buy more than they need at the deal price.

– Pay-for-Performance Trade Promotions:• Retailers are rewarded for making sales to

consumers rather than making purchases from manufacturers.

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Ethical and Legal Issues in Sales Promotion

Ethical and Legal Issues in Sales Promotion

• Deceptive Sales Promotion

• Fraud:• The Fake Storefront

• Stuffing the Ballot Box

• Playing the Middleman

• The Redemption Scam

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Ethical and Legal Issues in Sales Promotion

Ethical and Legal Issues in Sales Promotion

Diverting (or Arbitraging):• Secretly purchasing a product where it

is less expensive, usually as a result of a trade promotion, and reselling in areas where prices are higher.

Diverting (or Arbitraging):• Secretly purchasing a product where it

is less expensive, usually as a result of a trade promotion, and reselling in areas where prices are higher.

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Global ConcernsGlobal Concerns

• The Global Perspective requires marketers to make an extra effort to become familiar with local laws and customs.