Pick a PR triumph or disaster (not a case from your book--JetBlue):

Toyota (recent) Coke Europe (1999) Dominos (recent) Tylenol (1982) Carnival (recent) BP (recent) Cadbury Europe (2006)

Describe the issues and what they did or should have done based on your understanding of the goals of PR in the chapter.

Grade is based on how you apply what you read

Classic 5-paragraph essay—2page

Due by end of class time next Thursday.

Sales Promotion, Events, and Sponsorships

Advertising Principles and Practices

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Principle: Sales promotion is primarily designed to motivate

people to act by offering incentives.

Consumer and trade promotions now account for more than ½ of budget.

Online promotions are growing at a rate of about 27% annually.

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Changes in the Changes in the Promotion IndustryPromotion Industry

Pressure for short-term profits ◦ Rising cost of mass (traditional) media

Need for accountability◦ Sales promotions are easy to track and

evaluate Escalation of traditional media costs

◦ Promotions cost less and deliver tangible results

Easier and quicker to determine if objectives have been met◦ Usually, there’s an immediate response

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Reasons for Sales Reasons for Sales Promotion GrowthPromotion Growth

Principle: Sales promotion reduces the risk of trying a new product by giving something of added value to motivate action.

Consumer behavior◦ Shoppers switch more easily

Pricing◦ Consumers expect coupons, sales,

discounting Market share

◦ Increased switching leads to increased market share

Parity products◦ Promotions can distinguish between

similar products Power of the retailer

◦ Wal-Mart, Home Depot, Toys “R” Us and others demand promotional incentives

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Reasons for Promotion GrowthReasons for Promotion GrowthBased on Marketplace ChangesBased on Marketplace Changes

Consumer ◦ Targeted to consumer: people like you

and me Trade

◦ Targeted to people/companies in the distribution channel such as buyers, distributors, wholesales, dealers, franchisees, retailers, etc.

Sales Force◦ Directed at the firm’s salespeople to

motivate them to increase their sales including training, incentives, performance bonuses, contests

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Price Deals—contemporary price reduction or sale◦ Cents-off deal◦ Price-pack deals (prize in

cereal box)◦ Bonus packs (25% more)◦ Banded packs (toothpaste

and brush) Coupon

◦ Retailer: redeemable only at their outlet

◦ Manufacturer: at any outlet carrying the product

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Types of Consumer PromotionsTypes of Consumer Promotions

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Refunds and Rebates◦ Offer to return a certain amount

of money to the consumer who purchases the product (or coupon to encourage repeat use)

Sampling◦ Allowing the consumer to try the

product or service (in-store, mailed, dentist office, newspaper)

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Types of Consumer PromotionsTypes of Consumer Promotions

Visit the Site

With free membership in StartSampling.com you can “try something new” and earn “frequent flyer miles” which, when accumulated, can be redeemed for gifts.

Contests and Sweepstakes◦ Create excitement by promising “something

for nothing” and offering impressive prizes◦ Contests based on skill/ ability; you

compete for prizes◦ Sweepstakes based on luck; send in your

name for a drawing Premiums

◦ Tangible reward for a particular act◦ Work by adding value to the product◦ Self-liquidating

Specialties◦ Presents the brand’s name on something

that is given away as a reminder

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Types of Consumer PromotionsTypes of Consumer Promotions

Saved by Zero

Little Caeser’s “Stretch”

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• Frontier wanted to encourage customers to book online to save money and build their database.

• The results: 4,000 blog entries, a million votes, a 50% increase in Web traffic, and a 400% increase in qualified email addresses.

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1st moment of truth

Hand out

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Shopper Marketing

Saatchi & Saatchi X

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Sponsorship or Event Marketing?

http://www.youtube.com/watch?v=1V22PebTiik

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http://www.youtube.com/watch?v=LGUVWZnzHgI

What does it say about Volvo?

Why do this?

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Awareness◦ McDonalds “movie” toys

Trial ◦ Get the right people

involved with the product through sampling, price deals, coupons, refunds, rebates

Maintain/increase market share◦ Convince people to switch◦ Price deals work with low-

loyalty products◦ Characters on premiums

associate the brand with the character

Brand reminder◦ Remind customers of

positive experience with ad copy, specialty items, thank you gifts

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How to Use Consumer How to Use Consumer PromotionsPromotions

Trade—all those involved in the channel of distribution including buyers, brokers, distributors, wholesalers.

Marketers try to get the “trade” involved in promotions to make their marketing effort effective.

Trade promotions give channel members information about products and their selling points to encourage them to provide shelf space and push products.

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Principle: Consumer promotion is of little use if the product isn’t

available where the consumer can find it.

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Promo Magazine Promo Magazine

Visit the Site

• PROMO magazine provides insights into using promotion marketing as a strategic, measurable component of an overall marketing mix.

Manufacturers design and distribute displays to retailers to draw attention to their products.

Racks, display cartons, banners, signs, moving parts, lights, action.

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Types of Trade Promotions: Types of Trade Promotions: Point-of-Purchase (POP) DisplayPoint-of-Purchase (POP) Display

Materials that support retailer’s selling efforts or help representatives make sales calls on prospective retailing customers.

Product spec sheets, ad slicks/discs.

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Types of Trade Promotions: Types of Trade Promotions: Retailer (Dealer) KitsRetailer (Dealer) Kits

When a manufacturer gives sellers a financial reward for purchasing a certain amount of product or supporting a promotion◦ Includes special displays, extra

purchases, superior store locations, more local promotion

◦ Retailers get special discounts, free goods, gifts, cash from manufacturer

◦ Advertising allowances: deals on coop advertising and deals for using promotional displays

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Types of Trade Promotions: Types of Trade Promotions: Trade Incentives and DealsTrade Incentives and Deals

Advertisers can develop contests and sweepstakes to motivate resellers

Contests are far more common than sweepstakes because they can be more closely tied to product sales◦ The store or person who exceeds the

quota by the greatest percentage wins the contest

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Types of Trade Promotions: Types of Trade Promotions: ContestsContests

When companies in the same industry gather to present and sell their merchandise and demonstrate their products.

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Types of Trade Promotions: Types of Trade Promotions: Trade Shows and ExhibitsTrade Shows and Exhibits

The two primary roles for a trade promotion:◦ Stimulating in-store merchandising or

other trade support.◦ Creating excitement among those

responsible for selling the product. Trade promotions are also used

to:◦ Manipulate wholesalers’ and retailers’

inventory levels.◦ Expand product distribution to new

geographic areas or classes of trade.16-29

Manipulate Demand◦ Pull Strategies creating or increasing customer demand

so product is “pulled” through the channel.◦ Push Strategies give channel members reasons to carry

products or give them better shelf space so product is “pushed” through the channel.

Attention◦ POPs get attention and stimulate impulse purchases.

Motivation◦ Contests, trade deals, and other incentives motivate

trade/channel members to make sales. Information

◦ Trade show displays give information about products, allow companies to gather, and compare products.

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Promotions that cross over to other areas of marketing and blur the lines between promotion, advertising, and public relations.◦Sponsorships◦Event marketing◦ Interactive and Internet promotions◦Loyalty programs◦Comarketing/partnership promotions

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Sponsorships—companies support an event, sporting event, concert, or charity either financially or by donating supplies and services.

Event marketing—building a product’s marketing program around a sponsored event, such as the Olympics or a golf tournament.

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Crossover Promotions: Crossover Promotions: Sponsorships and Event MarketingSponsorships and Event Marketing

Blimps, balloons, inflatables, and skywriting planes capture attention and create excitement at events◦ Goodyear Blimp◦ Met Life’s Snoopy blimps◦ Inflatable Spiderman to

promote the movie Internet sweepstakes Internet coupons

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Crossover Promotions: Crossover Promotions: Other Promotional SupportOther Promotional Support

Also called a continuity or frequency program

A promotion to increase customer retention

Frequent flyers programs, TGI Friday’s “Frequent Fridays”

These programs also capture information to use for more targeted promotions and advertising

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Crossover Promotions: Crossover Promotions: Loyalty ProgramsLoyalty Programs

Comarketing involves manufacturers developing marketing communication programs with their main retail accounts, instead of for them.

Cobranding occurs when two companies come together to offer a product (e.g., American Airlines, Citibank Visa)

With licensing, one company gives another company the right to use its legally protected trademarks and logos on products and in advertising or promotion.

Tie-ins are when two companies are displayed, advertised, or promoted together to multiply impact. (e.g., McDonald’s Shrek Happy Meals)

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Crossover Promotions: Crossover Promotions: Partnership ProgramsPartnership Programs

Introduce a new product Create brand awareness Brand building

◦ Create affinity between brands and buyers◦ Create brand involvement through positive

associations

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Promotion Strategy: Promotion Strategy: Promotion ObjectivesPromotion Objectives

Brand building is long-term and focused on the brand’s core values, while promotion is short term and price-focused.

Critics say price promotions can undermine the brand’s established values and erode customer brand loyalty.

Proponents say promotion can help build brand image.

The solution: advertising must be more accountable and promotion more brand-focused; and they must work together. 16-

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Promotion Strategy: Promotion Strategy: The Issue of Brand BuildingThe Issue of Brand Building

Advertising and promotion have different strengths that, when combined with other marketing communication tools, can effectively accomplish objectives.

Both seek to increase the number of customers and usage of the product by existing customers.

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Promotion Strategy: Promotion Strategy: Promotion IntegrationPromotion Integration

Advertising

• Creates a brand image over time

• Relies on emotional appeals

• Adds tangible value to product or service through image

• Contributes moderately to short-term profitability

Promotion

• Creates immediate action

• Added value strategies rely on rational appeals; impulse appeals use emotion

• Adds tangible value to product or service

• Contributes greatly to short-term profitability

Effectiveness is measured by volume, response rates, and redemption (coupons, refunds, rebates) rates.

Payout planning seeks to produce promotions that increase sales and profits.

Promotions can deliver sales but they must be well planned and executed in order to enhance the brand’s reputation.

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Promotion Strategy: Promotion Strategy: Promotion EffectivenessPromotion Effectiveness

Macy’s Department Store Macy’s Department Store

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The Macy’s Web site features not only a price discount, but also several other deals to encourage store visits.

Visit the Site

Prentice Hall, © 2009

Discussion Questions

Tom Jackson’s marketing professor is covering some promotion methods, explaining that in selecting the consumer sales promotion, planners must know the brand situation and objectives before techniques are chosen.

Some techniques tend to increase product use, and others are used to get new consumers to try the product.

“Which methods belong with which objective and why?” the professor asks.

How should Tom answer this question?16-42

Janice Wilcox is a brand manager for a new line of eye cosmetics. She is about to present her planning strategy to division management.

Janice knows her company has been successful in using sales promotion plans lately, but she has strong misgivings about following the company trend.

“This new line must create a consumer brand franchise, and promotion isn’t the best way to do that,” she thinks to herself.

How is sales promotion weak in building and maintaining a brand?

Should Janice propose no promotion, or is there a reasonable compromise for her to consider?

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Three-minute debate: You have just been named product manager for a new FDA-approved pharmaceutical, a diet pill, that helps reduce hunger.

Should you use a push or pull strategy to introduce this new product?

Organize into small teams with each team taking one side or the other. In class, set up a series of three-minute debates, with each side having half that time to argue its position. Every team of debaters has to present new points not covered in the previous teams’ presentations until there are no arguments left to present. Then, the class votes as a group on the winning point of view.

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