L13_SalesPromotion - Lecture 13 ¡  Friday – feedback...

Info icon This preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Lecture 13 ¡  Friday – feedback session §  5 minutes per group §  Feedback on Part 2 ¡  Next Friday (Nov 7): Persuasion Skits §  5 Minutes §  Order will be randomly determined §  Clearly communicate the concepts in a memorable way to your target (e.g., classmates) §  “PLEASE BE ON TIME FOR CLASS!” A direct inducement that offers an extra value or incentive for the product to the sales force, distributors, or ultimate consumer with the primary objective of creating an immediate sale 100% Consumer Promotions 90% 80% 70% Media Advertising 60% 50% 40% 30% Trade Promotions 20% 10% 0% '89 ‘90 ‘91 ‘92 '93 '94 '95 '96 '97 '98 '99 US -­‐ Percent of total promotional dollars, 3-­‐year moving average. ‘00 Consumer-Oriented Trade-Oriented Samples Contests, incentives Coupons Trade allowances Premiums POP displays Contests/sweepstakes Sales training programs Refunds/rebates Trade shows Bonus Packs Cooperative advertising Price-off deals Frequency programs Event marketing Consumer-Oriented Trade-Oriented Samples Contests, incentives Coupons Trade allowances Premiums POP displays Contests/sweepstakes Sales training programs Refunds/rebates Trade shows Bonus Packs Cooperative advertising Price-off deals Frequency programs Event marketing ¡  Obtain trial and purchase ¡  Increase consumpUon of an established brand ¡  Defend (maintain) current customers ¡  Target a specific segment ¡  Enhance IMC efforts and build brand equity §  Consumers are given some quanUty of a product for no charge to induce trial §  Sampling works best ▪  The products are relaUvely low unit value ▪  The product can be broken into a small piece or size that reflects the full features and benefits. ▪  The purchase cycle is relaUvely short so the consumer can purchase in a relaUvely short Ume period. §  Coupons offer discount to consumers who care to provide minimum effort (of a\enUon and redempUon) §  The oldest and the most effecUve sales promoUon tool •  In order of usage •  Freestanding inserts (86%) •  In-­‐store couponing (6%) •  Direct mail (2%) •  Magazines (2%) •  Newspapers (1%) •  Coupons inside/outside product (1%) •  Other methods (2%) HK$10 off purchase of any product from REVITALIFT line, at SaSa, Watson’s, or Mannings Advantages Disadvantages Appeals to price sensitive consumers Hard to tell how many consumers will use them and when Can offer discounts without retailer cooperation Often used by loyal consumers who would purchase anyway Effective way to induce trial of products Defends market share and encourages repurchase Low redemption rates and high costs Misredemption and fraud An offer of an item, merchandise, or service, free or at a low cost, that is an extra incenUve for customers Types of Premiums Free: Only requires purchase of the product Self-­‐liquida5ng: consumer required to pay some or all of the cost of the premium §  Premiums (+ price discount): Subscribe to ELLE Decoration for a year and get free “Crabtree and Evelyn” scented candle (+ 20% off on magazine subscription) §  (Self-­‐liquidating) premium (+ coupons): get an engraved cup §  Contest: consumers compete for prizes based on skill or ability §  Sweepstakes: winners are awarded prizes based on chance §  Advantages: §  Can generate excitement and involvement with brand (if designed such that consumers perceive value in the prizes and find playing the games intrinsically interesting) §  Can attract attention to advertising §  Can yield (valuable) database of interested and potential customers §  Problems: §  Consumers may focus on game itself rather than on brand §  Complex legal problems and complex administration (high risk of errors) §  Contests and sweepstakes may contradict goal of developing prestige image §  Gatsby Dance Competition (2012) §  Contest (2008): www.nike.com.hk – Dance Competition §  Money-­‐back offer requiring buyer to mail in a form requesting the money back from the manufacturer §  Advantages: §  May help increase quantity purchased §  Relatively few consumers take advantage of rebate offer after buying brand §  Redemption rate typically between 1% and 2% §  Conversion rate to purchase typically between 3% and 4% §  Offer consumers an extra amount of a product at the regular price by providing larger container or extra units §  Advantages: §  A direct way to provide extra value without having to get involved with complicated coupons or refund offers §  Strong impact on the purchase decision §  Problems §  Appeal primarily to current users who probably would have purchased the brand anyways/ promoUon sensiUve consumers §  Reduction in regular price of brand §  Invitation to load (“stockpile”) §  Encourage switching behavior §  Advantages: §  Controllable (for the manufacturer) §  Straightforward deal; increases the value of a known brand automatically (for consumers) §  Main problems: §  May appeal primarily to regular users §  May degrade quality image §  Retailers not enthusiastic (inventory and pricing problems) §  Give customers discounts or rewards for repeat purchases §  Advantages: §  Builds customer loyalty §  Allows development of database with valuable information that can be used for direct marketing purposes §  Main problems: §  Changes in frequency program risk alienating best customers (e.g., airlines) §  Give customers discounts or rewards for repeat purchases §  Advantages: §  Builds customer loyalty §  Allows development of database with valuable information that can be used for direct marketing purposes §  Main problems: §  Changes in frequency program risk alienating best customers (e.g., airlines) ¡  A themed acUvity is developed for the purpose of creaUng experiences for consumers and promoUng a product or service ¡  Cf. Event sponsorship: a company sponsors a parUcular event and provides financial support in return for the right to display a brand name, logo, or adverUsing message and be idenUfied as a supporter of the event Consumer-Oriented Trade-Oriented Samples Contests, incentives Coupons Trade allowances Premiums POP displays Contests/sweepstakes Sales training programs Refunds/rebates Trade shows Bonus Packs Cooperative advertising Price-off deals Frequency programs Event marketing §  Obtain initial distribution §  Maintain trade support for established brands §  Encourage retailers to display established brand §  Build retail inventories §  Contests and incentive programs: to encourage better performance from retail management personnel and their salespeople. E.g., travel, gifts, or cash bonuses for reaching targeted sales levels. §  Potential risk: §  Salespeople may become “too” motivated – try to sell brand even to customers whose needs the product doesn’t fit §  Can look like bribe unless carried out in structured and open fashion §  Off-­‐invoice allowances: price reduction (increases wholesaler or retailer’s profits). §  Merchandise allowances: give allowance or discounts for performing certain promotional or merchandising activities in support of their brands §  Slotting allowance: fees retailers charge for providing a slot or position to accommodate the new product §  Failure-­‐fees: pays if a new product does not hit a minimum sales level within a certain time ¡  Helps a manufacturer obtain more effecUve in-­‐ store merchandising of products ¡  2/3 consumer’s buying decisions are made in a retail store ¡  Get a\enUon/ communicate a sales or promoUonal message ¡  Problems: §  Difficulty in gegng retail stores to comply with requests for display §  Retails are decreasing the amount of displays §  Require customized POP materials §  The manufacturer sponsors a sales training program for retailer sales personnel—common for consumer durables and specialty goods. §  E.g.: offer formal classes, provide sales manuals, brochures, videos, and/or send sales trainers into stores to work with store personnel §  Cooperative advertising: provide dollars directly to retailer for featuring the company’s brand in local advertising. §  Marketers control this co-­‐op advertising by setting strict specifications for size and content of ad, or may send the retailers the template for an ad (into which retailers insert the names and location of their stores). §  By sharing retailer advertising costs, the manufacturer increases retailer goodwill, and may also gain increased shelf space (retailer would want advertised brand to be highly visible in the store). ¡  Over-­‐use of sales promoUons §  Looking for quick sales fixes §  Easier to drop prices than to differenUate your product ¡  NegaUve impact §  A brand that is constantly promoted may lose perceived value §  Purchases based on discounts, not a favorable agtude §  Sales promoUon trap or spiral §  Procedure for evaluating promotion ideas: 1)  Identify the objectives 2)  Evaluation system: §  How good is the general idea? Does it help achieve objective? §  Will the sales promotion idea appeal to the target market? §  Is idea unique or is competition doing something similar? §  Is the promotion presented clearly so that the intended market will notice, comprehend, and respond to the deal? §  How cost effective is the proposed idea? §  Sales promotion techniques usually work best when used in conjunction with advertising §  A consumer sales promotion can enhance the effectiveness of an ad campaign ➜  When properly planned and executed together, advertising and sales promotion can provide a synergistic effect ...
View Full Document

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern