11.1. Consumer-Oriented Promotion I

Question 1

Sales Promotion Defnition

Answer 1

• short term incentive used to induce the trade and/ or consumers to buy a brand and to encourage the sales force to aggressively sell
• direct inducement that offers 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

Question 2

Trade promotion

Answer 2

• btw manufacturer and wholesaler/ retailer
  => obtaining distribution & shelfspace
  => encourage retailers to promote a brand

Question 3

Consumer Promotion

Answer 3

btw wholesaler/ retailer and consumer
btw manufacturer and consumer
=> increase short-term sales & long term market share
=> Generate product trial

Question 4

sampling

Answer 4

allows customer to try the product

Question 5

price-off deals

Answer 5

• temporary price reduction or sale
• cents-off deals, price-pack deals, bonus packs

Question 6

coupons

Answer 6

redeemable at the specified outlet

Question 7

refunds or rebates

Answer 7

offer to return money to the customer

Question 8

Premiums

Answer 8

tangible reward for a particular act, usually purchase

Question 9

contests and sweepstakes

Answer 9

• create excitement by promising something for nothing

Question 10

contests

Answer 10

require participants to compete for a prize or prizes based on skill or ability

Question 11

sweepstakes

Answer 11

require only that participants submit their names for a drawing or other chance event

Question 12

specialties

Answer 12

baseball caps, pens, key chains, t-shirts imprinted with brand name

Question 13

point-of-purchase promotion

Question 14

objectives of sales promotion

Answer 14

• gain trial among users
• increase repeat purchase and/ or multiple purchase
• expand brand usage by encouraging product uses in addition to usual use
• defend share against comp
• support and reinforce and advertising campaign/ theme or specific image
• increase distribution and/ or retailer/ dealer cooperation

Question 15

desired effects of sales promotions

Answer 15

graph

Question 16

rapid growth of sales promotion has been achieved because

Answer 16

• product managers are facing more pressure to increase their current sales
• companies face more competition
• Advertising efficiency has declined
• consumers have become more deal oriented

Question 17

company factors for growth of SP

Answer 17

• U.S. companies focus on immediate profits
• advertising tends to work in the long-term rather than short-term
• traditional media costs have also escalated to the point where alternatives need to be considered

Question 18

consumer factors for growth of SP

Answer 18

• consumers are less loyal to brands
• consumers are less loyal to brands
• consumers expect constant short-term price reductions
• promotion is the most effective strategy for increasing sales when products are largely undifferentiated

Question 19

biggest part of budget goes to…

Answer 19

trade promotions

Question 20

pros of promotions

Answer 20

• provides a means of encouraging consumer sales response
• is extremely flexible with a number of techniques to reach consumers across demographic and lifestyle categories
• functions at both the consumer and trade levels to encourage high levels of distribution and goodwill with the distribution channel

Question 21

cons of promotions

Answer 21

• can damage brand equity by replacing image of a product with price competition
• care must be taken to coordinate various messages of adv and promotion
• some forms have become so prevalent that they no longer provide a comp differentiation
• the frequency of deals changes the consumers reference price

Question 22

why is it easier to evaluate sales promotion results

Answer 22

• definite starting and ending points
• designed to impact sales directly

Question 23

sources of sales increase

Answer 23

• new users
  => trial from nonusers
  => switching from comp brands
• larger volume purchase

Question 24

segmentation analysis - assumptions

Answer 24

• different market segments have differential demand for essentially the sameproduct (different elasticities of demand)
• market can be segmented
• buyers cant resell product/ service
• little or no chance of competitors underselling a firm charging higher prices

Question 25

are coupons a form of price discrimination

Question 26

consumer promotion sensitivity

Answer 26

• promotion insensitives
• on deal only consumers
• stockpiling loyalist
• stockpiling promotion sensitives
• nonstockpiling promotion sensitives

Question 27

promotion insensitives

Answer 27

• dont respond to promotions
• may use coupons
• but cannot switch them from one brand to another
• promotions have no effect

Question 28

stockpiling loyalist

Answer 28

• loyal to one brand
• use promotions as opportunity to stockpile
• don’t switch brands
• promotions tend to “reward” brand loyals
• sales increase is borrowed from future sales

Question 29

stockpiling promotion sensitives

Answer 29

• loyalists who are willing to make exceptions and stockpile
• switchers who are willing to switch brands and stockpile
• promotions may have desired effect on them
• questionable if they are really “loyal” to new brand

Question 30

nonstockpiling promotion sensitives

Answer 30

graph

Question 31

on-deal-only buyers

Answer 31

• willing to switch brands
• but only buy on deal
• definitely not loyal to new brand
• Profit = no of units (Q) sold x profit margin (MD)

Question 32

Unprofitable segments

Answer 32

• promotion insensitives
• stockpiling loyalists

Question 33

Profitable segments

Answer 33

on deal only consumers

Question 34

Maybe profitable segments

Answer 34

• nonstockpiling promotion sensitives
• stockpiling promotion sensitives