Chapter 15 Flashcards
Sales Promotion definition
using incentives to create a perception of greater brand/product value. The intent is to generate a short-term increase in sales by motivating trial use, encouraging larger purchases, or stimulating repeat purchases.
Sales Promotion - 3 types
- Consumer - Induce household consumers to purchase a brand
- Trade Market - Motivate distributors, wholesalers, and retailers to stock and feature a brand
- Business Market - Cultivate buyers in large corporations who make purchase decisions
Trade-market sales promotion techniques
♠ P-O-P displays ♠ Incentives ♠ Allowances ♠ Cooperative adv ♠ Sales training programs
Business-market sales promotion techniques
♠ Trade shows ♠ Business gifts ♠ Premiums ♠ Incentives ♠ Loyalty/ frequency programs
Why the shift toward Promotion?…
- More pressure for short-term profits
- Increased need for accountability
- Can be cheaper than traditional media
- Easy and quick to measure effectiveness
- Consumer behavior is more sophisticated
- Consumers expect short-term price reductions
- Can combat parity
- Retailers wield more power
Objectives of Sales Promotion
- Stimulate trial purchases (e.g., offer a free product sample)
- Stimulate repeat purchases (e.g., accumulate points via continued purchases)
- Stimulate larger purchases (e.g., two-for-one sales move products faster)
- Introduce a new brand (e.g., potential to attract attention via trial use)
- Combat or disrupt competitors (e.g., launch a promo when competitor is launching a new ADV campaign)
- Contribute to IBP (e.g., offers the incentive component of the marketing mix)
Sale Promotions (Sales Promotions vs. ADV - how they differ)
♠ Creates immediate action ♠ Adds tangible value to the product ♠ Short-term profits ♠ Encourages brand switching ♠ Results are easier to measure ♠ Encourages trial use
Advertising (Sales Promotions vs. ADV - how they differ)
♠ Cultivates brand image ♠ Adds intangible value to the product ♠ Longer-term profits ♠ Encourages brand loyalty ♠ Results are more difficult to measure ♠ Encourages repeat purchase
Reasons why many marketers have been shifting funds from mass media advertising to sales promotions
♠ Demand for greater accountability ♠ Short-term orientation ♠ Consumer response to promotions ♠ Proliferation of brands ♠ Increased power of retailers ♠ Clutter
Consumer-market sales promotion techniques
♠ Coupons ♠ Price-off deals ♠ Premiums and advertising specialities ♠ Contests and sweepstakes ♠ Sampling and trial offers ♠ Gift cards ♠ Rebates ♠ Frequency (continuity) programs
Coupons definition
entitle a buyer to a price reduction for a product or service.
Counterintuitive fact about coupon usage
More affluent households dominate coupon usage
Advantages of coupons (5)
- Incentivizes sensitive customers
- Induces brand switching
- Timing/distribution can be controlled
- Stimulates repeat purchases
- Gets regular users to trade-up
Disadvantages of coupons (3)
- Time of redemption cannot be controlled
- Coupon programs require costly administration
- Coupon fraud
Price-Off Deals definition
Offers consumers a reduced price at point of purchase through specially marked packages
Advantages of price-off deals (3)
- Is controllable by manufacturer
- Creates positive price comparisons
- Increases consumer’s belief in the value of a known brand
Disadvantages of price-off deals (1)
Retailers believe it creates inventory and pricing problems
Premiums definition
Items offered free, or at a reduced price, with the purchase of another item
2 types of premiums
- Free premium
2. Self-liquidating premium
Free premium definiton
Provides consumers with an item at no cost. The most frequently used free premium is an additional package of the original item or a free related item placed in the package (e.g., free conditioner with the purchase of shampoo)
Self-liquidating premium definiton
Requires a consumer to pay most of the cost of the item received as a premium. Caution - unless the premium is related to a value building strategy for a brand, it can serve to focus customer attention on the premium rather than on the benefit of the brand. Effective technique with loyal customers
Advertising specialities 3 key elements
- Message placed on a useful item
- Given free to consumers
- With no obligation to make a purchase
Advertising specialities definition
SWAG - adv specialities allow a firm to tout its company or brand name with a target customer in an ongoing fashion.
Contests definition
Consumers compete for prizes based on skill and ability. Costly organization.
Sweepstakes definition
Promotion where winners are determined purely by chance
Challenges to effectively using contests and sweepstakes in the IBP effort
- Complex legal and regulatory requirements
- The game steals the attention of the customer form the brand
- Hard to get meaningful message across in the context of a game
- Risk of errors in administration - can create negative publicity
- Contests and sweepstakes are not good for developing quality or prestige image for a brand.
Sampling / Trialing
giving a consumer a chance to use a brand on a trial basis with little to no risk
Six techniques of sampling
- In store
- Door-to-door
- Newspaper
- On package
- Mobile
Trial offers definiton
Same as sampling but for more expensive items
Critique of sampling
Unless the brand has a clear value and benefit over the competition, a trial of the brand is unlikely to persuade a consumer to switch brands.
Rebates & Refunds definition
manufacturer offers to return a certain amount of the money to the consumer who purchases a product or service
Why use rebates?
Because we’re lazy! … many consumers forget to redeem the rebate
Frequency Programs definition
Offer customers discounts or free products for repeat patronage. Common in airline, travel, and restaurant businesses
Objectives for promotions in the trade chanenel
- Obtain initial distribution
- Increase order size
- Encourage cooperation with consumer-market sales promotion
- Increase store traffic
Push strategy definition
Sales promotions directed at the trade help push a brand into the distribution channel until it ultimately reaches the customer
Push money definiton
A program in which retail salespeople are offered a monetary reward for featuring a marketer’s brand with shoppers.
Merchandise allowances definition
In the form of free products packed with regular shipments, are payments to the trade for setting up and maintaining displays.
Slotting fees definition
Direct cash payments to induce food chains to stock an item.
Bill-back allowances definition
Provide retailers a monetary incentive for featuring a marketers brand in either advertising or in-store displays.
Off-invoice allowance definition
Advertisers allow wholesalers and retailers to deduct a set amount from the invoice they receive for merchandise.
Cooperative advertising
Vertical cooperative advertising - provides dollars directly to retailers for featuring company’s brand in local advertising.
Risks of Sales Promotion
- Creates a focus on price instead of brand
- Introduces legal and logistical challenges
- Requires significant managerial time and can be expensive
- Can alienate loyal customers
- Borrow from future sales
Point-of-Purchase (P-O-P) Advertising definition
materials used in the retail setting to attract shoppers’ attention to a brand, to convey primary benefits, or highlight pricing information
Objectives of P-O-P advertising
‣ Draw consumer attention at retail
‣ Stimulate trial use
‣ Stimulate increased /varied use
‣ Maintain purchase loyalty
Why is P-O-P so “sexy”? …
because it places advertising, brands, and a consumer together in the same place at the same
time
2 categories of P-O-P materials
- Short-term promotional displays < 6 months
2. Permanent long-term displays > 6 months
Traditional Support Media puropse
to reinforce or extend a message being delivered through other media
Classes of traditional support media
- Signs, billboards, posters
- Transit and aerial advertising
- Cinema advertising
- Directory advertising
Advantages of Outdoor Signage and Billboards (5)
- Wide local exposure
- Can be captivating
- Around-the-clock exposure
- Can address an immediate need
- New digital technology being used
Disadvantages of Outdoor Signage and Billboards (4)
- Message limits
- Location influences impact
- Relatively expensive
- Visual pollution
Support media definition
Used to reinforce or supplement a message being delivered via some other media vehicle
Out-of-home media advertising definition
Includes various adv venues that reach primarily local audiences.
Transit advertising definition
- Urban environments
- Reasonable geo-demographic segmentation
- Good message repetition
- Timely to purchase locations
- Can subtlety build brand awareness
Airport Ads
- Dioramas
- Cylinder showcases
- SkyScreens
- Baggage cart sponsorships
Directory advertising definition
Includes all the local phone directory and local business advertising books published by a variety of firms (yellow book)
Promotional benefits of packaging to the
Advertiser:
- The package carries the brand name and logo
- The package can communicate “value”
- The package can communicate “image” and “quality”
