chapter 16 Flashcards
Define sales promotion
A 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.
Who is the sales promotion targeted at?
- Retailers - trade-oriented sales promotion.
2. Consumers - consumer-oriented sales promotion.
Name some trade-oriented sales promotion vehicles.
- contests, dealer incentives
- trade allowances
- point of purchase displays
- training programs
- trade shows
- cooperative advertising
Name some consumer-oriented sales promotion vehicles
- samples
- coupons
- premiums
- contests/sweepstakes
- refunds/rebates
- bonus packs
- price off deals
- loyalty programs
- event marketing
Name some reasons for growth of sales promotions
- changing economic conditions
- growing power of retailers
- declining brand loyalty
- increased promotional sensitivity
- brand proliferation
- fragmentation of consumer markets
- short-term focus of marketers
- increased accountability
- need to penetrate the clutter
What is the 3 step process in consumer-oriented sales promotion?
- identify target audiences
- determine sales promotion objectives
- set measurable goals.
What are the 3 ways when sampling works best?
- the products are of relatively low unit value, so samples do not cost much.
- The products are divisible and can be broken into small sizes that can reflect the product’s features and benefits
- The purchase cycle is relatively short so the consumer can purchase in a relatively short time period
What are some methods of sampling distribution?
- door to door
- direct mail
- in store sampling
- on-package sampling
- event sampling
- with magazine/newspaper
- internet
What are coupons?
The
oldest and
most widely used
sales promotion tool. Used by virtually all packaged goods
manufacturers.
Advantages of coupons?
- appeal to price-sensitive consumer
- can offer price break without retailer’s cooperation.
- can be effective way to induce trial of new or existing products.
- can be way to defend market share and encourage repurchase.
Disadvantages of coupons?
- difficult to determine how many consumers will use coupons and when
- coupons are often used by loyal consumers who may purchase anyway.
- declining redemption rates and high costs of couponing.
- misredemtion and fraud.
What are premiums?
An offer of an item of merchandise or service either free or at a low cost that is an extra incentive for customers
What are the 2 types of premiums?
- Free premiums: only require purchase of the product.
2. Self-liquidating premiums: require consumer to pay some or all of the cost of the premium.
What is a contest?
A promotion where consumers compete for prizes or money on the basis of skills or ability. Winners are determined by judging entries or ascertaining which entry comes closest to some predetermined criteria.
What is a sweepstakes/games?
A promotion where winners are determined purely by chance and cannot require a proof of purchase as a condition for entry. Winners are chosen by random selection from a pool of entries or generation of a number to match those held by game entrants.
What are some problems with contests and sweepstakes?
- do not contribute to brand building
- focus not on brand
- not effective
- legal considerations
- may generate negative publicity
- use by professionals or hobbyists
What are some of the strategies for improved return on promotions?
- offer a popular grand prize
- ensure that there is a good perceived chance of winning
- give more than one prize
- have intermittent prize draws
- make it easy to participate
- make it easy to understand
- give instant gratification
- give prizes of interest
- communicate effectively
- focus on the promotion, not the brand
What are some other popular consumer sales promotion tools?
- bonus packs
- price-off deals
- refunds and rebates
- event marketing
- frequency/loyalty programs
What is event marketing?
Promotion where a company or brand is linked to an event or where a themed activity is developed for the purpose of creating experiences for consumers and promoting a product or service.
What is event sponsorship?
An IMC activity where a company develops actual sponsorship relations with a particular event and provides financial support in return for the right to display a brand name, logo or advertising message and be identified as a supporter of the event.
What are the objectives of trade-orineted sales promotion?
- obtain distribution of new products
- maintain trade support for existing products
- build retail inventories
- encourage retailers to display existing brands
What are the 3 forms of promotion targeted to reseller sales people?
- product or program sales
- new account placements
- merchandising efforts
What are the types of cooperative advertising?
- Horizontal cooperative advertising
- Ingredient-sponsored cooperative advertising
- Vertical cooperative advertising
what are refunds/rebates?
offers by the manufacturer to return a portion of the product purchase price
used to induce trial or encourage brand switch
what are bonus packs?
extra amount of product at the regular price by providing larger containers or extra units
simple way of adding value. has a strong impact on purchase decision
what are price-off deals?
a promotional strategy in which the consumer receives a reduction in the regular price of the brand
what is a loyalty program?
a type of promotional program that rewards customers for continuing to purchase the same brand of a product or service over time
aka frequency/continuity programs
what are the types of trade-oriented promotions?
- contests and incentives
- trade allowances (discount for wholesale)
- displays and point-of-purchase materials
- sales training programs
- trade shows
- cooperative advertising
what is a buying allowance?
a deal or discount offered to resellers in the form of a price reduction on merchandise offered in a fixed period
what is ‘push money’?
cash payments made directly to the retailers’ or wholesalers’ sales force to encourage them to promote and sell a manufacturer’s product
what are slotting allowances?
aka stocking allowances or introductory allowances
fees retailers charge for providing a slot or position to accommodate the new product.
what are failure fees?
a trade promotion arrangement whereby a marketer agrees to pay a penalty fee if a product stocked by a retailer does not meed agreed upon sales levels
what is forward buying?
A practice whereby retailers and wholesalers stock up on a product being offered by a manufacturer at a lower deal or off-invoice price and resell it to consumers once the marketer’s promotional period has ended
what is diverting?
a practice whereby a retailer or wholesaler takes advantage of a promotional deal and then sells some of the product at the low price to a store outside of their area or to a middleman who will resell it to other stores
what are trade shows?
a type of exhibition or forum where manufacturers can display their products to current as well as prospective buyers
what is co-operative adving?
an adving program in which a manufacturer pays a certain percentage of the expenses a retailer or distributor incurs for advertising the manufacturer’s product in a local market area
what are some pitfalls of sales promotion?
- deteriorates brand
- induces immediate sales but no long term value
- may induce a sales promotion trap (like a price war, but with sales promotions)
