Sales Promotion

Question 1

Growth of sales promotion (9)

Answer 1

1) changing economic conditions
2) growing power of retailers
3) declining brand loyalty
4) increased promotional sensitivity
5) brand proliferation
6) fragmentation of consumer markets
7) short term focus of marketers
8) increased accountability
9) need to penetrate the clutter

Question 2

Objectives of consumer orientated sales promotion (5)

Answer 2

1) obtain trial and repurchase
2) to increase consumption of an already established brand
3) to define and maintain current market
4) to target a specific target market
5) to enhance IMC efforts and build brand equity

Question 3

Consumer orientated sales promotional vehicles (8)

Answer 3

1) samples
2) coupons
3) premiums
4) contests/sweepstakes
5) refunds/rebates
6) bonus parks
7) price off deals
8) loyalty programs

Question 4

Sampling

• definition
• when it works best

Answer 4

1) definition- giving the consumer some quantity of the product at no charge to induce their trailing of the product.

2) works best:
- the products are of relatively low unit value so samples do not cost much
- the products can be broken into smaller sizes that can reflect the products features and benefits.
- the purchase cycle is relatively short so the consumer can purchase in a relatively short period or time.

Question 5

Sampling distribution methods (7)

Answer 5

1) door to door
2) direct mail
3) in store
4) on packaging
5) event
6) inserts
7) Internet

Question 6

Advantages of sampling (4)

Answer 6

1) effective in inducing trial
2) risk free process for prospective trailers
3) consumers experience brand directly
4) provides an opportunity to appreciate brand benefits

Question 7

Limitations of sampling (4)

Answer 7

1) expensive to initiate
2) potential for wastage
3) doesn’t suit all products
4) ROI reliant on sufficient adoption at full price

Question 8

Coupons

• definition
• 2 points

Answer 8

1) printed promotional device that rewards consumers for purchasing the coupon offering brand discounted or free merchandise

• the oldest and a widely used sales promotion
• used by virtually all packaged goods manufacturers

Question 9

Advantages of coupons (4)

Answer 9

1) appeal to prices entice consumers
2) can offer price break without retailers cooperation
3) can be effective way to induce trail of new or existing products
4) can be a way to defend market share and encourage repurchase

Question 10

Disadvantages of coupons (4)

Answer 10

1) difficult to determine how many consumers will use coupons and when
2) coupons are often used by loyal consumers who may purchase anyway
3) declining redemption rates and high costs of couponing
4) mis redemption and fraud

Question 11

Premiums

• definition
• 2 types and definition

Answer 11

1) an offer of an item of merchandise or service either free or at a low cost that is an extra incentive for customers

2) two types
- free premiums: only require purchase of product
- self liquidating premiums: require customer to pay some or all of the cost of the premium

Question 12

Event marketing

Answer 12

Promotion where a company or brand is linked to an event of where a themed activity is developed for the purpose of creating experiences for consumers and promoting a product or service

Question 13

Event sponsorship definition

Answer 13

A type of promotion whereby a company develops sponsorship relations with a particular events such as a concert, sporting competition or other activity .

Question 14

Contests/sweepstakes

- definition of each

Answer 14

1) contests - 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
2) sweepstakes - a promotion where winners are determined purely by chance and cannot require a proof of purchase as condition of entry. Winners are chosen by random selection from a pool of entries of generation of a number to match those held by game entrants.

Question 15

Benefits (4) and trends (2) of contests and sweepstakes

Answer 15

1) benefits
- get consumers involved with the brand
- generate interest and excitement
- help build brand equity/target groups
- encourage additional/repeat purchase

2) trends
- involvement of specialist firms
- online and SMS entry

Question 16

Problems with contests and sweepstakes

Answer 16

1) do not always contribute to brand building
2) focus not on brand
3) effectiveness
4) legal considerations
5) May generate negative publicity
6) use by professionals or hobbyists

Question 17

Strategies for improved return on contests/sweepstakes (5)

Answer 17

1) offer a popular grand prize
2) give more than one prize
3) make it easy to participate
4) make it easy to understand
5) ensure there is good perceived chance of winning

Question 18

Bonus packs

• definition
• advantages (4)
• disadvantages (2)

Answer 18

1) definition - special packaging that provides consumers with extra quantities of merchandise at extra cost e.g. Loreal 20% extra at no extra cost

2) advantages
- provides extra value without having to get involved with complicated coupons or refunds
- generally obvious to the consumer
- may result in large purchase orders and favourable display space

3) disadvantages
- usually require additional shelf space without providing any extra profit margins for the retailer
- may appeal primarily to current users who would probably have purchased the brand anyway or to promotion sensitive consumers who may not become loyal to the brand.

Question 19

Loyalty programs

• definition (1)
• advantages (3)
• disadvantages (1)

Answer 19

1) definition - a type of promotional programs that rewards consumers for the same brand of a product or service over time.

2) advantages
- marketers view them as a way of encouraging consumers to use their products or services in a continual basis
- consumer retention and building relationships
- continually develop data bases

3) disadvantages
- been argued that many of the loyalty programs developed by marketers are really short term promotions that over reward popular users and do little to develop long term loyalty.

Question 20

Refunds and rebates

1) definition
2) advantages (2)
3) disadvantages (2)

Answer 20

1) definition - an offer by a manufacturer to return a portion of a products purchase price, usually after the consumer supplies a proof of purchase

2) advantages
- can encourage repeat purchase behaviour
- temporary price reduction

3) disadvantages
- some users not motivated by a refund because of the delay and effort required to obtain the savings
- can’t be bothered due to keeping receipts, filling in forms or mailing the offer.

Question 21

Trade orientated sales promotions definition

Answer 21

A sales promotion designed to motivate distributors and retailers to carry a product and make an extra effort to promote or push it to their customers

Question 22

Trade orientated sales promotions objectives (4)

Answer 22

1) obtain distribution of new products
2) maintain trade support for existing products
3) build retail inventories
4) encourage retailers to display existing brands.

Question 23

Types of trade orientated promotions (6)

Answer 23

1) contests and incentives
2) trade allowances
3) point of purchase displays
4) sales training programs
5) trade shows
6) cooperative advertising

Question 24

Contents and incentives (2)

Answer 24

• can be directed towards managers who work for a wholesaler or distributor as well as towards store or department managers at the retail level.
• often targeted at the sales personnel of the wholesalers, distributors/dealers or retailers.

Question 25

Trade allowances (2)

Answer 25

• a discount or deal offered to retailers or wholesalers to encourage them to stock, promote, or display a manufacturers product.
• types of allowances offered to retailers include buying allowances, promotion or display allowances, and slotting allowances.

Question 26

Point of purchase displays (3)

Answer 26

• important promotional tool because they can help a manufacturer obtain more effective in store merchandising of products including end of aisle displays, banners and posters.
• very important for marketers to get the attention of consumers, as well as to communicate a castles or promotional message, through PoP displays.
• PoP displays are very effective at reaching consumers, difficulties in getting in retail stores to comply with displays often makes it difficult for marketers to use them.

Question 27

Sales training program (2)

Answer 27

• many products sold at the retail level requires knowledgeable salespeople who can provide consumers with information about the features, benefits and advantages of various brands and models.
• manufacturers provide sales training assistance to retail salespeople in a number of ways:
  1) conduct classes or training sessions to increase staff knowledge about products or product lines.
  2) provide training assistance through their own sales force.
  3) supply reseller with detailed sales manuals.

Question 28

Trade shows (4)

Answer 28

• a type of exhibition or forum where manufacturers can display their products to current as well as prospective buyers.
• major opportunity to display product lines and interact with customers.
• valuable for introducing new products, as resellers are often looking for new merchandise to stock.
• many companies use them to entertain key customers and to develop and maintain relationships with the trade.

Question 29

3 types of cooperative advertising

Answer 29

1) horizontal - retailers
2) ingredient sponsored - manufacturer to manufacturer
3) vertical - trade orientated manufacturer and retailer

Question 30

Sales promotion abuse (3)

Answer 30

1) brands that are constantly promoted may lose perceived value
2) more likely to lower a brands evaluation when the brand has not been promoted previous, compared to when it has been frequently promoted.
3) more likely to result in negative evaluations when they are uncommon in the industry

Question 31

Sales promotion trap (2)

Answer 31

• a spiral that results when a number of competitors extensively use promotions.
• if a company has a successful promotion and creates a competitive advantage, competitors may follow quickly. If all competitors use this sales promotion, it lowers profits margins for each company and makes it difficult for a company to stop using the promotion.

Question 32

Definition of sales promotion

Sales promotion targets (2)

Answer 32

1) a direct inducement that offers extra value or incentive for the product, to the the sales force, distributors, or the ultimate consumer with the primary objective of creating an immediate sale.

2) targets
retailers - push > trade orientated sales promotion
Consumers - pull > consumer orientated sales promotion