sales promotion week 9 Flashcards
sales promotion
All
promotional activities
(excluding advertising,
public relations, personal selling, direct
marketing, and online
marketing/social
media) that stimulate
short-term behavioral
responses from
(1) consumers, (2) the
trade (e.g., distributors,
wholesalers, or retailers), and/or (3) the
company’s sales force.
sales promotion techniques
consumer; samples, coupons, price-offs, in/on pack premiums, self-liquidating premiums, bonus packs,
trade; buying allowances, push money, merchandise allowances, advertising allowances, display allowances, specialty advertising, trade shows
AIMED AT RETAILERS OR WHOLESALERS TO MOTIVATE THEM TO PROMOTE A PRODUCT
sales force ; sales contests, bonuses, meetings, sales aides, training materials, pop displays
FOCUS ON THE COMPANY’S OWN SALES TEAM
brand-level promotions
ENCOURAGE : sales force
PUSH : retailers
PULL : consumers
developments underlying the growth in promotions
- shift in balance of power from manufacturers to retailers
- increased brand parity and price sensitivity
- reduced brand loyalty
- splintered mass market and reduced media effectiveness
- emphasis on short-term results in corporate reward structures
- responsive consumers
sales promotion can
- stimulate sales force enthusiasm for a new, improved, or mature product
- invigorate sales of a mature brand
- facilitate the introduction of new products to the trade
- increase on-and off-shelf merchandising space
- neutralize competitive advertising and sales promotion
- obtain trial purchases
- hold current users by encouraging repeat purchases
- increase product usage by loading consumers
- pre empt competition by loading consumers
- pre empt competition by loading consumers
- reinforce advertising
sales promotion cannot
- compensate for a poorly trained sales force or a lack of advertising ( if the brand has no awareness, sales promotion doesn’t work)
- give long-term reason to continue purchasing a brand
- permanently stop an established brand’s declining sales trend or change the basic nonacceptance of an undesired product
problems with an excessive emphasis on sales promotion
- damage image of product
- diminish brand loyalty
- reduce consumption
ingredients for a successful trade promotion program
- financial incentive
- correct timing
- minimize retailer’s effort/cost
- quick results
- improve retailer performance
trade promotion types
- trade allowances
- off-invoice : free goods/ price reductions for purchases of specific quantity of goods (ex. 5% off if purchase 50 cases), retailers do not necessarily pass along the discounts to consumers
- bill-back : retailers receive allowances for featuring the manufacturer’s brand in advertisements or for providing special displays
- slotting allowances and exit fees
2. cooperative advertising and vendor support programs
3. trade contests and trade incentives
4. POP materials
5. training programs
6. specialty advertising
7. trade shows
forward buying
buying larger quantities than needed due to deals
problems :
- deal savings not passed on to consumers
- retailer and distributor costs increase
- manufacturers have higher production costs from storing excess inventories
- diverting : products are bought in one region at a discounts and sell this in another region for profits
diverting problems
- undermines regional marketing efforts
- products intended for foreign markets are diverted back into domestic markets
- product quality can suffer due to delays
- product tampering become difficult to trace
trade allowances
- slotting allowances : manufacturers pay retailers for access to a slot, or location in retailer’s warehouse
exit fees
charged when a product does not meet a required average weekly sales volume to stay in the retailers distribution centre
efforts to try to rectify trade allowance problems
- category management : each product category within a company is managed by a category manager who has direct profit responsibility (also at retail level)
why the shift from brand management to category mgmt?
- different consumer preferences
- scanner data
- shift of power from manufacturers to retailers
- need for a longer-term focus
- everyday low pricing
- pay-for-performance programs
- account-specific marketing/ co-marketing : manufacturer customizes to specific retail accounts
5 stages of category management
- reviewing the product category
- targeting consumers
- planning merchandising
- implementing strategy
- evaluating results
