Week 9 Flashcards
What is Sales Promotion?
Sales promotion refers to a set of incentive tools and techniques used by businesses to stimulate and encourage the purchase of a particular brand or product by consumers, retailers, or the trade.
What is the difference between Push and Pull strategy?
Push Strategy:
The emphasis is on pushing the product through the distribution channel from the manufacturer to the end consumer. The manufacturer “pushes” the product to wholesalers, retailers, and ultimately to consumers.
*Focuses on building relationships with intermediaries (wholesalers, retailers).
*Trade Shows: Manufacturers participate in trade shows to showcase products to retailers.
*Salesforce Promotion: Manufacturers use their salesforce to actively promote products to retailers.
Pull Strategy:
The focus is on creating demand among consumers. The manufacturer uses marketing and promotional activities to create consumer awareness and interest, leading consumers to actively seek out the product from retailers.
*Focuses on creating consumer demand to drive sales through the distribution channel.
*Advertising Campaigns: TV, radio, online, or print advertisements targeting consumers.
*Consumer Promotions: Offering discounts, coupons, or other promotions directly to consumers.
What are some objectives of consumer-oriented sales promotions?
- Trial (Increase Users):
Encourage consumers to try a product or service for the first time. - Repurchase (Increase Frequency of Usage):
Encourage existing customers to make repeat purchases and increase the frequency of product usage. - Increase Consumption Per Usage:
Persuade consumers to consume more or purchase larger quantities during each transaction. - Defending Turf (Pre-empting Competition):
Secure and maintain a competitive advantage by preemptively responding to or countering competitor promotions. - Building Excitement:
Generate excitement and buzz around a product or brand.
What are some consumer-oriented sales techniques?
- Sampling:
Providing consumers with free samples of a product to allow them to experience it firsthand. - Door to Door:
Sales representatives visit consumers’ homes to present products, provide information, and make direct sales. - Through Mail:
Sending promotional materials, samples, or product information directly to consumers via mail. - In-Store:
Conducting promotional activities within retail stores to engage with shoppers directly. - On-Pack:
Offering promotions, discounts, or freebies directly on the product packaging. - Event:
Hosting events or promotional activities to directly engage with consumers in a specific location.
Useful for low cost trials, superior product benefits.
What are some types of couponing methods?
- Cents-off Coupons:
Coupons that provide a specific amount of discount in cents when the consumer redeems them.
E.g., $1 off on any shampoo purchase. - FSI (Free-Standing Inserts):
Coupons distributed as inserts in newspapers or magazines, often as a separate flyer or booklet.
E.g., Coupons found in the Sunday newspaper offering discounts on various products. - Direct Mail Coupons:
Coupons sent directly to consumers through postal mail.
E.g., A retailer sending a coupon booklet to customers’ homes. - Inside or On-Pack Coupons:
Coupons attached to or inside the product packaging.
E.g., A cereal box containing a coupon for a discount on the next purchase. - Cross-Ruff Coupons:
Coupons distributed for one product that can be used for a discount on another related product.
E.g., A coupon for a discount on hot dog buns when purchasing a package of hot dogs. - Instant Coupons:
Coupons that are immediately available and applied at the point of purchase.
E.g., A digital coupon on a mobile app that is scanned at the checkout for instant savings. - In-Store Coupons:
Coupons distributed within the store premises.
E.g., Coupons available near the entrance or on store shelves for customers to use during their shopping trip.
Key Considerations:
a) Ability to Offer Low Price to Price-Sensitive Consumers:
Coupons allow businesses to provide discounts, attracting price-sensitive consumers and encouraging them to make a purchase.
b) Low Redemption Rates, High Costs:
While coupons can be effective, they may have low redemption rates, and the cost of designing, printing, and distributing coupons can be relatively high.
c) Expiration Date:
Coupons typically have an expiration date, encouraging consumers to use them within a specified time frame. This creates a sense of urgency.
What are Refunds/Rebates and Bonus Packs?
- Refunds and Rebates: involve returning a portion of the purchase price to the consumer after they provide proof of purchase.
- Encourages Brand Switching:
- Effective for high-cost items where the effort and time involved in obtaining the refund are justified by the savings.
- Bonus Packs: involve offering consumers extra quantities of a product at the same price as the regular-sized product.
*The additional quantity in bonus packs results in a lower price per unit, providing perceived value to consumers.
* Effective in retaining and rewarding current users of a product, encouraging them to continue purchasing.
* Used strategically to pre-empt competition by offering a more attractive deal to consumers.
* Retailers need to allocate more shelf space for bonus packs, and this may be a consideration in terms of logistics.
What are some other consumer-oriented sales techniques?
- Price-offs: On-pack deals
Providing a discounted price or special offer directly on the packaging of a product. Consumers can take advantage of the reduced price without the need for additional steps like collecting coupons.
*Retailers may not always favor on-pack deals because they can create pricing and stocking challenges. The discounted pricing may affect profit margins, and managing inventory for products with on-pack deals can be more complex.
- Event marketing: Sponsor an event – art, sports, social etc.
- Loyalty program: Builds loyalty, builds data bank and helps make specific offers.
Factors that contribute to the growth of trade promotion
- Growing Power of Retailers:
As retailers gain more influence and power in the marketplace, manufacturers often find it necessary to engage in trade promotions to secure shelf space, improve product visibility, and maintain strong relationships with key retail partners. Retailers may request or negotiate for various promotional support, discounts, or cooperative advertising to feature products prominently in-store. - Brand Proliferation and Product Line Extensions:
The proliferation of brands and the introduction of numerous product variations or line extensions in the market intensify competition. In this competitive environment, manufacturers may use trade promotions to differentiate their products, secure premium shelf space, and gain an edge in the retail environment. Promotional activities become a tool to stand out among a crowded array of products. - Emergence of Private Labels:
The rise of private labels or store brands, owned and marketed by retailers themselves, has prompted manufacturers to invest in trade promotions to ensure their branded products remain competitive. Private labels often compete directly with national brands, and trade promotions help manufacturers maintain a strong presence on retail shelves and in consumer choices.
What are some trade-oriented sales promotions?
*Designed to incentivize and support retailers, distributors, and their sales teams.
- Contests and incentives: Designed to get greater selling effort and support from retailer’s sales force
- Trade allowances: Discount offered to retailers to stock, promote and display product
- Buying, merchandising, slotting allowances
- Most allowances never get passed to customers. P&G adopted EDLP to counter this. - Point of purchase displays: End of aisle displays, shelf cards, stand-up racks etc
- Sales training: Often for high ticket items. Selling aids given
- Co-operative advertising: Cost is shared
Types:
Horizontal Cooperation: Several manufacturers sharing advertising costs for a common promotional theme.
Vertical Cooperation: Collaboration between a manufacturer and a retailer to jointly fund advertising for specific products.
Integrated Marketing Communication
Unified, coordinated effort to promote a brand
through the use of multiple communication tools that “speak with a single voice” as a way to provide clarity, consistency, and maximum communications impact.
★ The brand is the integrating factor around which all marketing and marketing communication should be built.
Marketing communications include: direct marketing, website, packaging and brand name, sales promotion, public relations, advertising.
Expand on Direct Marketing
Examples of Direct Marketing:
Direct mail
Catalogues
Telephone Marketing
Internet Marketing
Commercial email
DR: Newspaper, TV, Magazine, Radio
Key Strategies:
- Focused selection of target segments involves identifying and prioritizing specific groups of customers or prospects who are most likely to be interested in a product or service.
- Stimulating repeat purchase is a strategy aimed at encouraging customers to make additional purchases after their initial transaction.
- Cross-selling involves offering customers complementary or additional products or services to what they initially purchased.
Key Characteristics:
a) Reaching out to customers or potential customers directly through various communication channels.
b) Relies heavily on databases containing information about customers, their preferences, purchase history, and other relevant data.
c) Recency, Frequency, Monetary (RFM): method used in direct marketing to analyze and segment customers based on their past behaviour:
Recency: How recently a customer has made a purchase or engaged with the brand.
Frequency: How often a customer makes purchases or interacts with the brand.
Monetary: The amount of money a customer spends on purchases.
Expand on Public Relations
- Relationship Building: With an organization’s different publics (audiences)
- Focus on creating and maintaining ‘goodwill’
- Not openly paid for by the organization
- Two broad areas: Managing negative information, ‘hyping’ positive information
Role of PR in communications:
1. Building marketplace excitement and anticipation (new launches)
2. Recharging old and fatigued brand message
3. Correcting ‘incorrect’ perceptions
4. Evaluating public attitudes, and identifying and developing programs and policies to influence public attitudes, and generate greater public acceptance.
