PART FIVE: INTEGRATION AND EVALUATION Chapter 16 Wells, Moriarty, Burnett & Lwin ADVERTISING Principles and Effective IMC Practice Koekemoer L. (2004)., Marketing Communications, Juta and Company Ltd. Revised by Chutinun K, 2014. SALES PROMOTION, EVENTS, AND SPONSORSHIPS
Key Points Explain the principles that drive the use of sales promotion List and explain the use of various consumer promotions Summarize the types and purposes of trade promotions Describe the use of other types of promotions Explain the strategic use of promotions in marketing
Growth of Sales promotion? Company Side Need for short-term profit Easy to evaluate the impact (from sales volume) High cost of Media Market share: battle for market share instead of product growth Consumer Side Consumer behavior: less loyal to brand names Added value: reduce the risk of purchase, get more for less Pricing: expect the short term price reduction Parity products: increasing sales when products are largely undifferentiating Power of the retailer: dominant retailers demand incentives to offer shelf space
Sales Promotion A marketing discipline that utilizes a variety of incentive techniques to structure sales-related programs that generate a specific, measurable action or response cost less, produce immediate results (short-term sales) Consumers risk value added (more for less)
Types of Sales promotion 1. Consumer Sales Promotion is a promotion aim at ultimate consumers of products 2. Trade Sales Promotion is a value added program directed at trade members (resellers)
Push, Pull, and Combination Strategies
1. Consumer Sales Promotion 1. Price Deals 2. Coupons 3. Refunds and Rebates 4. Sampling 5. Contests and Sweepstakes 6. Premiums 7. Specialties items
1. Consumer Sales Promotion Price Deals Cents-off deals: Reduce prices e.g. 20% discount, 50 % discount Price pack deals (value pack): They can take any of the two forms; Bonus pack: offer additional amount of the product being purchased but contain in the packaging Ex: 25%more in this bottle of ketchup Banded pack: more units of a product sold at a lower price than if they were bought a the regular singular unit price Ex: buy two get one free
1. Consumer Sales Promotion Coupon Coupon: are small written contracts that grant holders a price reduction or other benefits within time frame Retailer-sponsored coupons: redeemable only at the specified outlet Manufacturer-sponsored coupons: redeemable at any outlet (distributor)
1. Consumer Sales Promotion Refund and Rebate Refund and rebate: Offer to return the certain amount of money to the consumer or sometimes it may be a coupon or other benefits to encourage repeat use. Sampling Sampling: Allow the consumer to try the sample of the product
1. Consumer Sales Promotion Contest Contest: Engage consumers who compete for prizes based on some sort of skill or ability. Sweepstakes Sweepstakes: Award prizes to consumers. Based on luck or chance of selection Specialties items Specialties items: Give- away items as a reminder for the brand
1. Consumer Sales Promotion Premium Premium: an extra product or tangible reward for consumer s particular behaviors, usually purchasing Direct premium award given at the time of purchase Store premiums: given to customers at the retail site In-pack premiums are inserted in the package at the factory On-pack premiums are placed outside the package Container premiums in which the package is the premium Free-in-the-mail premium A free-in-the-mail premiums is usually an item (not available in shops) that is sent to selected consumers who provide proof of purchase. Self-liquidating premium Consumers are expected to provide a specified number of proofs of purchase and to pay a 'nominal' sum for the premium, plus mailing and handling costs, in essence, consumers pay the actual cost of the premium.
2. Trade Sales Promotion 1. Point-of-purchase (POP) display 2. Retailer (dealer) kits 3. Trade shows and exhibition 4. Contest 5. Trade incentive and deals I. Bonuses (push money, spiff) II. Dealer loaders III. Buying Allowances IV. Advertising Allowance V. Cooperative ads VI. Display Allowances Trade Support Excitement
Goal o Designed by manufacturer to get cooperation of people in distribution channel (trade member) o Encourage the promotion of product to the consumer o Gauged from sales volume Target: Resellers (wholesaler, retailer) 2 Roles: 1) Trade support: to stimulate in-store merchandising, superior store location, shelf space 2) Excitement: to create the high level of attention from resellers about the product sales
2. Trade Sales Promotion Point-of-purchase (POP) display: Manufacturer-designed display distributed to retailers to get attention from the customers o Special rack, display carton, banner, sticker, signs, price card, etc. Retailer (dealer) kits: Materials and information to help retailer sell ability such as price information, product specification, product display instruction, etc. Trade shows and exhibition: provide opportunities to exchange information, demonstrate and sample products and sell merchandise (usu. same industry)
Contest and sweepstakes: can motivate resellers (increase relationship) Trade incentive and deals: Reward for purchasing at the certain amount of product. I. Bonuses (push money, spiff): monetary bonus paid to store s salesperson based on the units that salesperson sells II. over a period of time Dealer loaders are premiums (=consumer premium) a manufacturer gives to a retailer for buying a certain amount of product e.g. free trip III. Buying Allowances: is a price reducing and reward program for trade to purchase in a certain amount of product (discount) IV. Display Allowances: direct payment of cash or goods is given to the resellers if the resellers agree to set up the point-of-purchase (POP) V. Advertising Allowance: the manufacturer pays the resellers a certain amount of money to advertise the manufacturer s product (flat amount or percentage according to the gross purchase) VI. Cooperative ads.: contractual arrangement between manufacturer and resellers, the manufacturer agrees to pay a part or all ad expenses incurred by the resellers.
Promotions that across the lines Event Marketing Sponsorship Interactive and Internet Promotions Loyalty Programs Partnership Promotions
Sponsorship: Company supports an event either financially or by donating supplies and services Event marketing: Building product marketing s program around a sponsored event. Practice of linking a brand to an event that usually matches the brand to the target market s lifestyle e.g. Greenwave + Fat Festival Interactive and Internet Promotion: There are a number of ways that advertisers can use the internet for sales promotion program. Ex: sampling, sweepstakes, contests, coupons, etc. Loyalty Program (loyalty program or continuity program): is a promotion to increase customer retention in order to keep and reward the continued patronage e.g. member card, airline frequent flier program Higher purchase, Greater Benefit
Partnership programs o Co-marketing: Two separate brands develop a marketing communication program together e.g. P&G with Tesco Lotus o Co-Branding: Two companies come together to offer a product o Tie-ins: associate complementary brands linking two complementary products in a promotion and also in an advertisement. 2 products joined bigger impact,share the advertising cost o Licensing agreements (rents): A company s legal permission for other manufacturers to use their company s logos, symbols, trade characters, identities for or use on other product. e.g. Waltz Disney products (the comp. gets money + extend the brand)