sales promotion week 9 Flashcards
(23 cards)
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
9 generalizations about promotions
1.temporary retail price reductions substantially increase sales - but only in the short term
2. the greater the frequency of deals, the lower the height of the deal spike
3. the frequency of deals changes the consumers’ reference price
4. retailers pass through less than 100 per cent of trade deals
5. higher market share brands are less deal elastic
6. advertised promotions can result in increased store traffic
7. feature advertising and displays operate synergistically to influence sales of discounted brands
8. promotions in one product category affect sales of brands in complementary and competitive categories
9. the effects of promoting higher-and lower quality brands are asymmetric
brand management objectives
brand management objectives (influencing consumer behavior):
- generate purchase trial and retrial (new customers)
- encourage repeat purchases (current customers)
- reinforce brand images
sampling
sales promotion device for generating trial usage by delivering an actual-or trial-sized product to consumers
sampling distribution method
-direct mail
- newspapers and magazines
- door to door by special distribution crews
- on-or in pack sampling
- high-traffic locations/ unique venues
- in-store sampling
- online sampling
when should sampling be used?
- new or improved brand
- innovative products
- promotional budgets
sampling problems
- expensive
- mishandling in distribution
- distributed to the wrong market
- in-or-on package samples do not capture current non-consumers
- can fail to reach sufficient numbers of consumers to justify its expense
- may be misused by customers
coupon
a promotional device that rewards consumers for purchasing the coupon-offering brand by providing cents-off or dollars-off savings
full coupon cost
- face value
- distribution and postage cost
- handling charge
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