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9

Sales Promotion
(Chapter 16)

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Sales Promotion

A direct inducement that offers an extra value or


incentive to the sales force, distributors, or the ultimate
consumer with the primary objective of creating
immediate sales.

An extra A tool to
incentive to buy speed up sales

Targeted to
different parties

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Sales Promotion Increases

Growing power of retailers

Reasons Declining brand loyalty

Increased promotional sensitivity

Brand proliferation

Fragmentation of consumer markets

Short-term focus of marketers

Increased accountability

Competition

Clutter

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Objectives of Consumer-Oriented Promotions

To increase
consumption of an
established brand

To obtain trial and To defend (maintain)


repurchase Objectives current customers

Enhance IMC efforts


To target a specific
and build brand
segment
equity

4
Sales Promotion Vehicles

Consumer-Oriented Trade-Oriented
Samples Contests, incentives

Coupons Trade allowances

Premiums Point-of-purchase displays

Contests/sweepstakes Training programs

Refunds/rebates Trade shows

Bonus Packs Cooperative advertising

Price-off deals

Frequency programs

Event marketing
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1. Sampling
Consumers are given some quantity of a product for no
charge to induce trial.

Door-to-door
Direct mail
In-store
On package
Event
Newspaper/magazine insert
Internet sites

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2. Couponing
A ticket/document that can be exchanged for a financial discount or
rebate when purchasing a product.

• Media Delivery
– Free Standing Inserts (FSI)
• Direct Mail
• In or on packages
• In stores and at POP

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Electronic Coupons
• Online printable coupons
• Coupon apps
• E-Coupon on shopping
sites
• Coupon code:
– A string of letters/numbers
to enter into a promotional
box on a site's shopping
cart checkout page to
obtain a discount on their
purchase.
3. Premiums

An offer of an item, merchandise, or service,


for free or at a low cost, that is an extra
incentive for customers

Types of Premiums

Self-liquidating Premiums:
Free Premiums:
consumers are required to pay
Only requires purchase of the
some or all of the cost of the
product
premium

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Examples of Premiums
Happy Meal Toys

https://www.youtube.com/watch?v=GM7rjGixctY
4. Contests and Sweepstakes
Contests: Sweepstakes:
Consumers compete for prizes or Winners are purely determined by
money on the basis of skills or ability chance

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• Eristoff Vodka's Belgian Competition Will Reward You If Real
Wolves 'Reply'
http://creativity-online.com/work/eristoff-vodka-howl-with-a-wolf/33125
• Cannon PhotoMarathon 2017 Hong Kong

October 2017, the mission is to take photographs


based on themes announced on the day of the event
while visiting designated checkpoints within a fixed
period of time
5. Refunds and Rebates

Offers to return some portion of the product purchase


price after supplying some sort of proof of purchase

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6. Bonus Packs
Offers the consumer an extra amount of a product at the
regular price by providing larger containers or extra units

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7. Price-off Deals
Provide a reduction in the regular price of the brand

• Initiated by manufactures
• Right on the package
through specifically marked
price packs

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8. Loyalty Programs

Promotional programs that reward customers for continuing to


purchase the same brand of a product or service over time.

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9. Event Marketing

A form of promotion where a company or brand is linked to


a specific event or a themed activity is developed for the
purpose of creating experiences for consumers and
promoting a product or service.

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There are more…
Summary of Consumer-Oriented Promotions

Induce Trial:
Samples
• Samples
• Coupons
Coupons • Rebates
• Free premiums
Premiums
Customer Retention/ Loading:
Contests/sweepstakes • Price-off deals
• Bonus packs
Refunds/rebates • Free premiums
• Loyalty programs
Bonus Packs • Rebates
Support IMC program/build
Price-off deals
brand equity:
• Events
Loyalty programs
• Premiums
• Contests/sweepstakes
Event marketing • Loyalty programs

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Trade Oriented Promotions

Types of Trade-Oriented Promotions


Objectives
Contests, incentives
Obtain distribution for new
products Trade allowances

Maintain support for established Point-of-purchase displays


brands
Training programs
Encourage display of products
Trade shows
Build retail inventories
Cooperative advertising

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Types of Trade Oriented Promotions

Contests and incentives

Trade allowances

Buying

Promotional

Slotting

Training programs

Trade shows
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Displays and POP Materials

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Cooperative Advertising
Cooperative advertising is the sharing of costs for locally placed advertising
between a retailer or wholesaler and a manufacturer.
Problems With Sales Promotion
• A brand that is over-promoted may lose perceived value.
• Consumers who consistently purchase a brand because of a
coupon or price-off deal may attribute their behavior to
promotional incentives, rather than to a favorable attitude toward
a brand.
• Sales promotion trap is inevitable.
• Marketers must be careful not to damage the brand franchise with
sales promotions, or get the firm in a promotional war that erodes
profit margins and threatens the company’s long-term existence.

Shiv, Baba, Ziv Carmon, and Dan Ariely (2005),


“Placebo Effects of Marketing Actions:
Consumers May Get What They Pay For,”
Journal of Marketing Research, 42 (4), 383-93.
Coordinating Sales Promotion and Other IMC Tools

Budget allocation
Proper coordination of sales
promotion with other IMC tools
is essential if the firm is to take
advantage of the opportunities
offered by each, and get the
most out of its promotional
budget.
Coordination of
themes
Media support and
timing
Final Project
• Due Date: Nov 27th (session A) or Nov 28th (session B)
– All the hardcopies and softcopies will be collected at the beginning of the
class. No late project will be accepted.
– Submit the hardcopy of your final project
– Submit the hardcopy of Veriguide confirmation page with all of your
team members’ signatures on it (completed before class starts)!
– Submit the softcopy of your final project (in PDF format), presentation
slides, and supplementary materials in a burned disk.

• The final write-up should be neatly and correctly typed, single-


spaced in 12-point font, and on A4 papers. The length should be
10-15 pages excluding appendix and references.
Final Presentation
• Presentation:
– November 27th (Session A) and 28th (Session B) in class
– Dress code: business casual
– Maximum 20 minutes (including a Q&A session)
– Every member should participate in creating the presentation; however,
you can select team representative(s) to present the project

• Evaluation Criteria:
– Persuasiveness: Are you convinced by the campaign? Is it feasible and
effective?
– Originality: How creative are the proposed programs?
– Content Clarity: Is the presentation is clearly structured? Does it contain
necessary details?
– Presentation Skills: Presentation manner, dress code, time control, and
handling of Q&As.
Final Exam
• Date: Dec 1st (Saturday)
• Time: 10:00 - 11:30am
• Venue: YIA_LT6
• Format: Multiple choices; short questions
(total 70 points; 35%)
• Scope:
– Lecture notes (excluding examples)
– Book chapters (go to the last page of syllabus for page numbers)
• Full-page mini cases/examples will not be tested
• The “IMC Perspective,” “Ethical Perspective,” “Digital and Social Media
Perspective,” and “Global Perspective” pages in the textbook will not
be tested
– Supplementary reading materials will not be tested.
– Focus on comprehension and application