CHAPTER OBJECTIVES

After reading this chapter. ),oj should be able to answer the following questions:

0 What types of trade promotions can help push products onto retailers' shelves and eventually to end use 0 What concerns exist for manufacturers considering trade promotions programs? 0 What issues complicate international sales promotions programs?

at one of your favorite words is your own name," he said with a smile. Miller continued, "When you come to our ballpark, we are going to know your name." In truth, Jay Miller is talking about two ballparks, one in Corpus Christi, Texas, and the other in Round Rock, Te game over 72 home dates each summer. This ranks among the top franchises at the Double-A level of professional base-

fans, and the entire organization. In a city with a large Hispanic community, the term la familia clearly applies. The Hooks are a family that hosts a large number of guests at

thrives on consumer promotions. For fans, numerous discounts and giveaways are part of the scene. In 2010, the Hooks staged over 30 promotional nights. The free gifts included bobbleheads, baseball card sets, duffle

ce of "awesome customer servi ce." At a Hooks game, everyone from park?ing attendants to the ticket takers to the ushers and concessions peibumiel focuses on friendly, first-name care. Miller and Ryan routinely circu?late through the stands to ming

e allowed on the field prior to the game. Many times disadvantaged children, Littie Leaguers, and others are paired with a player to go on the field as the game is about to begin to stand during the national anthem. Other attendees participate in the "Dizzy Bat R Reid Ryan n Sanders Baseball, results from promoting a summer-long experi?ence rather than a single event. Instead of focusing on wins and losses or even on players, the enjoyment of attending a series of games in a low-cost, f amily friendly environment

n summer evening with family and (,lends creates a iong?lasting impression. The Hooks' advertising tagline, "Catch a Memory-Hooks g ase -all," expresses this feeling.

profes?sional baseball for over 24 years. He has been named "Executive of the Year" on more than one occasion. He proudly reports that sales of memo?rabilia for the Hooks are higher than the majority of minor league teams, an indication of the strong loya

sponsors place adver?tising on the scoreboard, field. walls, and other places. Special corporate box seats are available for entertaining clients and reward?ing employees. Various business organizations are featured on the vi deo bo ar d a nd o n it e

329

importance of brand and image building. In a marketplace where a w;de variety of summertime activi?ties are possible, they emphasize the goal of being top-of-mind, or the family's first choice. A stadium full of happy customers for every home game provides all the evidence they need that their approach is working." E
E

E
E

E Coupons 330 E Premiums E Contests and sweepstakes E Refunds and rebates E

E Price-offs '41FIGURE 12.1 Types of Consumer Promotions E

PART 4 IMC Promotional Tools

CHAPTER 12 Sales Promotions 331

Sampling
Bonus packs

Jay Miller

are the differences between consumer nromotions and trade promotions?

ial, was about S5 million. In exchange, Denny's earned somethinu monev alone cannot buy; a powerful positive public relations blitz. The promotion garnered as much as $50 million in free, positive media news cover?age. The company

key activities. This chapter describes sales promotions pro g rams. Sales promotions consist of all of the incentives offered to customers and channel members to encourage product purchases. Consumer promotions are aimed at those who actually use the prod?uct, or end users. They may be individuals or households. Another end user may be a business that consumes the product, and the item is not resold to another bu 1.6 billion were redeemed- The eventual resale. Trade promotions provided to other firnis help billion in savings for consumers, or ng channel to purchase goods for0.85 percent redemption rate represents approximately $2-25 push products through to retailers. about $ 1.41 per coupon _4 Nearly 80 percent of all U.S. households use coupons, and almost two ncouraged customers, businesses, and the distribution channel to forns on price. Recently, however, that view has changed. Many company leaders recognize that promo?tions can differentiate a brand from the competition, which cycle, promotions are typically designed to match advertising and other efforts focused on brand awareness, creating opportunities for trial purchases and stimulating additional purchases. Later, the goal often shifts to strengthen eestanding made to sales promotions programs in international markets are also described. djustmentsinserb (FSIs), which are sheets of coupons distributed in newspapers, primari ly on Sunday. FSTs represent almost 90 percent of all coupons distributed. The percentage has been steadily declining as con?sumers switch

Never,
24.6%

AwaM
20.7%

'4 FIGURE 12.2 Percentage of Consumers Who Use Coupons

Rarely, 17.0%

Somellimer, 37.7%
P G T p 1 7 . W 5 AON 20041. PP. 23-29.

Is

- r-

Ho

k'cowm cw - 4 -

ates the interest and excitement that brings the consuer into the store. Marketers then use other tactics. In addition to leading to the final decision to buy an item, consumer promotions programs can be Mghly effective in generatin

JJZ
FIGURE 12.3 Methods of Distributing Coupons

PART 4

IM( Pr

omotional Tools

CHAPTER 12 Sales Promotions 333

full price doe., not make sense. Nlanuracturer,. however, argue that these consumers may be willing to stock up on the item, which means they do not buy from the competition. In essence, manufacturers recognize that these brand-pre

is not redeemed. Third. FSIs encourage consumers to purchase brands on the next trip to the store. Consume; are more likely to purchase a couponed brand and remember

the name when

they redeem a coupon, which helps mo

ice

nto mobile devices. or transfer them to a loyalty card. Retail stores, including JCPenne%. Kroger. and Safeway, feature technologies that allow consumers to redeem coupons from cell phones. CVS Pharmacy lets customers scan a
S

BE

<_-)

Fre-*

RM A E

A manufacturer's L;uupon for 50 cents off the new Snax Stix.

roducts. To receive the gift, the customer mails in a proof ofpurchase to the manufacturer, who then mails the gift to the customer. More than one purchase may be required to receive some gifts. A premium offer appears in the e. the consumer activates the card to receive an incentive, which can range from cash back on a purchase to merchandise and frequent-flier miles. E E A cross-cuffing coupon for Tyson and Betty Crocke onsumer must buy the product to see the premium. At other times, the gift is attached to the package, such as a package of blades with the purchase of a razor. i y oduct. Fast-food restaurants offer ch ldren a toy with the purchase of a child's meal. Hyundai recently offered a unique premium. With the purchase of a new H undai Equus, with the suggested retail price of $50,000, customers at the store. This form of only $4.99 is an mium may be offered for distribution plus instant redemption coupon program. The coupons often lead to trial purchases and purchases of additional packages of a product. Many gro?cery stores permit a company to cook a food produ

and switch?ing the next time a consumer makes a purchase. ay be placed on a package of potato chips. Cross-raff coupons should be for products that logically fit together and that arc often purchased and consumed simultaneously. Occasion?ally, a manufacturer uses cross-ruff-mg to encoura

Free4ri-Itie-ma0

- Stwe

or mainufacturer

E E

III- or on- package- Self- fiquidatin

-4 FIGURE 12.4 Types of

Premiums

334

PART 4 IMC Promotional Tools

CHAPTER 12 Sales Promotions

335

premiums cost. The manu?facturer may also receive money for shipping and handling so that consumers are paying most or all of the expense of the item. ity. The winner will be selected from the group that perfomis best or provides the most correct answers. Often, contests require a participant to make a purchase to enter. In some states, however, forcing consumers to make a pu s or win competitions to earn prizes. Although some contests are mostly chance. others require skill. For example. Ryan Leer won a contest held by Quiznos for creating a video clip that featured a take rocket-launcher shooting Qu market consisting of older, high-income individuals can be reached with a premium such as china or fine crystal. If the market is children, a cartoon figure or a character from Disne y or Sesame mee t becomes more attract the firm's image. Premium programs succeed when they tie in with the film's tFroducts to enhance the image of the product and the brand-' ct instead of slashing prices or using coupons. Premiums can serve as a "thank you" to current customers or to attract new customers. Sports Illustrated has a rich history of premium programs, from DVDs to watches to phones, which re or location. Probability dictates the chances of winning a sweepstakes. The odds of winning must clearly be stated on all point-of-purchase (POP) displays and advertising materials. In a sweepstakes, the probability of

C ol l ect p oi n t e pack Boy

10 FREE points inside 2 millionpackages!

WT a
Fast, fun, delicious seafood for the whole farnEy.

Z7

nnr L- - 1

This advertisement for fantasy fishing by Bassmaster is designed to

mail premium by Fisher Boy for "cool" prizes and a coupon for 55 cents off.

actually enhance an image. Picking the right type of premiu miums can be used to boost sales; however, they usually coupon sales. Nevertheless, premiums remain a valuable c premiums add value and enhance the brand, they are not as effective at increas?ing profits. Therefore, a clear relationship between the premivart's intention and IMC goals shoidd be established. Logically, the goal should be m

or challenging. Consumers do not enter every contest or sweepstakes they encounter. Instead, they selec?tively choose. The decision will be based on the perceived value of the contest or sweepstakes prize combined with the extrinsic value and intrinsic games, contests, and sweepstakes the year, attractiveness of the item (a car versus free sandwich). The greater prize list dote-comes the success or the more likely people will become involve mately $1.9 billion on variousvalue. The crtrinsic value representseachactual which appear in bah consumer marketsaand business markets.12 The the perceived and extrinsic values, failure of these appeals. Members of the targe ntest requiring the use of a skill, such as the one with recipes or an essay contest, entices entry by iiKUvidu?als who enjoy demonstrating that skill. Extrinsic rewards become secondary. Instead, participants enjoy amspeting and demon ca" contest that encouraged in&vi&Ws to nominate baseball fields, playgrounds, and odwaxtimu?nity green spaces. The contestants sent photos arm wrote short essays about why the area deserved a wAscover.

target market - Ca at: select the premiums (Mid fads, try for exclusivity) !.*.PiickJipremium that reinforces the 'din's product and image
and POP displays)

boIs (ei0-m ally advertising bk

-

E
Fk* &-fi
g

rt
Prert - k-bm IM
n0.8

WV

tmt

1999). pp. 104-I65-

336

PART 4 IMC Promotional Tools

CHAPTER

12

Sales Promotions

337

4,11
k

uition.14 --yh W-a , ft r,, , - V -ucM wr WON -IX0"W umers wait 2 to 3 months to receive a rebate check. ~ come tosweepstakes by text messaging dealers often findMe" during the concert. At 10:00 P-m., offered. As a result. no new purchase activity is associ ted without"that rebate. but rathergrand prize, a purchase process. Further, increa red the expect them. For example. car the words "Pick that customers %%ait until rebates are one concertgoer, Melissa Hasty, received word via text message the she N c.0 bad the it delays the 5-day, 4-night Caribbean cruise o had won W-2:':t-1,a v '35 new or original. When they become an entrenched pan of doing business. they are expected dis?counts. To be effecti, rcbaic~ and relund, should chance the bu'. bcha ior, either b% Icadmc io a more immediate purchase or b
,
l
0C W

S"eal 1,,, ym . m oftw -ide. Th. nxw m t* w om~ vd. V. rcad M-,d. ,5 iMt,.y Whgt,, W , , ; ,

cOnWW:S d ff

cse MM

n=<4%d

ID o* -16 On-

(A

iness-to-business markets. Sam?ples of products mav he pro ided to potential clients. Sampling also can be featured in the service sector. For example, a tanning salon may offer an initial visit free to encourage new customers to purchased the product durin the same shopping tfip. Fifty-eight percent indicated they tbu the product again. Nearly one-fourth said they bought the product bein sampled instead of BACK! $35 00 CASH the brand they had intended to purch
g y g

Aulhorilc- 7ealer a-: Dm.r

14

FEATURES

unmamvx

The Internet provides a new medium for offering contests

The Internet and Social Media

A This

advertisement for Skyjacker offers a 535.00 rebate on four Skyjack

rize's intrinsic value by creating interactive games to challenge a contestant's ability. The Internet offers promoters data-capturing capabili?ties. Internet contests are less costly to set up and run than other types of promotions. c-fil-A, and McDonald's have created T-~-itter sweepstakes or have used Twitter and social media sites to enlist participants for a contest or sweepstakes. The intention is to use the sweepstakes or contest to ignite a v

s e customer traffic, the question remains as to whether they actuallystore, such as when a food product is cooked and given to customers intrinsicDi-ectsampling to drawitems are mailed or delivered door-to?door to consumers.prosp ommon consumer method, in-store disitibution, delivers the sample in the boost sales. Some do, others do not. Marketers recognize that on site. rewards tend means consumer back. This means online gaines are exciting In th sses responding to a media offer on tele%ision, on the Internet, from a magazine, or by some other source. Cross-niffing sampling plans provide samples of one product on another. A laundry detergent with a free dryer sheet attac utlet. Recently, samples for Dr- Scholl's Her Open Shoes insoles were affixed to heavy-stock paper in magazines such as In Stvie, All You, Shape, and Glamour Women could remove the insole and test it on one foot and compare it to

ice for the product but can mail in some type goods," such as food or clothing. Rebates

REFUNDS AND REBATES

i i
E

or low response rates. Too many steps or long

E Professional sam pling ~ i~ .

Response sampling cross-ru-sawmg EMilitia san0mg

'4 FlIGURE 12.6 Methods of Distiributing Samples

338

PART 4 IMC Promotional Tools

CHAPTER 12 Sales Promotions 339

4 F I G U R E 1 2 . 7 Bonus Pack Objectives

be true for products with more constant consumption rates. If Colgate offers a bonus pack %% ith an additional tube of toothpaste, consumers do not use more of the product. In effect, this delays the next purchase. Manufacturers of

umers are often more receptive when samples are included in the paper."' he consumer has used the brand previously. Facing purchase decisions, consumers may opt for brands that offer more product at the regular price. The packages present an advantage that competitive brands are not offering. hip with a manufacturer that uses a bonus pack to increase brand switching and stockpiling. Retailers gain an advantage because the bonus pack is a "bargain" or "value" offered through the retail outlet. Customers enjoy bonus pac uested one. They had to be willing to provide their names, addresses, and e-mail informa?tion. In addition to the 12-pack sample of Excedrin, consumers received coupons for additional purchases, along with the quarterly Excedr
Videocwfemncing never rooked so good.

A bonus pack offer for two packages of Lean Slices by

# POLYCOK

UkAbout",

ess-to-business Polycom advertisement offers a free 30-day, risk-free trial.

y throwing it away if he is dissatisfied with it. Marketing research indicates that when the bonus is small (20 to 40 percent), consumers often believe the price has not truly changed. Unfortunately, when the bonus is large, such a

fOnly I gram of at per package!'

will be most effec?tive when it introduces a new product or a new version of a product to a market. Samples also help to promote a current product to a new target market or to new prospects. ently, Mars Petcare introduced a line of dog food with a cross-country sampling tour called "Share the love." Cesar Canine Cuisine Bistro brand samples were given to pet owners at 125 dog parks and beaches. Coupons were m

nus pack promotion. Recently, Rayovac attached three free AA batteries in a bonus pack containing nine bat?teries. Typical bonuses range from 20 to 100 percent of the normal number of units in a package. A 30 percent bonus is t ottle of aspirin shows the regular retail price marked out and replaced by a special retail price (e.g., 56.99 marked out and replaced by $5.99). Producing a label with the price reduction premarked forces the retailer to sell the item

tuces the financial risk of making contains eight small

i SAVE L604; Z ..
Pckg.
b y PA

nany2lI

of

C ar l

B ad dig

. -11. - 111-

VIV111VOU11d1 luu1s

C H A P T E R 12

Sales Promotions

341

YOU -

h o v e

t e s s his prudent wfth you, fln-Why let tnesconomy determine your lifestyle?

do have a brand preference. a price-off on a favorite brand encouragc!F, stockpiling of the product and possibly increased consumption of the item.'-' A consumer who purchases additional breakfast bars because of a price-offtends

promotion-prone. brand-loyal, brand-preferred. and price-sensitive. (see Figure 12.9). Thee tend to clip coupons on a regular refunds, contests, sweepstakes, and other promotional incentives. consumersto other have to wail for the reward. rd is immediate. Unlike rebates, basis, enter contests and sweepstakes, pur?chase bonus packs, and respond do not promotional offers. In contrast, for price-sensitive consumers, price remains the primary, if not only. criterion used in m effort is necessary to purchase their chosen brand. %.lore common is brand preference. Brand-preference consumers have a small set of brands for which they have a strong pref?erence. When promotions are offered for one of thei on or brand preferences will change across product and service categories. A beer drinker maybe extremely promotion prone; a wine drinker may ve a negative impact on a com?pany's profit margin. It normally takes at least a 20 to 40 percent increase in sales to offset each 5-percent price reduction. they can either wait for a price-off promotion or choose another brand that happens to be on sale. In addition, when used too often, price-offs can have a negative impact on a brand's image. As always, price-off programs should be in

FREE DEUVERY A N D
C A R R Y O U T

sli,ci,IT L a r g e O n e

L a r g e ings
I-

up

to Five T

rpm

$69-9

$q9q

S1

A price-off and coupon offer for Papa John's pizza.

A A price-off promotion by Platinum Motorcars offering 20 percent off on a 2-day rental if the consumer mentions seeing the

brand and the same wine drinker may be price sensitive when it comes to buying potato chips. -prone consumers purchase the brand that is on-deal. Price-sensitive consumers purchase whichever brand is cheaper, regardless if it is on-deal or off-deal. Therefore, 6xse mo types of consumers are not highly auractive to d. Offering a promotion to this group makes little sense, because they will buy the brand anv-,vav The ideal group to target is the brand-preferred consumer, especially if the promotion features a
E

Brand-preferred consumers

are the ideal group

oupons at a Chinese New Year's celebration in Vancouver. Asians who live in the United States and Canada are notset. This can enhanceof coupons; however, Tropicana Canada's research indicated that the Chinese consider orange brand in their preference typically large users loyalty toward I the brand and prevents them from purchasing a competing her company, which is an intercompany tie-in. Fast-food restaurants often use tie-ins with movies and toys to create attractive children's promotions. Whether a promotion is a stand-alone, overlay, or tie-in program, careful attention

er to brand loyalty. sent in the target audience, as well as opinions regarding the firm's products, especially as they relate to the competition. After gathering this i=nformation, the marketing ler objectives in using promotions, it does little good to create a promotion that will be popular with consumers if retailers are not willing to work with the manufacturer to enhance the pro?motional offer. Retailers prefer promot How do different types of customers respond to consumer promotions?

26

Types of Consumers in Relation to Consumer Promotions E E Promotion-prone Brand-loyal Brand-preferred Price-sensitive E E PART 4 IMC Promotional Tools Off-invoice allowance: A per-case rebatepaid to retailers for an order. E E Slotting fees: Money paid to retailers to st ock a new product. Exit fees: Money paid to retailers to remove an item fi ,m their SKU inventory. "I FIGURE 12.10 Types of Trade Allowances E E

342

CHAPTER 12 Sales Promotions 343

C~ ~t I C, S FtA(2Lke..-.-.
Trade Allowances
f

Trade allowances provide financial incentives to other channel members to motivate them to make purchases- Trade allowances can be packaged into a variety of forms, including the ones described in Figure 12.10. Each makes it possible A

411 fns a" "onct Utwr

cific goals associated with the product, the target market, and the retail outlets are first formulated. Building-brand is more of a long?term goal; generating sales is more short range. Price-based offers normally are designed to attract new customers or to build sa

'*d

d at retailers, distributors, wholesalers, brokers, or agents. A manufacturer can offer trade promotions to convince another member of the trade channel to carry its goods. Wholesalers, distributors, brokers, and agents use trade promo?tions to persuade retailers to

lowances, making them the largest expenditure among trade promotions tools.28 As with refunds, rebates, and price-offs in the consumer sector, many retailers are reluctant to purchase merchandise unless some type of trade allowance is given. In addition, there is treme

products to inventories and to stock merchandise. An unsuccessful product means the retailer's investment in inventory represents a loss, espe?cially when the retailer has stocked the product in a large number of stores. Slotting fees, recover some of the loss. V A new product, such as a new flavor of 0 11's salad dressing, will often be ch ated to them. In both cases, the retailer spends both time and money on creating space for a new product.

ate at least 10,000 to 15,000 new products per year. Most will fail. Consequently, retailers believe charging slotting fees forces man?ufacturers to weed out high-risk product introductions. The average total cost in slotting fees for a nationally introduced

0 percent. Trade promotions are often the second-largest expense for a manufacturer after the cost-of-goods-sold. Trade promotions account for 17.4 percent of gross sales revenues for manufacturers??

not be involved in the IMC planning process. Leaders it, these firms often view trade promotions as being merely a means for getting products onto retail shelves or satisfying a channel member's requesr. As a result, little consideration may be given to matching th haque'sthe nature of the first seeks to understandversus distributor), the type of customer retail store. nclude marketing team business (manufacturer the type of consumers that shop at its to be influenced (e.g., selling to a retailer versus selling to a wholesaler), company preferences, and the objectives of the IMC plan. The primary types of trade promotions are

n help push products onto retailer shelves and eventually on to end users?

oduct failures_ ting fees add to the bottom line. Many products have low margins or markups. Slot-in fees N~7 provide additional monies to support retail operations. It has been estimated that between 14 and 27 percent of trade promotion monies given to afailers go directly to the retaile Trade Contests de of the argument comes.from manufacturers, who claim slotting fees are practi?cally a form of extortion. Many manufacturers believe slotting fees are too costly and are unfair in the fist place. These fees compel manufactur?ers to pay millions of dollars to retailers

CHAPTER

12

Sales

Promotions 345

ca cruise was enrolled in the trade contest. The prizes offered included a free cruise with five veranda staterooms. The Princess Cruise line offered booking agents the chance to win a West Coast sailing cruise with a mini-sui

Trade sae as for trade allowances: to en incentives involve the retailer performing a function in order to receive the funds. The purpose, however, remains thecontests were held among travel agents, to incre cruis

wer risk and is not the same as adding a new product. Rather than charging an up-front fee, such as a slotting allowance, retailers request exit fees ifthe new ver?sion of the product fails or if one of the current versions must be

ount. The two products are rarely promoted on-deal at the same time. By offering only one on-deal at a time, the retailer always has a reduced priced brand for the prirr?sensitive consumer. The retailer also can charge the bran ocation and ships it to another location where it is off-deal. For example, a manufacturer may offer an off-invoice allowance of S5 per case for the product in France. Diversion tactics mean the retailer purchases an excess

1.1 21 . his is exactly what a contest is designed to accomplish, many large retail organizations do not want buyers participating, because these buyers make purchase decisions for as many as 500 to 2,500 stores and participating in a otential travelers. urer to undertake a two-way mar- keting effort. The CMA can be fora wide variety of marketing tasks. A CMA can feature the manufacturer's brd as a price leader in an advertisement. A cooperative agreement can be made to emphasize ns control of the functions performed. Also, if price allowances are made as part of the CMA, the manufacturer knows that the retailer passes a certain percentage or the entire price discount on to the consumer. CMAs allow manufacturers to create annual contracts with retailers.. These longer-term comm le retailer plans for customers through manufacturer irade incentives. Sign- ing an agreement means a retailer can schedule the weeks a particular brand will be on sale and offset the other weeks with other brands. Calendar promotions allow the retailer to always have one brand on sale wh& the others d, wrhile price-sensitive consumers can choose the on-deal brand, and for store retainsretainsa reasonablemaetuli on all beers sold.

Trade In c e n tiv e Cooperative merckingk*

agreement Premium or b o n u s pa
dsco- op ,4 1

advertisingleadvertisingPOFM
1 2 . 1 1

F I G U R E

Types of T r a d e I n c e n t i v e s

346

PART 4

IMC Promotional Tools

CHAPTER 12

Sales Promotions

347

4 FIGURE 12.12 Five Categories of Buyers Attending Trade Shows

r a bonus pack of one carton for each 20 purchased within the next 60 days. The bonus packs are free to the retailer and are awarded either for placing the order by a certain date or for agreeing to a minimum-size order. Ofte

4 The final trade incentive, a cooperative advertising

offers the

orportunity

to discoNer potential customers and sell nc~

product, Also. rela?tionships , o% urrrni cu,tomers can be

strengthened at the sho,.

all

A tride

sho,% ofter.

prmides the

chance I,,

mvestigatc

x%hat the competition is doing. Many

ses. the retailer can negotiate special deals. Trade shows represent an ideal place for buyeis and scllcis tu ineel ill

iiifoinial, low-piebsuce

set(inv to

di~cuss how to work

ceive the reimbursement. the retailer follows spe?cific guidelines concerning the placement of the ad and its content. In almost all cases, no competing products can be advertised. Normally, the manufac_ turer's product must be offers a 4.5 per?cent co-op advertising fund on all purchases made by
V

A trade show provides an excellent opportunity for companies to locate potential c

BOB'S FURNITURE GALLERY!"18

.17141736 MAIN - JOPLIN, MO - 623-1680 - OPEN MON. - SAT. 9 "- 5:30 P.M.

THIS COMPANY PRESIDENT SPENDS MORE TIME

ATTENDING B-TO-B TRADE SHOWS

THAN HE DOES

for Bob's Furniture Gallery featuring b o t h t h e F l a x s t e e l a n d Thomasville brands.

CALLING HIS POOR SICK MOTHER

de shows. Mmy marketers try to weed out the education seekers who are not interested in buy?ing- Manufacturer's agents concentrate efforts on three groups: solution seekers, buying teams, and power buy?ers, Asking the righ omem International attendees tend to be senior exec?utives with the authority to make purchases. They fit into the power-buyer category listed in Figure 12.12. Ameri?can manufacturers know that the international attendee often wish

aper, magazines, televi?sion, and outdoor advertising. on requires preapproval for some of the media buys and advertisements; B.F. Goodrich does not require any preapprovals. Thus, each manufacturer has a upique set of restrictions to be followod by retailers seeking to qualify fo tional brand, which can attract new or additional customers to the store. Wal-Mart recently expanded co-op advertising efforts with major manufacturers, who contributed over $400 million toward Wal-Mart's annual advertising bud he retailer accrues co-op advertising dollars based on a certain percentage of sales. Thus, to get the co-op money, the retailer must not only promote the brand prominently, but must also purchase the product f

_W PART 4 IMC Promotional Tools

CHAPTER 12

Sales Promotions 349

ocused on building- or rebuilding, a brand's image. Also. the marketin team should be certain promotions fit the brands image. "If it doesn't fit:' writes Brian Sullivan in Marketing
g g

News.

"don't use it:` Unfortunately. to spend more oil advertising means cu

y

annin process because such a lar e percentage of the marketing budget is trade pro?motions. Effective IMC programs achieve a balance between all elements of the promotions mix and identif clear goal., and targets for trade promotions programs. Only the y endees during the mid-1900s. The number has dwindled to fewer than 40.000 today. Now manufacturers and retailers attend specialty trade shows that focus on onl one sport or regional shows that focus on one section of the country. Smaller shows are cheaper t

C) What issues complicate international sales promotions prog

for manufacturers considering Made promotions programs? ers a trade deal. Further. brand managers are often evaluated based on the sales growth of a brand. Offering trade deals becomes the easiest way to ensure continu?ing growth. The pattern of using trade deals to reach short-term quotas rather than long-term

enditures a, a major component of the marketing budget for products wch as Pennant's pesticides. g g g ey are offered. There are two complications: legal and cultural. Any coupon. premium, contest, sweepstakes, or price change must fit %% ith local le al re ulations. The marketing team should investigate any poten?tial legal problems before launchin an international consu w of some promotions. For instance. in some cultures those who redeem coupons may be viewed as being of lower socioeconomic status, which max dissuade some from using them. Participation in con?tests or sweepstakes may violate religious norms in other nation y regarding discounts. spill money. slot-tine fees, and exit fees. These issues may also be reflected in cultural values. And, as previously noted, the ways in which managers in companies around the world participate in trade shows varies.
y

different, depending on the company inchedE T H A Tcountry in which that company operates. Both small compa?nies seeking to do business in foreign countries and large international conglomerates will need to adjust to local conditions when emplo ing the N A M and the W E E D

o believes Sony is a strong brand in the stereo marketplace will ask for the brand in an electronics retail store. This makes stocking Sony an advantage, even when limited trade promotions are available. g g stimates suggest that I I cents out of every dollar spear for a consumer product goes directly for the cost of trade promotions. , The goal should he to keep the cost at a rcasonab.,: level. Money should be spent wisely, rather than simply ettin into "bidding
s

jority of all purchases made by retailers are on-deal with some type of trade incentive in place. The constant use of deals has trimmed manufacturer margins on products and created competitive pre sures to conform. If a manufacturer tries to halt or cut back on trade p

hotel, e in verticalswe identified all of the executives that we wereand major hospital wantedwellhave something QSRs had a l ittle feel of what Austin is about, because soine people who attend the trade shows w regional hospitals targeting, and we chains as to hospitality, and that (quick-service restaurantsr port isone that that are health care, such as "There was a tise in withevent. Accord?ing to chip that was shapedtrade show in Austin, Toms. It was for thewith the campaign.They came to Lis withand say the campaign was called Austintatious. Everythingtop executiv Breedlove, card a custom sound like a guitar case and branded hospitality industry. I should back up a chal?Ienge. Like any trade show challenge, they wanted to Wt the is over th
(Continued)
Sig nalgrass is just one of marry weeds that without Pennant0prevents. 6 SO now you can choke out your worst weeds beating up on ornamentals and warm-season tart..
P E

IN IN A IN T
Aka mjd

0 ] 9 9 Z C 6 A 4 Z W C a P

ad torn. bbd

d-6~

350

PART 4 IMC Promotional Tools

CHAPTER 12 Sales Promotions 351

brand-loyal consumers Consumers who purchase only one particular brand and do not Eubs,itute. regardless of
brand-preference consumers Consumers who prefer a small set of brands.

trade allowances Financial incentives to other channel members to motivate them to make purchases. slotting fees A form of trade allowance in which are funds charged by retailers to stock new products. offered to customers and channel members to encourage roduct purchases. consumer promotions Incentives directly offered to a firm's customers or potential customers. exit fees Monies paid to remove an item from a retailer's inventory. entives used by manu?facturers and other members of the marketing channel to purchase goods for eventual sale. spill money I Rewards given as contest prizes to brokers, retail salespeople. stores. wholesalers, and agents. s distributed in newspapers, primarily on Sur.,4ay. E This Austintatious billboard was seen by trade show attendees at the Austin airport. trade incentives Funds given that require the retailer to per?form a function in order to receive the dollars. A umer s Willie Nelson impersonator was one of the entertainers at the Austintatious nightclub takeover event. wh o a r e no t brand loyal and regularly respond to promotions, such as coupons, price-off plans. or premiums. only purchasing items that are on-deal.
p

r whom pncc is the primary, if not only. criterion used in making a purchase decision.

5. .What are the major types of trade allowances? . extravaganza billboard thatwith manufacturers? Which has the who were redemption rate? Which is the most popular was only intended for 200 people highest flying in. We thought Austintatious was a cool, fun word. 17, What is a slotting fee? An exit fee? o programs? onthis bar that we had redeco?rated and had a little shindig, and their salespeople got to mingle, and it was quite successful. They were making appointments right and left with their marketing people and technology folks. So it was fun." And highly successfu 1.39 18. .What is meant by the term on-deal? s of premium programs can companies use? 18. .What complications are associated with trade allowances? How does the spill money relate to trade'contests? What are the main types of trade incentives? Describe a cooperative merchandising agreement. How are premiums or bonus packs used as trade incentives? 18. .How can a cooperative advertising program benefit both a manufacturer and a retailer? Name ways in which trade shows have changed in recent years. Describe how to effectively utilize trade promotions. What problems must be overcome when developing inter?national sales promotions programs?

3. . What is an ova lay? A tie-in? we gutted the entire place. We took everything that they had out of there. We redesigned it in our Austintatious theme, threw a 3-hour party, took it all down, and put it back the way it was, except that they liked some of the things that we had put up, so they kept a few. 4. .What four categories of consumers can be associated with consumer promotions' exit of the airport, and arc the two main categories of sales promotions'

ion about the ads, visuals, and displays used in this campaign.

programs? and a sweepstakes? izes rendered in contests and sweepstakes?

media play in offer?ing contests and sweepstakes?

U MR M AY

ed with sampling? acks? iated with price-off tactics?

t take sales away from competitors. the sales pro?mo t i o n helps f t h e mi x, i nc l u or g t r a d e a the marketing promotions, plays a crucial role in other organizations and moves products toward the retailer. Trade promotions work best when they are integrated into other IMC efforts rather than cipation in trade showspa r t o the manufacturer di nmember ofnd co n su mer channel maintain positive contact withthe success or failure of the overall marketing program. motion manager for Eckerd Drug. "The teen and preteen segments are impor?tant because they (teens) are developing buying habits and loyalties during these ages and are our future loyal con?sumers-" In addition to established brands such as Cover stakes, refunds, rebates, samples, bonus packs, and price-off deals. These items should be combined with specific promotional goals to have the right impact on customers. u?lations, and cultural nuances of a given geographic region. The primary objective of any promotions program must always be to enhance thewould be the best to in other aspectspreteens to the cosmetics manner that helps thDrug? What promotions message sent forth attract teens and of the IMC program ire department of Eckerd e company eans of introduc?ing new products. Often, a consumer promotion prompts consumers to at least try the product, where selling it at the reg?ular price will list of consumer promotions in Figure successful tactics for attracting new customers. Consum 2. .Refer to the not Coupons and contests have been 12.1. Discuss each one in terms of your personal ima Design a magazine advertisement with a detachable coupon or premium for one of the following products.

and positive fashion.

C.

Quaker Oats (www.quakeroats.com)

CHAPTER 12

d. Papa John's (tiiNxi.papajohns.com/inde.%.shim) 1,

Examine the table of contents and access the various areas. After exploring the site. xmte a short
a%ailable at the Web site and ho, it can be used to assist coni-

panics "aming, to dc% elop %ariow promotions.

4. One %% idel% read journal featurin,, promotional marketiFig Pnolno. Access the Web site at www.promomagazine.com.

JDM_T"*JMDr
Creative Corner

Reread the opening vignette that featured the Corpus Christi Hooks. From the following list of special days, pick two and then design two different ads. Make sure that each advertise?ment features a consumer promotion that is either mentioned in

n the offers. you buy soft drinks (%our favorite brand is "What's on Sale"), but be cry brand loyal when you bux, shoes (Nike. Reebok). What determines which type of cateLory %ou fit into for the vari?OLIS products you discussed?

findings to the class.

mpling techniques. In the United States and Western cultures. Clinique provides cosmetics samples in retail outlets for customers to try. In the United States, women normally sell retail cosmetics; in Saudi Arabia, men do. At the same time. Muslim custom prohibits a man fro Opening Day Mother's Day Fourth of July Play-offGames Cinco de Ma Father's Day Labor Day Championship Celebration

son. Th, company intends to use a coupon program. Discuss the pros and cons of each method of coupon distribution listed in FIQUre 12.3 for Rawlings: Which method should Rawlings use? Why? e women keep their faces covered. Sampling is %cry important for Clin?ique in Saudi Arabia .41
y

ts lipstick products. What t pe of premium would you suggest for Revlon for each of the target markets listed here' Which premium aould xou use" Justif- vour answers. uss the use of consumer promotions in her home country.

"NTEGRAIrED LEAftN19G EXE.RWSES

es? Which firm would you choose if you were responsible for developing a contest or a sweep?stakes program? o a consumer? How do the Web sites impact manufacturers? How do they impact retailers? ctivators, Inc. (Nviviv.promotionactivators. com)

ommunications (www.centra marketing.com)

keting & Promotion (www.sweepspros.com)

ng Web sites. What types of promo?tions are available? What are the objectives of the various consumer promotions? Do the promotions on the Web sites mesh with the company's advertising and consumer promo?tions at ietail outlets?

w.tacobelLcom) e development of Sweep?stakes and contests. This is important due to a variety of legal restrictions imposed by different states. Access the following Web sites. What types of services does each offer? How do the companies assist in developing a w.hersheys.com)

354

PART 4 IMC Promotional Tools

CHAPTER 12 Sales Promotions 355

NEWMAN'S OWN ORGANICS: SALES PROMOTIONS AND RETAIL RELATIONSHIPS

h h h OUNMA(

BEN'S COMPLETE LAWN CARE SERVICE

Jason's challenge was to find and develop retail outlets for Newman's Own Organics.

a complete lawn care service. ry single aspect of lawn care, from the first spring feeding to mowing, trimming, weeding, leaf removal, and even a winter fertilization program. He would also offer sod and seed services for lawns with bare spots or brand new lots. ruction contractors and house builders that want to sub?contract the grass-growing part of finishing a home. d-to-reach spots. re retail stores. His assignment was to fine-tune both the consumer and trade that is substantially lower than the various markets. ety frequently, such as a price-per-treatment for eight summertime treatments promotions that would be offered inprice-per-treatment for a customer who only schedules four. Referral discounts are given when a customer finds a new client for the company. Specials a of actors. concoct a batch of salad dressing to be given to their friends for the Christ?mas holiday season. The dressing became so popular that the two created the Newman's Own company to sell the item. The two agreed that proceeds and profits would be given to charity. expanded to a wider variety of salad dressings, and then to salsa, mari?nara. steak sauce, pizza, and even wine. ummer-camp experience. The Newman's Own Foundation had given over $250 million to various charities prior to Paul Newman's death. The figure now approaches $300 million, The company's mission statement reads "Shameless Exploitation in Pursuit of the Common G

A and soy pride cludes pretzels, chocolate bars, "Fig Newmans," Champion Chip Cookies, Chocolate Cups, Newman O's, Pop's Corn, Alphabet Cookies, coffee, dried fruit, olive oil and balsamic vinegar, dried fruit, pet food, mints, tea,Ben taak crisps.in his lawn care business. ers or pesti?cides for 3 years or more. The farms and processors have been certified by an independent third party. Kosher certification is made by the Union of Orthodox Jewish Congregations. . In this way, the organization is able to capitalize on the popularity of Paul Newman, the strong relationship to chartable giving, and the niche market of organic foods. nstitute one major marketplace. Small grocery stores that are more upscale and feature organic foods area second. Third would be any specialty stores that offer organic products. ads into meeting with prospective retail customers. He also knew that it would take more than a name to persuade retailers to make room on the shelves for the products. Beyond Wall Camps, could be promoted on the to develop bonds and relationships ers without a retail store but also to direct consumers to stores that carry the items. Various types of promotions for the products and various charities, including the Hole in the simple placement, the ultimate goal was Newman's Own Organics Web site. that would lea

ond would by lowering p.;homeowners to use his services rather than those of national chains. His biggest advantage was being a full-service lawn care company, offering more than just one or two types of services. Ben's Complete Lawn Care Service began operations in M compete be convincing ces in various ways, including using sales promotions? f promotions are used by Ben's competitors? romotions campaign for Ben's Complete Lawn Care Service. News Network at www.tsnn.com and BizTradeShows at www.biztradeshows.com for spe?cific trade shows and locations. isements should be used in conjunc?tion with the company's consumer promotions campaign? and memories of Paul Newman begin to fade away?

mber 27, 2008; Newman's Own (Titp://newnmrtsown.com, accessed May 10, 2010); Newman's Own Organics (www. newmansownorganics.corrL/funfacts.htmi, accessed May 10, 2010)-