MKTG 303: Advertising and
Promotion
Sales Promotions
December 17, 2009
Zeynep Gürhan-Canlı
Planning Consumer Promotions
• Types of consumers
 Promotion prone
 Brand loyal
 Price sensitive
• Retailer incentives
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Increase store traffic
Increase store sales
Attract new customers
Increase basket size
• IMC Plan
Consumer Promotions
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Coupons
Premiums
Contests and sweepstakes
Refunds and rebates
Sampling
Bonus packs
Price-offs
Types of Coupons
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Instant redemption (versus bounce back)
Scanner-delivered
Cross-ruffing
Response offer
Face value of coupon,distribution method,
and coupon for preferred brand or brand in
evoked set determine their effectiveness.
• Problems: Reduced revenue, counterfeiting,
illegal internet distribution, misredemption
Types of Premiums
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Free-in-the-mail
In- or on-package
Store or manufacturer
Self-liquidating
• Time factor
 Tend to have short life spans
 Popularity important
• Cost
 Related to interest in premium
 Exclusive premiums
Keys to Successful Premiums
• Match premium to target market
• Carefully select premiums
• Pick premium that reinforces
product and firm image
• Integrate premium with other IMC
components
• Don’t use premiums to increase
profits
Contests and Sweepstakes
• Contests
 Require skill
• Sweepstakes
 Random chance
• Rewards
 Extrinsic
 Intrinsic
• Costs
• Consumer indifference
• Clutter
Creating Successful
Contests and Sweepstakes
• Know legal restrictions.
• Find right prizes.
• Consider extrinsic and intrinsic
value.
• Use special events and tie-ins.
• Use Internet.
• Coordinate with POP displays and
other marketing tools.
Rebates and Refunds
• Rebates – hard goods
• Refunds – soft goods
• Redemption rates
 30% overall
 65% for rebates over $50
Rebates and Refunds
• Problems
 Costs
 Paperwork
 Diminished effectiveness
• Creating effective programs
 Visibility
 Perceived newness
 Impact
Types of Sampling
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In-store distribution
Direct sampling
Response sampling
Cross-ruff sampling
Media sampling
Professional samples
Selective samples
Sampling Programs
• Problems
 Costs
 Distribution
• Effective sampling
 Component of IMC Plan
 Stimulate trial usage
 Target audience
Bonus Packs
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Increase usage of product
Match or preempt competition
Stockpiling of product
Develop customer loyalty
Attract new users & encourage
brand switching??
• Bonus range from 30% to 100%
• 30% bonus most common
Price-offs
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Temporary price reduction
Stimulate sales
Reduce financial risk
Brand switching
Use of by
 Manufacturers
 Retailers
Problems with Price-offs
• Increase sales, but not profits.
• 20% or more increase in sales is
needed to offset 5% price reduction.
• Makes consumers more price
sensitive.
• 25% of consumers base purchases
on price.
• Competitive pressure to use.
Effective Price-offs
• Increase store traffic
• Generate sales
• Works best with higher margin
items
• Reasons for success
 Consumers view as monetary
savings
 Reward is immediate
Promotion Combinations
• Over-lay: Two or more consumer
promotion activities in one
campaign
• Intra-company tie-in: Promotion
of two different products within
one company
• Inter-company tie-in: Partnering
with another company
Trade Promotions
Expenditures or incentives to push
products through the channel (up
to 70% of marketing budgets).
Objectives of Trade
Promotions
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Obtain initial distribution
Obtain retail shelf space
Maintain established brands
Counter competitive actions
Increase order size
Build retail inventories
Reduce excess inventories
Enhance channel relationships
Trade Promotion Tools
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Trade allowances
Trade contests
Trade incentives
Training programs
Vendor support programs
Trade shows
Specialty advertising
Point-of-purchase displays
Trade Allowances
• Off-invoice allowance
 Approximately 35% of all trade promotions
• Slotting fees
 To add new products to inventories and to
stock merchandise.
 Shelf space
 To finalize decisions
 Add to the bottom line
• Exit fees
• Assumption is that a portion of this
reduction will be passed on to
consumers
• Forward buying
• Diversion
Trade Contests & Incentives
• Trade contests: To distribution
channels, stores, sales people
• Trade incentives involve the
retailer to perform a function to
receive the allowance.
• Cooperative merchandise
agreement (CMA) is an example.
Training Programs & Trade Shows
• Training programs are provided
by manufacturers
• Goal is to bias salespeople
• Provide knowledge
• Trade shows are used extensively
in business-to-business
marketing programs
Concerns of Trade
Promotions
• High costs
• Tend to use outside of IMC Plan
• Over-reliance on trade
promotions
• Used for short-term sales goals
• Erosion of brand image
• Impact on small manufacturers