MKT 3310 Lecture 9, 2012
Lecture objective By the end of today’s class you should: • understand the role of sales promotion in a company's integrated marketing communications program.
• understand the different types of consumer and trade-oriented sales promotion tools, and the reasons for using them.
sales promotion, types of sales promotion • Strengths and weaknesses of sales promotion
•Sales promotion and consumer behavior
•Sales promotion aimed at distributors
•Key learning points from the lecture
DEFINING SALES PROMOTION
“A direct inducement that offers an extra value or incentive for the product to the sales force, distributors, or the ultimate consumer with the primary objective of creating an immediate sale.”
An extra incentive to buy
A tool to speed up sales
Targeted to different parties
Types of Sales Promotion
Consumer-Oriented (i.e. pull) Distributor-Oriented (i.e. push)
Coupons Premiums (i.e. free gifts) Premiums Contests/sweepstakes Refunds/rebates
Sales contests Contests, dealer incentives
Trade allowances Point-of-purchase displays Training programs
Trade shows Trade shows
Bonus packs Packs
Price-off deals Frequency programs Loyalty programs Demonstrations
Sales Promotion Strengths
– gives an extra incentive to act, because it changes the price/value relationship – gives a sense of immediacy to act – encourages a behavioral response – builds databases – motivates trade support – produces measurable results, at least in terms of behavioral response
Sales Promotion Weaknesses
– clutter – if a price cut is used, consumers may expect it for the long term i.e. some consumers won’t buy except on price deal – forward buying/cheating by the trade – fraudulent coupon redemption – sometimes it is difficult to get trade cooperation to support the sales promotion campaign – damage brand image – it might take time to administer and manage the campaign – some consumers just want the free gift or benefit, and not the product itself (see contestalley.com, freebiedot.com, promomagazine.com) – for products with a long purchase cycle (e.g cable TV), giving a special deal to new customers might make existing customers and past customers angry 8
Exercise (20 minutes)
What sales promotion vehicles would you recommend to:
1) BU’s Pacific Coffee (to attract more students and staff to go their at off-peak times) 2) BU’s Chinese medicine clinic (to attract more students and staff to go there)
Looking specifically at sales promotion targeted at consumers (pull)………..
Sales promotion can • invigorate/help sales of a mature brand • facilitate introduction of a new brand • increase shelf space • neutralize & preempt competition • stimulate salesforce enthusiasm, and, most importantly… • change consumer behavior
Sales promotion can not • compensate for a poorly trained salesforce or lack of advertising • give consumers a long-term reason to continue to buy the product • permanently stop an established brand’s declining sales • change an unacceptable product into an acceptable one
There has been a growth of sales promotion targeted at consumers because: • increase in (sales) promotional sensitivity of consumers • many many brands (no loyalty) • marketing managers evaluated on short term results • there is renewed emphasis on marketing productivity (which is often measured in terms of sales) • advertising clutter and advertising avoidance 13
As mentioned earlier, sales promotion can help to change consumer behavior. For instance, sales promotion may encourage consumers to: • experience trial • switch brands • stockpile/load-up • accelerate their purchase process • spend more than they normally would These are all behavioral responses. 14
Looking at the next slide, research of consumers...