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Marketing Essentials: Sales Promotions
The document outlines the various types of sales promotions, emphasizing their role in stimulating customer purchases through methods such as discounts, coupons, and contests. It discusses the importance of adapting promotions based on factors like the marketing budget, product life cycle, and competition. Additionally, it covers the mechanics and objectives of different promotional strategies to enhance customer engagement and sales.
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Marketing Essentials: Sales Promotions
- 1. Marketing Essentials WEEK 5 Sales Promotions
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- 3. Sales Promotions A barking dog is often more useful than a sleeping lion.” ~ Washington Irving
- 4. Sales Promotions Common typesof sales promotions • Discounts (Price Deals) • Coupons • Sweepstakes/Contests • Buy One - Get One (BO-GO) • Gift with Purchase (Premiums) • Incentive / Frequent Buyer • Holiday / Themed Promotions • Others: In-store displays, sampling, bundling, rebates, trade-ins, free trial/demo
- 5. Sales Promotions More thanany other element of the marketing mix, sales promotion is about ACTION. It’s about stimulating customers to buy a product.
- 6. Sales Promotions Definition Media andnon-media marketing pressure applied for a predetermined, limited period of time in order to stimulate trial, increase consumer demand, or improve product quality. (American Marketing Association)
- 7. Sales Promotions Price-Value Relationship •Every product or service has an established perceived price or value • Sales promotions change this price-value relationship by increasing the value and/or lowering the price.
- 8. Sales Promotions Target Audiencesfor Sales Promotions • Consumers • Resellers • Company Sales Force
- 9. Sales Promotions Compared tothe other components of the marketing mix - Advertising, Publicity, Events - Sales Promotion commonly: • Operates on a shorter time line • Uses a more rational appeal • Returns a tangible or real value • Fosters an immediate sale • Contributes highly to profitability
- 10. Sales Promotions When touse Sales Promotions Where do sales promotions fall in the overall marketing mix? • Marketing budget • Product life cycle stage (New Vs. Old) • Competition in the market • Target Audience • Type of product
- 11. Sales Promotions When touse Sales Promotions Marketing budget Sales promotions are particularly attractive alternatives when the marketing budget is limited, as it is for many small businesses.
- 12. Sales Promotions When touse Sales Promotions Product life cycle stage Often used in the growth and maturity stages to stimulate consumers to choose the product over the competition rather than in the introduction stage when building awareness (via Advertising/PR) is usually more important.
- 13. Sales Promotions When touse Sales Promotions Competition in the market An effective tool in a highly competitive market, when the objective is to convince retailers to carry your product or to influence consumers to select it over the competition.
- 14. Sales Promotions When touse Sales Promotions Target Audience Is your customer sensitive to the price/value relationship that exists in your category? Sales Promotions can often encourage trial usage which leads to brand affinity, but you must deliver on the quality.
- 15. Sales Promotions When touse Sales Promotions Type of product Sales Promotions tend to work best when applied to impulse items whose features can be judged at the point of sale, rather than more complex items that might require a longer purchase cycle (research/comparisons) or a hands-on demonstration.
- 16. Sales Promotions Discounts/Price BasedPromotions
- 17. Sales Promotions Discounts/Price BasedPromotions Price deals are usually intended to: • Encourage trial of a new product or extension • Recruit new buyers for a mature product • Convince existing customers to increase purchases, accelerate their use or purchase multiple units.
- 18. Sales Promotions Discounts/Price BasedPromotions Ways to Implement: • In-Store/POP Displays • Advertising • Direct Mail • Event • Associations / Groups • Seasonal / Themed • Referrals • Group-buying (Groupon/Living Social/Amazon)
- 19. Sales Promotions Discounts/Price BasedPromotions • Increased sales gained from price-based promotions are usually at the expense of profits • Company must also guard against the possible negative effect of discounting on brand image
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- 21. Sales Promotions Coupons The firstcoupon was created in 1887 by Asa Chandler, one of the partners at Coca-Cola. By 1931, it’s estimated that 1 in 9 Americans had received one of these free Coca-Colas.
- 22. Sales Promotions Coupons In 2009there were $528.5 billion worth of coupons available; yet only $3 billion worth of coupons were redeemed
- 23. Sales Promotions Coupons The keyobjective with a coupon promotion is to maximize the redemption rate - the proportion of customers actually using the coupon Vs. what was distributed. • Measure short term Vs. long term sales impact • Coupon promotions are often used for new products or to encourage sales of existing products that are slowing down
- 24. Sales Promotions Coupons Average Redemption Rate = ??? Average face value = ??? (Promotion Marketing Association)
- 25. Sales Promotions Coupons DistributionMethods • On-Package (encourage trial or repeat purchase) • Print Advertising: Newspaper/Magazine • Back of receipts • Free Standing Inserts (FSI) • Online/Email • Direct Mail (ex: ValPak) • Events • Mobile Phone
- 26. Sales Promotions Coupons DistributionMethods • Mobile Phone
- 27. Sales Promotions Coupons •May simply encourage customers to buy what they would have bought anyway • Can cause customer disappointment if retailers do not hold sufficient stock of the promoted product
- 28. Sales Promotions Sweepstakes &Contests
- 29. Sales Promotions Sweepstakes &Contests What’s the difference between a Sweepstakes and a Contest???
- 30. Sales Promotions Sweepstakes &Contests - What’s the Difference? Contest: Audience applies skill, analytical or creative thinking to try to win a prize. Winners are determined by judges or by which contestant comes closest to a predetermined criteria. ONE PROFESSIONAL & AMATEUR FIRST PLACE WINNER in each category will receive a prize package including: * A $100 B&H gift card * $100 certificate for Canson Infinity media * A DSLR camera * A PhotoServe portfolio ($860 value) * A Crumpler bag * A PDN PhotoPlus Expo Gold Expo Pass * A subscription to PDN®
- 31. Sales Promotions Sweepstakes &Contests - What’s the Difference? Sweepstakes: A promotion in which winners are determined purely by chance.
- 32. Sales Promotions Sweepstakes &Contests Contests and sweepstakes often create excitement and generate interest for a brand, create great content, can go “viral,” but… • Time consuming • Expensive • No guarantee of success • Legal Issues • Hard to accurately measure impact on sales • May lose focus of the brand • Fail to build long-term brand affinity
- 33. Sales Promotions Buy One> Get One (BO-GO)
- 34. Sales Promotions Buy One> Get One Free Vs. 50% Off Example #1 • Sell 1 Pizza for $20 / Cost = $2.50 Buy One > Get One FREE 2 Pizzas for $20 = $15 Profit ($20-$5 = $15) Give 50% OFF 1 Pizza for $10 = $7.50 Profit ($10-$2.50 = $7.50)
- 35. Sales Promotions Buy One> Get One Free OR 50% Off Example #2 • Sell 1 Pizza for $20 / Cost = $2.50 Buy One > Get One FREE 2 Pizzas for $20 = $15 Profit ($20-$5 = $15) Buy One > Get One 50% OFF 2 Pizzas for $30 = $25 Profit ($30-$5 = $25)
- 36. Sales Promotions Gift WithPurchase / Premium Promotions
- 37. Sales Promotions Gift WithPurchase / Premium Promotions “The prize in a cereal box”
- 38. Sales Promotions Gift WithPurchase / Premium Promotions • Commonly found with magazine subscriptions, cigarettes, cosmetics and fragrances • Ability to partner with affiliated brands or products; can you barter? • Can introduce new products or line extensions through relevant promotional items
- 39. Sales Promotions Gift WithPurchase / Premium Promotions
- 40. Sales Promotions Gift WithPurchase / Premium Promotions • The premium may be given for free or offered to consumers for a significantly reduced price • Set “purchase targets” - buy a certain quantity or dollar amount to receive free gift • Instant gratification • No confusion about returning coupons or proof of purchase.
- 41. Sales Promotions Gift WithPurchase / Premium Promotions Measurement and Evaluation • Increase Sales • Increase customer goodwill • Retail / employee excitement about your product and offer • Generate repeat store visits or purchases • Faster sell-through • Gather Customer data
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- 43. Sales Promotions Loyalty/Frequent BuyerPrograms Encourage and reward repeat purchases by acknowledging each purchase made and offering a premium as purchases accumulate • Airlines • Grocery & Drug Stores • Car Wash • Hair Salons
- 44. Sales Promotions Loyalty/Frequent BuyerPrograms Decide what you want to accomplish: • Reward customers for their frequency and increased spending. • Design a tiered structure that rewards heavy buyers with privileges & special offers • Shift the pattern of frequent buyers' behavior by offering incentives and rewards for buying on off-peak hours or days.
- 45. Sales Promotions Loyalty/Frequent BuyerPrograms Enrollment Tactics: • Simple form that collects buyer info such as addresses, phone and email • Create a "New Membership Kit" which includes rules, awards, points, privileges, etc., if your program will be more complex • Make enrollment easy and attractive by offering an incentive to join (free small gift, % off first purchase or # of points)
- 46. Sales Promotions Loyalty/Frequent BuyerPrograms Program Structure: Reward the behavior YOU desire, not what the customer desires. Set your program to reward different customers for different spending levels. • Purchases: Reward customers based on the dollar amount of purchase. Spend $250 during July and receive a gift certificate worth $25 off any purchase in August
- 47. Sales Promotions Loyalty/Frequent BuyerPrograms Program Structure: Points: Buyers earn points for every dollar they spend. You then determine what award they receive at each point level. Could give points for every visit to your store. Then for every $100 they spend, they get additional points, etc.
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- 50. Sales Promotions Resources www.promo.com www.pmalink.org PromotionMarketing Assoc www.couponpros.org Assoc of Coupon Professionals www.isp.org.uk Institute of Sales Promotions (UK)