Chapter 15

5 primary advantages to the coupon as a sales promotional tool

1. the use of a coupon makes it impossible to give a discount to a price-sensitive consumer while still selling the product full price to other consumers 2. the coupon-redeeming customer may be a competitive-brand user, so the coupon can induce brand switching 3. a manufacturer can control the timing & distribution of coupons. This way a retailer is not implementing price discounts in a way that can damage brand image 4. coupon is an excellent method of stimulating repeat purchases 5. coupons can get regular users to trade up within a brand array (upgrade to premium)

Incentives for the Trade-Market

Awards in the form of travel, gifts, or cash bonuses can induce retailers & whole sales to give a firm's brand added attention

Advertising & Promotion (can/cannot) initiate product category use in a mature product category like coffee

CANNOT it can only affect brand choice among people who already use the product category

Borrowing From Future Sales

Consumers or Trade Buyers who would have purchased the brand anyway may be motivated to stock up at the lower price Result in Low Next Time Sales

Risks of Sales Promotion (5)

Creating a Price Orientation Borrowing from Future Sales Alienating Customers Managerial Time & Expense Legal Considerations

The purpose of sales promotion as a tool (does/does not) change from the consumer market to the trade or business market

DOES NOT (short-term & instant demand)

Reasons for Growth in the Use of Sales Promotion (6)

Demand for greater accountability Short-Term Orientation Consumer Response to Promotions Proliferation of Brands Increased Power of Retailers Clutter

Legal Considerations

Lottery, copyright, state & federal, prize notification, right of privacy, tax etc. laws carefully & clearly state rules & keep customers informed

Objectives for Promotions in the Trade Channel

Obtain Initial Distribution Increase Order Size Encourage Cooperation with Consumer-Market Sales Promotions Increase Store Traffic

__________ displays have been shown to positively affect sales by as much as 35% in some product categories

P-O-P in-store displays

Objectives for Consumer-Market Sales Promotion (6)

Stimulate Trial Purchase Stimulate Repeat Purchase Stimulate Larger Purchases Introduce a New Brand Combat or Disrupt a Competitors' Strategies Contribute to an IBP

Alienating Customers

There is risk of alienating the customers with change in the program

sampling can be imprecise -

a firm may never be sure that the product is reaching the target audience

rebate

a money-back offer requiring a buyer to mail in a form requesting the money back from the manufacturer rather than from the retailer usually tied to multiple purchases few consumers actually take advantage of the rebate offer after buying a brand

advertising specialities

a sales promotion having 3 component elements: a message placed on a useful item, given free to consumers with no obligation (baseball caps, t-shirts, coffee mugs, pens)

on-package sampling

a technique in which the sample item is attached to another product package

trial offers

a type of sales promotion in which expensive items are offered on a trial basis to induce customer trial of a brand (exercise equipment, appliances, watches, electronics, etc.)

in-store sampling

a type of sampling that occurs at the point of purchase & is popular for food products & cosmetics

merchandise allowances

a type of trade-market sales promotion in which free products are packed with regular shipments as payment to the trade for setting up and maintaining displays

slotting fees

a type of trade-market sales promotion in which manufacturers make direct cash payments to retailers to ensure shelf space proliferation of new products has made shelf space expensive

if a firm knows a competitor is launching a new brand campaign,

a well-timed sales promotion offering discounts or extra quantity can disrupt the competitor's strategy

companies are demanding greater ______ across all functions, including marketing, advertising & promotions

accountability

off-invoice allowance

advertisers allow wholesalers & retailers to debut a set amount from the invoice they receive for merchandise

The potential for knowing when & where consumers are is blurring the lines between ___________&______________

advertising & promotions

transit advertising

advertising that appears as both interior and exterior displays on mass transit vehicles and at terminal and station platforms

other sales promotions, such as frequency programs, provide an _________, which increases a consumers ability & desire to identify w/ a particular brand

affiliation value

riding the boards

assessing possible locations for billboard advertising lots of time & $$$

trial purchase encourages

brand introduction

The combination of advertising and sales promotions can ______

break through clutter

free stuff for employees leads to them

buying something

Pros of gift cards

can build brand loyalty holders tend to use them freely to pay the full retail price for items

mobile sampling

carried out by logo-emblazoned vehicles that dispense samples, coupons, & premiums to customers at malls, shopping centers, fairgrounds, & recreational areas

push money

carried out through a program in which retail salespeople are offered a monetary reward for featuring a marketer's brand with shoppers if a salesperson sells a certain brand over another, they get $$$ sales people might want to sell to every single person, which is a bad idea

contest

consumers compete for prizes based on a skill or ability winners are determined by a panel of judges or based on which contestant comes closest to a predetermined criterion for winning somewhat expensive

incentives

coupons, samples, rebates, contests & sweepstakes

Purpose of Advertising (5)

cultivate long-term demand encourage brand loyalty encourage repeat purchases promote image/feature orientation obtain long-term effects, often difficult to measure

sales promotions like ____,_____,&_______ can attract attention & give new energy & word-of-mouth buzz to the advertising & IBP effort

dealer incentives, consumer price discounts, & samples

business-market sales promotion

designed to cultivate buyers in organizations or corporations who are making purchase decisions about a wide range of products including computers, office supplies, & consulting services includes: trade shows, premiums, incentives, loyalty/frequency programs

33% of brand management time is spent on

designing, implementing, and overseeing sales promotions

top 3 coupon uses

diapers cereal detergent

coupon

entitles a buyer to a designated reduction in price for a product or service oldest & most widely used form of sales promotion

trade shows

events where several related products from many manufacturers are displayed & demonstrated to members of a trade efficient way to reach interested current & potential buyers can be critically important to a small firm that cannot afford advertising & has limited reach

sampling is expensive/inexpensive

expsensive

Obtain Initial Distribution

fierce competition for shelf space sales promotion incentives can help a firm gain initial distribution & shelf placement

Members of the trade channel would rather make ____,____ orders and carry little incentives

frequent, small

business gifts

given as a part of building & maintaining a close working relationship w/ suppliers may include small items like logo golf balls, jackets, or small items of jewelry

the role of sales promotion is primarily to elicit a _______ purchase from a customer group

immediate

sales promotion encourages more ______ & _______ responses whereas the purpose of advertising is to cultivate an image, loyalty, & repeat purchases

immediate & short-term

P-O-P is the only medium that places advertising brands, and a consumer _____

in the same place at the same time

directory advertising

includes all the local phone directory & local businesses advertising books published by a variety of firms helps people follow through with their decision to buy

cinema advertising

includes those ads that run in movie theaters before the film & other advertising appearing off-screen within a theater off-screen ads are the promos on the side of the popcorn box and lobby-based advertising

out-of-home media advertising

includes various advertising venues that reach primarily local audiences digital signage that can deliver messages by neighborhood using wireless technology

permanent long-term displays

intended to provide P-O-P presentation for more than six months

consumer-market sales promotion

introduces household consumers to try or eventually purchase a firm's brand rather than a competitor's brand can either be price promotions or not includes: coupons, price-off deals, premiums, contests & sweepstakes, sampling & trial offers, rebates, loyalty/frequency programs, & gift cards

aerial advertising

involves airplanes pulling signs or banners, skywriting, or those majestic blimps

premiums

items offered free, or at a reduced price with the purchase of another item (two for one) Two Types: free premium & self-liquidating

In-package coupons good for the next purchase or the accumulation of points with repeated brand purchase can

keep consumers loyal to a particular brand

Sales promotion techniques can encourage whole sales & retailers to order in _____ quantities, thus, shifting the inventory burden to the trade channel

large

if it seems local in nature it probably is

location based in sales

encouraging consumers to buy in larger quantities offers benefits to both

manufacturer and retailer (both get increased dollar volume & both realize the benefit or faster inventory turnover)

Retailers are demanding deals from

manufacturers

point-of-purchase advertising

materials used in the retail setting to attract shoppers' attention to a brand, convey primary brand benefits, for highlighting pricing information

trade-market sales promotion

motivates distributors, wholesalers, & retailers to stock & feature a firm's brand in their store merchandising programs includes: P-O-P displays, incentives, allowances, cooperative advertising, & sales training

price-off deal

offers a consumer cents or even dollars off merchandise at the P-O-P through specialty marked packages reduction is taken from manufacturers controllable straightforward creates inventory & pricing problems snapped up by regular consumers

________ shoppers search for extra value in every product purchase

precision

Factors of short-term orientation

pressures from stockholders to increase quarter-by-quarter revenue and profit per share bottom line mentality

the "message in a sales promotion features _____,_____,____

price reduction, free samples, a prize, & other incentives

sales promotions featuring _______ are effective in the convenience goods category where frequent brand purchases, brand switches, & a perceived homogeneity among brands characterize consumer behavior

price reductions

Consumers are demanding more & better ______ at a _____

products & services cheaper price

sweepstakes

promotion in which winners are determined purely by chance scratch of cards, can be designed so that repeated trips are required so the retail outlet are necessary to gather a complete set of winning cards

bill-back allowances

provide retailers a monetary incentive for featuring a marketer's brand in either advertising or in-store displays

sales-training programs

provide training for retail store personnel

free premium

provides consumers with an item at no cost (included in a package)

three types of misredemption that costs firms money

redemption of coupons by consumers who do not purchase the coupon redemption of coupons by sales clerks & core managers without consumer purchases illegal collection or copying of coupons by individuals who sell them to unethical store merchants, who in turn redeem the coupons without the accompanying consumer purchases

frequency programs

referred to as continuity programs or loyalty card programs, offer consumers discounts or free product rewards for repeat purchase or patronage of the same brand, company, or retailer pioneered by airlines & renters benefit larger firms

self-liquidating premium

requires a consumer to pay most of the cost of the item received was a premium it can go wrong if people focus on the premium rather than the beenfits of the brand

because of proliferation & "clutter" of brands, marketers turn to ______ to gain attention for their individual brand

sales promotion

sampling

sales promotion technique designed to provide a consumer w/ an opportunity to use a brand on a trial basis w/ little or no risk particularly useful for new products, but should not reserved for new products alone used successfully for established brands with weak market share in specific geographic areas

money has shifted from media advertising to

sales promotions

Managerial Time & Expense

sales promotions are both costly & time consuming $$$ in handling promotional materials & protecting against fraud

push strategy

sales promotions directed at the trade help push a brand into the distribution channel until it ultimately reaches the consumer

Creating a Price Orientation

sales promotions rely on some sort of incentive. the brand can perceived as cheap w/ no real value or benefits beyond the low price

sales promotion is designed to make things happen in the _________

short run (capable of instant demand stimulation)

many organizations are developing marketing plans - w/ rewards & punishments for manager performance that are based on ___________ revenue generation

short-term

sales promotion is a key component particularly in campaigns seeking ___________ sales effects

short-term

sales promotion intent is to generate a

short-term increase in sales by motivating trial use, encouraging larger purchases, or stimulating unique purchases

Purpose of Sales Promotion (5)

stimulate short term demand encourage brand switching induce trial use promote price orientation obtain immediate, often measurable results

a reduced price, offer of a rebate, or a free sample may

stimulate trail purchase

price reductions or two-for-one sales can motivate consumers to

stock up on a brand, thus allowing firms to reduce inventory or increase cash flow

Types of Trade-Market Sales Promotion

techniques incentives allowances trade shows sales training programs cooperative advertsing

packaging

the container or wrapping for a product last five seconds of marketing / first moment of truth

cooperative advertising

the sharing of advertising expenses between national advertisers and local merchants

Challenges of coupons/sweepstakes

there will always be regulations & restrictions (state/federal laws) game may become the focus instead of the brand (fails to build long-term affinity can't get meaningful messages across administration is complex & the risk of errors can create negative publicity not going to build a quality or prestige image

risks of coupons

timing of redemption isn't controlled heavy redemption by regular brand buyers merely reduces a firm's profitability coupon programs include much more than the cost of the face value of the coupon (handling, production, etc.) fraud

the purpose of sales promotion is to get people to

try new brands or encourage brand switching

door-to-door sampling

type of sampling in which samples are brought directly to the homes of a target segment in a well-defined geographic area

mail sampling

type of sampling in which samples are delivered through the postal service

sales promotion

use of incentive techniques that create a perception of greater brand value among consumers, the trade, & business buyers

short-term promotional displays

used for six months or less

support media

used to reinforce or supplement a message being delivered via smoother media vehicle billboards when ur close to a store