Chapter 17

Sales Promotion

An activity or material, or both, that acts as a direct inducement, offering added value or incentive for the product to resellers, salesman, or consumers. Marketing communication activities, other than advertising, personal selling, and public relations, in which a short-term incentive motivates customers or dealers to purchase a product NOW. It encompasses all promotional marketing communication activities and materials other than personal selling, advertising, personal selling, and public relations. Sales promotion is often used to facilitate personal selling, advertising, or both, and the opposite - personal selling and/or advertising to support sales promotion. Encourages product trial and purchase. Most effective sales promotion efforts are highly interrelated with other promotional activities. In short, sales promotion is the collection of things a marketer does to stimulate sales now.

Overcoming objections

An effective salesman usually seeks out a prospect's objections in order to address them. One of the best ways to overcome objections is to anticipate and counter them before the prospect raises them. If possible, the salesperson should handle objections as they arise.

Trade Sales promotion methods

Attempt to persuade wholesalers and retailers to carry a producer's products and market them more aggressively. Marketers use trade sales promotion methods for many reasons, including countering the effect of lower-priced store brands, passing along a discount to a price-sensitive market segment, boosting brand exposure among target customers, or providing additional incentives to move excess inventory or counteract competitors

Refunds

Consumers submit proof of purchase and are mailed a specific amount of money. Usually, manufacturers demand multiple product purchases before consumers qualify for money refunds. Marketers employ money refunds as an alternative to coupons to stimulate sales. Refunds, used primarily to promote trial use of a product, are relatively low in cost. However, they sometimes generate low response rates and, thus, have limited impact on sales.

Coupon advantages

Coupons reward current product users, win back former users, and encourage purchases in larger quantities. Because they are returned, coupons also help a manufacturer determine whether it reached the intended target market. The advantage of using digital coupons over paper include lower cost per redemption, greater targeting ability, improved data-gathering, and greater experimentation capabilities to determine optimal face values and expiration cycles.

Prospecting

Developing a database of potential customers. Sales people seek names of prospects form company sales records, trade shows, commercial databases, public records, and many other sources, but most salespeople prefer to use referrals - recommendations from current customers - to find prospects. Among the advantages of using referrals are more highly qualified sales leads, greater sales rates, and larger initial transactions. Consistent activity is critical to successful prospecting

Consumer sales promotion methods

Encourage or stimulate consumers to patronize specific retail stores or try particular products. Consumer sales promotion methods initiated by retailers often aim to attract customers to specific locations, whereas those used by manufacturers generally introduce new products or promote established brands.

Coupon drawbacks

Fraud and misredemption, which can be expensive for manufacturers. Another disadvantage is that coupons are losing their value; because so many manufacturers offer them, consumers have learned not to buy without some incentive (coupons, rebates, or refunds). Brand loyalty among heavy coupon users has diminished, and many consumers redeem coupons only for products they normally buy. Thus, coupons as an incentive to consumers to try a new brand/product is questionable.

Follow up

In the follow-up stage, the salesman determines whether the order was delivered on time and installed properly, if installation was required. Contact the customer to see if any problems or questions have arisen. The follow-up stage is also used to determine customers' future product needs.

Point-of-purchase (POP) materials

Include outdoor signs, window displays, counter pieces, display racks, and self-service cartons, used to attract customers. These items, often supplied by producers, attract attention, inform consumers, and encourage retailers to carry particular products. Offers captive audience in retail stores, impulse buys 70% of all grocery unplanned purchases and decided at the store.

Consultative/Relationship selling

Involves building mutually beneficial long-term associations with a customer through regular communications over prolonged periods of time. It is especially used in B2B marketing. Sales relationships are also built on being able to recover when customers are concerned about service. Being proactive in identifying the need for recovery behaviors is a major part of relationship selling. Relationship selling that generates long-term customers is likely to be extremely profitable for the firm both in repeat sales as well as money saved in trying to find new customers. Finally, as the personal selling industry becomes increasingly competitive, relationship selling is one way that companies can differentiate themselves from rivals to create competitive advantages. A consultative salesman must be an expertise and know everything about the product, customers, competition, and the industry.

Premiums

Items offered free or at a minimal cost as a bonus for purchasing a product. Premiums are used to attract competitor's customers, introduce different sizes of established products, add variety to other promotional efforts, and Stimulate customer loyalty. Consumers appear to prefer premiums to discounts on products due to the perception that they are receiving something free. Creativity is essential when using premiums. They must be desirable and easily recognizable. Consumers are more favorable toward a premium when the brand has equity and there is a good fit between the product and the premium. Premiums are placed on or inside packages and can also be distributed be distributed by retailers via mail.

Drawbacks to refunds and rebates

Many people perceive the redemption processes as too complicate. Consumers might also have negative perceptions of manufacturer's reasons for offering rebates. They may believe the products are untested or have not sold well

Personal selling

Paid personal communication that attempts to inform customers and persuade them to purchase products in an exchange situation. Personal selling gives marketers the greatest freedom to adjust a message to satisfy customers' information needs. It is the most precise of all promotion methods, enabling marketers to focus on the most promising sales prospects. It is also the most effective way to form relationships with customers. Personal selling is perhaps most important with B2B transactions involving the purchase of expensive products. Because of the high-risk factors involved, personal selling is often necessary to assure prospective customers about the quality of the product and answer any questions. Despite these benefits, personal selling is generally the most expensive element in the promotion mix; the average cost is more than $400.

Cause related marketing

Partnership with a non-profit. Part of purchase amounts are donated. Attractive to millennials and included in some loyalty programs to differentiate. Short-term, ongoing, and part of the promotion mix.

The future of personal selling

Personal selling will continue to gain respect as professional sales associations develop and enforce ethical codes of conduct. Developing ongoing customer relationships today requires sales personnel with high levels of professionalism as well as technical and interpersonal skills. Personal selling is changing today based on new technology, how customers gain information about products, and the way customers make purchase decisions.

advantages of personal selling

Provides detailed explanation/demonstration of the product. Message can be varied according to the motivations of each particular customer. Can be directed only to qualified prospects. Can purchase personal selling in small increments. Most effective promotional form in obtaining sales and satisfying customer needs.

Coupons

Reduce a product's price and aim to prompt customers to try new or established products, increase sales volume quickly, attract repeat customers, or introduce new packaging sizes or features. Coupons are the most widely used consumer sales promotion technique. While digital coupons are increasingly growing in popularity, print coupons continue to be the most widely used and have the most redemption value. Print advertisements with coupons are often more effective at generating brand awareness than print ads without coupons. Generally, the larger the coupon's cash offer, the better the recognition generated.

Making the presentation

Salespeople should match their influencing tactics - such as information exchange, recommendations, threats, promises, and inspirational appeals - to their prospects. Different types of buyers respond to different tactics, but most respond well to information exchange and recommendations, and virtually no prospects respond to threats. The salesperson should have prospects touch, hold, or use the product. The salesperson must listen, listening is half of the communication process and is often the most important part for the salesperson. Ask for the order/sale.

Consultative selling

Sell advice, assistance, and counseling. Focus on improving the customer's bottom line. Consider sales planning as a top priority. Spend most contact time attempting to build a problem-solving environment with the customer. Conduct discovery in the full scope of the customer's operations. Team approach to the account Presentations and proposals based on profit-impact and strategic benefits to the consumer. Sales follow-up is long-term, focusing on long-term relationship enhancement.

Traditional Selling

Sell products (goods and services). Focus on closing sales. Limited sales planning. Spend most contact time telling the customer about the product's value and benefits. Conduct "product-specific needs" assessment. "Lone wolf" approach to the account. Proposals and presentations on pricing and product features.

Consumer Price Promotion

Short-term reductions in price to induce purchase or retail traffic. Often blurred with overall pricing strategy, as this tactic is ongoing in many categories and channels. Increasingly pervasive. Generally figured into the profit picture as ongoing tactic, and also used to reduce inventory.

Rebates

The consumer is sent a specific amount of money for making a single product purchase. Rebates are generally given to more expensive products than refunds. Rebates are also used to reinforce brand loyalty and encourage product purchase. On larger items, such as cars, rebates are often given at the point of sale. Most rebates, however, especially on smaller items, are given after the sale, usually though a mail-in process. Mail-in rebates are most effective in situations where consumers require a reason to purchase an item.

Approach: Initial Contact

The manner in which a sales person contacts a potential customer, a critical step in the process. 80% of initial sales calls are purposed to gather information about the buyer's needs and objectives. Social media is becoming more typical in gaining the initial contact with a prospect. First impressions are key because they are usually lasting ones. The approach must be designed to deliver value to targeted customers. The exact type of approach depends on the salesperson's preferences, the product being sold, the firm's resources, and the prospect's characteristics. Conduct consumer needs assessments.

Preapproach: Lead Qualifying

The most successful salespeople are thorough in their preapproach, which involves identifying key decision makers, reviewing account histories and problems, contacting other clients for information, assessing credit histories and problems, identifying product needs, and obtaining relevant literature. In short, salespeople need to know what potential buyers and decision makers consider most important and why they need a specific product.

Why sales promotions growing

The use of sales promotion has increased dramatically over the past 30 years, primarily at the expense of advertising's clutteredness. This shift in how promotional dollars are used has occurred for several reasons: 1) Heightened concerns about value have made customer more responsive to promotional offers, especially price discounts and point-of-purchase displays. 2) The size and access to checkout data possessed by retailers has given them considerable power in the supply chain and they are demanding greater promotional efforts from manufactures to boost retail profits. 3) Declines in brand loyalty have produced an environment in which sales promotions aimed at persuading customers to switch brands are more effective. 4) The stronger emphasis placed on improving short-term performance results calls for greater use of sales promotion methods that yield quick sales increases. 5) More brands and more competition.

free samples

Used to stimulate trial of a product, increase sales volume in the early stages of a product's life cycle, and obtain desirable distribution. Sampling is the most expensive sales promotion method because production and distribution entail high costs. However, it can also be one of the most effective sales promotion methods. Sampling can lead to repeat purchases as well as purchases of other products under the same brand name. Despite high costs, use of sampling is increasing. Sampling is the best way to get trial of a new product.

Closing the sale

When the salesman asks the prospect to buy the product. The salesman might ask the potential customer about financial terms, desired colors or sizes, or delivery arrangements. Reactions to such questions usually indicate how close the prospect is to buying. A salesperson should try to close at several points during the presentation because the prospect may be ready to buy. Closing may uncover hidden objections.

Trade Sales Promotion (PUSH)

• Trade Allowances - Incentivizes reseller to carry product or stock more of it Push Money/Dealer Loaders - A gift, often part of a display, given to a retailer that purchases a specified quantity of merchandise. Training Free Merchandise Store Demonstrations Conventions and Trade Show