Advertising Principles and Practices

Sales Promotion, Events, and Sponsorships

Questions Well Answer

Which principles drive the use of sales promotion and what are some current trends? How are various consumer promotions used? What are the types and purposes of trade promotions? How do other types of promotions sponsorships and events, interactive promotions, loyalty programs, and co-marketing programs work? How are promotions used strategically in marketing in terms of brand building, new product launches, integration, and effectiveness?
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Frontier Campaigns for Votes and Hits

Frontier wanted to encourage customers to book online to save money and build their database. Citizens \voted for their favorite animal online; animals campaigned on the Web site. The results: 4,000 blog entries, a million votes, a 50% increase in Web traffic, and a 400% increase in qualified email addresses.
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What is sales promotion?

When a marketer increases the value of its product or brand by offering an extra incentive to purchase it. Designed to encourage action. AMA: The media and non-media marketing pressure applied for a predetermined, limited period of time at the level of consumer, retailer, or wholesaler in order to stimulate trial, increase consumer demand, or improve product availability.
Principle: Sales promotion is primarily designed to motivate people to act by offering incentives.
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Changes in the Promotion Industry

In the past, advertising had dominated marketing spending. Today, more than 2/3 of all firms plan promotions as part of their strategy. Global incentive programs have increased dramatically; online promotions are growing at a rate of about 27% annually.

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Reasons for Sales Promotion Growth

Pressure for short-term profits
Rising cost of mass (traditional) media

Need for accountability

Sales promotions are easy to track and evaluate

Escalation of traditional media costs

Promotions cost less and deliver tangible results

Easier and quicker to determine if objectives have been met

Usually, theres an immediate response Principle: Sales promotion reduces the risk of trying a new product by giving something of added value to motivate action.
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Reasons for Promotion Growth Based on Marketplace Changes

Consumer behavior
Shoppers switch more easily

Pricing
Consumers expect coupons, sales, discounting

Market share
Increased switching leads to increased market share

Parity products
Promotions can distinguish between similar products

Power of the retailer

Wal-Mart, Home Depot, Toys R Us and others demand promotional incentives
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Categories of Sales Promotion

Consumer Targeted to consumer: people like you and me Trade Targeted to people/companies in the distribution channel such as buyers, brokers, distributors, wholesales, dealers, franchisees, retailers, etc. Sales Force Directed at the firms salespeople to motivate them to increase their sales including training, sales presentations, support materials, incentives, performance bonuses, contests
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Types of Consumer Promotions

Price Dealscontemporary price reduction or sale Cents-off deal Price-pack deals (prize in cereal box) Bonus packs (25% more) Banded packs (toothpaste and brush) Coupon Retailer: redeemable only at their outlet Manufacturer: at any outlet carrying the product

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Types of Consumer Promotions

Refunds and Rebates
Marketers offer to return a certain amount of money to the consumer who purchases the product (or coupon to encourage repeat use)
With free membership in StartSampling.com you can try something new and earn frequent flyer miles which, when accumulated, can be redeemed for gifts.

Sampling
Allowing the consumer to try the product or service (in-store, mailed, dentist office, newspaper) StartSampling.com
Visit the Site

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Types of Consumer Promotions

Contests and Sweepstakes
Create excitement by promising something for nothing and offering impressive prizes Contests based on skill/ ability; you compete for prizes Sweepstakes based on luck; send in your name for a drawing

Premiums
Tangible reward for a particular act Work by adding value to the product Self-liquidating

Specialties
Presents the brands name on something that is given away as a reminder
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How to Use Consumer Promotions

Awareness
McDonalds movie toys

Trial
Get the right people involved with the product through sampling, price deals, coupons, refunds, rebates

Maintain/increase market share

Convince people to switch Price deals work with low-loyalty products Characters on premiums associate the brand with the character

Brand reminder
Remind customers of positive experience with ad copy, specialty items, thank you gifts
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What are trade promotions?

Tradeall those involved in the channel of distribution including buyers, brokers, distributors, wholesalers. Marketers try to get the trade involved in promotions to make their marketing effort effective. Trade promotions give channel members information about products and their selling points to encourage them to provide shelf space and push products.
Principle: Consumer promotion is of little use if the product isnt available where the consumer can find it.
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Promo Magazine
PROMO magazine provides insights into using promotion marketing as a strategic, measurable component of an overall marketing mix.

Visit the Site

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Types of Trade Promotions:

Point-of-Purchase (POP) Display
Manufacturers design and distribute displays to retailers to draw attention to their products. Racks, display cartons, banners, signs, moving parts, lights, action.
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Types of Trade Promotions:

Retailer (Dealer) Kits
Materials that support retailers selling efforts or help representatives make sales calls on prospective retailing customers. Product spec sheets, ad slicks/discs.
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Types of Trade Promotions:

Trade Incentives and Deals
When a manufacturer gives sellers a financial reward for purchasing a certain amount of product or supporting a promotion
Includes special displays, extra purchases, superior store locations, more local promotion Retailers get special discounts, free goods, gifts, cash from manufacturer Advertising allowances: deals on coop advertising and deals for using promotional displays
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Types of Trade Promotions:

Contests
Advertisers can develop contests and sweepstakes to motivate resellers Contests are far more common than sweepstakes because they can be more closely tied to product sales
The store or person who exceeds the quota by the greatest percentage wins the contest

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Types of Trade Promotions:

Trade Shows and Exhibits
When companies in the same industry gather to present and sell their merchandise and demonstrate their products.

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How to Use Trade Promotions

The two primary roles for a trade promotion:
Stimulating in-store merchandising or other trade support. Creating excitement among those responsible for selling the product.

Trade promotions are also used to:

Manipulate wholesalers and retailers inventory levels. Expand product distribution to new geographic areas or classes of trade.
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How to Use Trade Promotions

Manipulate Demand
Pull Strategies creating or increasing customer demand so product is pulled through the channel. Push Strategies give channel members reasons to carry products or give them better shelf space so product is pushed through the channel.

Attention
POPs get attention and stimulate impulse purchases.

Motivation
Contests, trade deals, and other incentives motivate trade/channel members to make sales.

Information
Trade show displays give information about products, allow companies to gather, and compare products.
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What are crossover promotions?

Promotions that cross over to other areas of marketing and blur the lines between promotion, advertising, and public relations.
Sponsorships Event marketing Interactive and Internet promotions Loyalty programs Comarketing/partnership promotions

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Crossover Promotions:
Sponsorships and Event Marketing
Sponsorshipscompanies support an event, sporting event, concert, or charity either financially or by donating supplies and services. Event marketingbuilding a products marketing program around a sponsored event, such as the Olympics or a golf tournament.
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Crossover Promotions:
Other Promotional Support
Blimps, balloons, inflatables, and skywriting planes capture attention and create excitement at events
Goodyear Blimp Met Lifes Snoopy blimps Inflatable Spiderman to promote the movie

Internet sweepstakes Internet coupons

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Crossover Promotions:
Loyalty Programs
Also called a continuity or frequency program A promotion to increase customer retention Frequent flyers programs, TGI Fridays Frequent Fridays These programs also capture information to use for more targeted promotions and advertising
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Crossover Promotions:
Partnership Programs
Comarketing involves manufacturers developing marketing communication programs with their main retail accounts, instead of for them. Cobranding occurs when two companies come together to offer a product (e.g., American Airlines, Citibank Visa) With licensing, one company gives another company the right to use its legally protected trademarks and logos on products and in advertising or promotion. Tie-ins are when two companies are displayed, advertised, or promoted together to multiply impact. (e.g., McDonalds Shrek Happy Meals)
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Promotion Strategy:
Promotion Objectives
Introduce a new product Create brand awareness Brand building
Create affinity between brands and buyers Create brand involvement through positive associations

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Promotion Strategy:
The Issue of Brand Building
Brand building is long-term and focused on the brands core values, while promotion is short term and price-focused. Critics say price promotions can undermine the brands established values and erode customer brand loyalty. Proponents say promotion can help build brand image. The solution: advertising must be more accountable and promotion more brandfocused; and they must work together. Prentice Hall, 2009

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Promotion Strategy:
Promotion Integration
Advertising and promotion have different strengths that, when combined with other marketing communication tools, can effectively accomplish objectives. Both seek to increase the number of customers and usage of the product by existing customers.
Advertising Creates a brand image over time Relies on emotional appeals Adds tangible value to product or service through image Contributes moderately to short-term profitability Promotion Creates immediate action Added value strategies rely on rational appeals; impulse appeals use emotion Adds tangible value to product or service Contributes greatly to short-term profitability
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Promotion Strategy:
Promotion Effectiveness
Effectiveness is measured by volume, response rates, and redemption (coupons, refunds, rebates) rates. Payout planning seeks to produce promotions that increase sales and profits. Promotions can deliver sales but they must be well planned and executed in order to enhance the brands reputation.

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Macys Department Store

The Macys Web site features not only a price discount, but also several other deals to encourage store visits.

Visit the Site

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Discussion Questions

Discussion Question 1
Tom Jacksons marketing professor is covering some promotion methods, explaining that in selecting the consumer sales promotion, planners must know the brand situation and objectives before techniques are chosen. Some techniques tend to increase product use, and others are used to get new consumers to try the product. Which methods belong with which objective and why? the professor asks. How should Tom answer this question?
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Discussion Question 2
Janice Wilcox is a brand manager for a new line of eye cosmetics. She is about to present her planning strategy to division management. Janice knows her company has been successful in using sales promotion plans lately, but she has strong misgivings about following the company trend. This new line must create a consumer brand franchise, and promotion isnt the best way to do that, she thinks to herself. How is sales promotion weak in building and maintaining a brand? Should Janice propose no promotion, or is there a reasonable compromise for her to consider?
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Discussion Question 3
Three-minute debate: You have just been named product manager for a new FDA-approved pharmaceutical, a diet pill, that helps reduce hunger. Should you use a push or pull strategy to introduce this new product? Organize into small teams with each team taking one side or the other. In class, set up a series of three-minute debates, with each side having half that time to argue its position. Every team of debaters has to present new points not covered in the previous teams presentations until there are no arguments left to present. Then, the class votes as a group on the winning point of view.

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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

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