Chapter 13 (part3) - Lecture notes/ Module 12 PDF

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Clear and descriptive lecture notes cover the material and extra examples to help enhance understanding and clarity of the concepts and have greater practical comprehension. These notes supplemented my success in the course, and I attained an A letter grade with 98% in the course. Reading these note...

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Chapter13 (part3)

Sales Promotion Sales promotion consists of short-term incentives to encourage the purchase or sale of a product or service. Whereas advertising offers reasons to buy a product or service, sales promotion offers reasons to buy now. Sales promotion tools are used by most organizations. They are targeted toward final buyers through consumer promotions, retailers and wholesalers through trade promotions, business customers through business promotions, and members of the sales force through sales force promotions. Several factors have contributed to the rapid growth of sales promotion. First, product managers view promotion as an effective short-run sales tool. Second, the company faces more competition, and competitors are using sales promotion to help differentiate their offers. Third, advertising efficiency has declined because of rising costs, media clutter, and legal restraints. Finally, consumers are demanding lower prices and better deals. Sales promotions can help attract today’s more thrift-oriented consumers.

Sales Promotion Objectives

Sales promotion objectives vary widely. Sellers may use consumer promotions to urge short-term customer buying or boost customer−brand engagement. Objectives for trade promotions include getting retailers to carry new items and more inventory, buy ahead, or promote the company’s products and give them more shelf space. Business promotions are used to generate business leads, stimulate purchases, reward customers, and motivate salespeople.

Consumer Promotion Tools Consumer promotions include a wide range of tools. This table shows the customer promotion tools of samples, coupons, rebates, price packs, and premiums. Samples are offers of a trial amount of a product. Sampling is the most effective, but most expensive way to introduce a new product or create new excitement for an existing one. Coupons are certificates that save buyers money when they purchase specified products. Rebates, or cash refunds, are like coupons except that the price reduction occurs after the purchase rather than at the retail outlet. The customer sends a proof of purchase to the manufacturer, which then refunds part of the purchase price by mail. Price packs, also called cents-off deals, offer consumers savings off the regular price of a product. The producer marks the reduced prices directly on the label or package.

Premiums are goods offered either free or at low cost as an incentive to buy a product. This table shows the customer promotion tools of advertising specialties, point-of-purchase promotions, contests, sweepstakes, games, and event marketing. Advertising specialties, also called promotional products, are useful articles imprinted with an advertiser’s name, logo, or message that are given as gifts to consumers. Point-of-purchase (POP) promotions include displays and demonstrations that take place at the point of sale. Contests, sweepstakes, and games give consumers the chance to win something, such as cash, trips, or goods, by luck or through extra effort. Marketers promote brands through event marketing or event sponsorships. Firms can create their own brand-marketing events or serve as sole or participating sponsors of events created by others.

CONSUMER-ORIENTED SALES PROMOTION Consumer-oriented sales promotion consists of sales tools used to support a company’s advertising and personal selling directed to ultimate consumers. Also called consumer promotions. •Coupons and •Deals Self- liquidating- cost charged to the consumer covers the cost Premiums and Contests

Value-based- win product, enter to win a car Experience-based-win a trip to the season finale of American idol Sweepstakes and Samples

Point-of-Purchase Displays and Rebates Product placement is a consumer sales promotion tool that uses a brand-name product in a movie, television show, video game, or a commercial for another product. Reverse product placement- when something comes out of a movie or show- like Bubba Gump Top Gun- Ray Bans went from 100K to 7M pairs in 5 years Product Placement

Trade Promotions Manufacturers direct more sales promotion dollars toward retailers and wholesalers than to final consumers. Trade promotions can persuade resellers to carry a brand, give it shelf space, promote it in advertising, and push it to consumers. Manufacturers use several trade promotion tools. Many of the tools used for consumer promotions—contests, premiums, displays—can also be used as trade promotions. The manufacturer may offer a straight discount off the list price on each case purchased during a stated period of time (also called a price-off, off-invoice, or off-list).

They may offer an allowance (so much off per case) in return for the retailer’s agreement to feature the manufacturer’s products in some way. Manufacturers may offer free goods, which are extra cases of merchandise, to resellers who buy a certain quantity or who feature a certain flavor or size. They may also offer push money—cash or gifts to dealers or their sales forces to “push” the manufacturer’s goods. Finally, retailers may be given free specialty advertising items that carry the company’s name, such as pens, calendars, memo pads, flashlights, and tote bags.

Business Promotions Business promotions are used to generate business leads, stimulate purchases, reward customers, and motivate salespeople. Business promotions include many of the same tools used for consumer or trade promotions. Additional major business promotion tools include conventions and trade shows and sales contests. Many companies and trade associations organize conventions and trade shows to promote their products. Firms selling to the industry exhibit their products at the trade show. Vendors at these shows receive many benefits, such as opportunities to find new sales leads, contact customers, introduce new products, meet new customers, sell more to present customers, and educate customers with publications and audiovisual materials. A sales contest is a contest for salespeople or dealers to motivate them to increase their sales performance over a given

period. Sales contests motivate and recognize good company performers, who may receive trips, cash prizes, or other gifts....