Transcript File - mba 671 distribution management

LECTURE 7
SALES PROMOTION
Distribution Management
M Wahidul Islam
Spring 2015
Planning,
Forecasting
& Budgeting
Warehousing
and Logistics
Channel
Information
Systems
Sales Force
Management
Elements of
Distribution
Management
Distribution
Channels
Product
Pricing and
Promotion
Product
Visibility
WHAT IS SALES PROMOTION?
 “Sales
Promotion, a key ingredient in
marketing campaigns, consist of a diverse
collection of incentive tools, mostly shortterm, designed to stimulate quicker or
greater purchase of particular products or
services by consumers or the trade”
Philip Kotler
BENEFITS OF SALES PROMOTION
MANUFACTURERS

Price differentiation

Trial

Increase in sales

Build a database

Easy to design and implement and less-expensive

Useful for small player
BENEFITS OF SALES PROMOTION
CONSUMERS

Loyals vs Switchers

Price sensitive customers
BENEFITS OF SALES PROMOTION
TRADERS

New product introduction

Increased sales traffic
DRAWBACKS OF SALES PROMOTION

Manufacturers
Reduction in brand value
 Dilution in quality image


Consumer


Confusion
Traders
Price-sensitivity
 Increased competition

DIFFERENT CONSUMER PROMOTIONS
Sampling
 Coupons
 Premiums (gifts)
 Contests & Sweepstakes (or Prizes)
 Refunds and rebates
 Price-offs
 Bonus packs
 Frequency programs
 Event marketing
 Point-of-Purchase

SAMPLING

In-store distribution


Direct sampling



Only respondents get the free
sample
Media sampling

Selective
sampling
Direct
sampling
Sampling
Sample is included in the media
outlet
Selective sampling

In-store
distribut
ion
Delivered to a mailing address
(home / office)
Response sampling


Direct from retail store
Samples are distributed at a site
/ event /
Media
sampling
Response
sampling
Sampling is one of the most expensive ways of consumer promotion as
there is no guarantee that it will lead to a future purchase.
However, most effective for launching a new product.
COUPONS – A PRICE REDUCTION OFFER

Instant redemption coupon


When competitors products are
scanned, a coupon is given
Response
offer
coupons
Coupons
Bounce –
back
coupons
Cross-ruff coupons


Coupons are placed inside
packages so that consumers are
encouraged for repeat purchase
Scanner – delivered coupons


Instant
redemptio
n coupon
Bounce – back coupons


Can immediately redeem the
coupon while making the
purchase
Coupon for one product places
inside another (bundling)
Response offer coupons

Issued on request of a customer
Crossruff
coupons
Scanner
–
delivered
coupons
Can be difficult to manage.
Brands that are readily recalled by consumer, face value of the coupon,
the ease of distribution method and flexibility are key point in successful
promotion planning using coupons.
PREMIUMS / GIFTS

In or On package premiums


Free in the mail premiums


After proof of purchase are received by the manufacturer
Self liquidating premiums


Small gift inside / strapped on the package
Consumers pays the cost for the gift and the handling as
well
Store or manufacturer premiums

Given by manufacturer or retailer when the customer buys
the product
Have high cost, but can add value to the product / brand.
They can attract new customers and thank the existing customers.
OTHERS

Contests


Consumer buy the product
Sweepstakes

Participants do not require to buy the products
Refunds and Rebates
 Price-offs
 Bonus packs
 Frequency and loyalty programs
 Event marketing and Event Sponsorship
 Point-of-Purpose


Includes posters, danglers, banners, stand-up racks, brand
logos, products dispensers
TRADE PROMOTIONS

Directed towards the channel members OR
Resellers





Retailers
Wholesalers
Distributors
Dealers
Usually companies spend more money on Trade
Promotions than Consumer promotions
OBJECTIVES OF TRADE PROMOTION



Persuade the reseller to carry the company’s product
To encourage retailers to promote / support company’s
product
To encourage retailers to display company’s PoP
material

To get better shelf space

To stock and display new products

To make retailers and their sales staff more
interested to push the company’s products
TYPES OF TRADE PROMOTIONS
Trade
Allowances
Cooperative
advertising
Trade
Promotions
Trade
Shows
Trade
Contests
Training
programs
TYPES OF TRADE PROMOTIONS
TRADE ALLOWANCES



A major type of trade promotion
Resellers are offered financial incentives to
purchase, promote, display company’s products
Different execution types
Off-invoice allowance
 Slotting allowance



New Product Placement
Promotional / Merchandizing allowance

Advertising and sales support activities
Drop-ship allowance
 Exit fees

TYPES OF TRADE PROMOTIONS
TRADE CONTESTS



Monetary rewards given to resellers’ sales
persons for achieving sales goals
Also known as spiff money or push money
Can have negative impact on end customers as
sales persons may push the wrong product
TYPES OF TRADE PROMOTIONS
TRAINING PROGRAMS & TRADE SHOWS


Training Programs

Training for resellers to know more about the
product’s features, benefits and USPs

Can be conducted in separate venue or during the
sales person’s visit
Trade Shows

Trade show / trade fair / exhibitions a useful way of
showcasing the product

Can convey products benefits to resellers as well as
end customers as well
TYPES OF TRADE PROMOTIONS
COOPERATIVE ADVERTISING


Cost of advertising is shared by two or more
organizations
Three types

Horizontal Cooperative Advertising


Vertical Cooperative Advertising


Group of retailers providing similar products sponsor a
common campaign
Company and retailer together run a campaign
Ingredient-sponsored Cooperative Advertising

Manufacturers of raw materials and component parts help
successful promotion of the end product to the customer.
REFERENCES

Chapter 17 – Sales Promotion
 Havaldar K. and Cavale V. M. (2011) Sales and
Distribution Management – Text and Cases (2nd Edition)
Delhi: Tata McGraw-Hill Education Private Limited
END