Transcript moriarty8e_media_16

Advertising Principles
and Practices
Sales Promotion,
Events, and
Sponsorships
Questions We’ll 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, there’s 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 firm’s 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 Deals—contemporary
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
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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 brand’s 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?
• Trade—all 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 isn’t
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
retailer’s 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.
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–
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Sponsorships
Event marketing
Interactive and Internet promotions
Loyalty programs
Comarketing/partnership promotions
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Crossover Promotions:
Sponsorships and Event Marketing
• Sponsorships—companies
support an event, sporting
event, concert, or charity
either financially or by
donating supplies and
services.
• Event marketing—building
a product’s 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 Life’s 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 Friday’s
“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., McDonald’s 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 brand’s
core values, while promotion is
short term and price-focused.
• Critics say price promotions
can undermine the brand’s
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.
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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 brand’s reputation.
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Macy’s Department Store
The Macy’s 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 Jackson’s 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 isn’t 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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