Sales Promotion: Offering Incentives

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Sales Promotion Offering Incentives
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What is Sales Promotion?

• An incentive to buy the brand created by changing
  the price/value relationship
  
• Lower the price of the brand
• Add value to the brand

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Sales Promotion Spending

• Total for 2002 233,699,000,000

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Sales Promotion vs. Advertising

• In 2002
• Consumer sales promotion 30.6
• Trade sales promotion 26.6
• Advertising 37.6

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Sales promotion spending by type

• Point of purchase 23.4
• Games, contests, sweepstakes 20.6
• Coupons 17.1
• Premiums 17.1
• On-line 15.4
• Sampling 9.1

• Direct mail 36.0
• Events 29.7
• Ad specialties 19.4
• Sponsorships 17.1
• Co-op 15.4
• Trade shows 9.7

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Spending Forecast for 2003

• Same as 2002 53.1
• More than 2002 30.9
• Less than 2002 13.1

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Sales Promotion Example

• Kmart holiday promotion
• New web site launching this Thursday
• Win Your Holiday Wish sweepstakes gives 1 500
  shopping spree each day
  
• Kmart Rewards, credit card giving 10 back for
  every 250 purchased

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Why Has Sales Promotion Grown?

• Increased retailer power
• Declining brand loyalty
• Increased promotion sensitivity
• Brand proliferation
• Consumer market fragmentation
• Short-term focus
• Increased accountability

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Consumer sales promotion goals

• Trial
• Loading
• Purchase continuity

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Consumer sales promotion techniques

• Coupons
• FSIs
• In-ad
• On-pack
• Mail
• Special packs
• In-pack
• On-pack
• Near-pack
• Specialty containers

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Consumer sales promotion techniques

• Continuity programs
• Refunds
• Sweepstakes and contests
• Through-the-Mail Premiums
• Free-in-the-mail
• Self-liquidating

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Consumer sales promotion techniques

• Sampling
• Direct mail
• Door-to-door
• Demonstrator
• Co-op
• Print
• In-store pack
• In- or on-pack
• Consumer request

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Consumer sales promotion techniques

• Price-offs

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Trade Sales Promotion Goals

• Hold/gain shelf space
• Displays
• Featuring

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Impact of displays/featuring

• Average sales increase with a 10 price cut
  20
  
• Increase with 10 price cut AND ad feature 78
• Increase with 10 price cut AND display 105
• Increase with all three 203

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Trade sales promotion techniques

• Buying allowance
• Off-invoice allowance
• Free goods
• Advertising/display allowance
• Buy-back allowance
• Spiffs/mystery shopper
• Trade coupons

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Other trade issues

• Slotting allowances
• Forward buying
• Diversion

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Consumer Franchise Building

• Techniques
• Sampling
• Manufacturers coupon with selling message
• Consumer demonstrations
• Consumer education and service material

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• Non-CFB techniques
• Co-op ads
• Price-offs
• Premiums (unless tied to brand)
• Contests/sweepstakes
• Trade coupons
• Coupons without a selling message

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Consumer Franchise Building

• CFB activities affect sales for about 4 years
• Non-CFB activities affect sales for 1 year or
  less
  
• When you spend too much on non-CFB relative to
  CFB, profits decline within 2 years

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What Sales Promotion Cant Do

• Change negative attitudes
• Reverse a declining sales trend
• Create a brand image
• Make up for insufficient advertising