Sales Promotion

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MKT 425 Selling and Sales Promotion
Chapter

• Sales Promotion

Afjal Hossain Assistant Professor Department of
Marketing Patuakhali Science Technology
University
Kenneth E. Clow Donald Baack
Integrated Advertising, Promotion Marketing
Communications 2nd ed.
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Sales Promotion

• Also refers to consumer promotion.
• Are the incentives aimed at a firms customers.
• This type of promotions are directed toward
  individuals or firms that use the product and do
  not resell it to another business.

Leon G. Schiffman Leslie Lazar Kanuk Consumer
Behavior 8th edition, Prentice Hall 2006

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Why Consumer promotion?

• Stimulate purchase
• Introduce as a trial
• Create new users
• Increase repurchase from occasional customers
• Reward loyal customers

Leon G. Schiffman Leslie Lazar Kanuk Consumer
Behavior 8th edition, Prentice Hall 2006

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General Categories of Promotions

• Consumer franchise building
• To increase awareness loyalty of a brand.
• Goal Build a favorable image by pointing out
  unique features
• Ex style, design etc.
• Consumer Sales building promotions
• Focus on immediate sales.
• Ex discount, coupon etc.

Leon G. Schiffman Leslie Lazar Kanuk Consumer
Behavior 8th edition, Prentice Hall 2006

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Promotions that Work

• Unique, Desirable Offering or Premise
• They make you believe you can win!
• Simple to Enter / Participate

Leon G. Schiffman Leslie Lazar Kanuk Consumer
Behavior 8th edition, Prentice Hall 2006

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Types/ Forms of Consumer Promotions

• Coupons
• Premiums
• Contests Sweepstakes
• Refunds Rebates
• Free samples/ Sampling
• Bonus Packs
• Price-offs
• Specialties
• Price Reductions

Leon G. Schiffman Leslie Lazar Kanuk Consumer
Behavior 8th edition, Prentice Hall 2006

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Types of Consumer Promotions ---

• Coupons
• price reduction offer to a consumer for
  achieving another thing.
• It may be percentage off the retail price. Three
  types of coupons are
• Instant redemption coupons
• Bonus-back coupons
• Scanner-delivered coupons

Leon G. Schiffman Leslie Lazar Kanuk Consumer
Behavior 8th edition, Prentice Hall 2006

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Types of Consumer Promotions ---

• Coupons Three types of coupons
• Instant redemption coupons
• This type of coupons are given out along with
  free samples of a product to encourage consumers
  to try a new brand.
• Bonus-back coupons
• This type of coupons are given inside packages
  to encourage repeat purchase.
• Scanner-delivered coupons
• Firms issue coupons at cash register by
  triggering an item being scanned. The item being
  scanned is normally a competitors product. It is
  used to brand switching.

Leon G. Schiffman Leslie Lazar Kanuk Consumer
Behavior 8th edition, Prentice Hall 2006

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Types of Consumer Promotions ---

• Coupons Problems
• Reduced revenues
• Using coupon it is to reduce price of the
  product in case of the loyal customers in the
  next purchase. So, total revenue is reduced.
• Mass-cutting
• This problems occurs only for a fraudulent
  retail outlet/ illegal coupon ring.
• Counterfeiting
• Coupons are copied send back to the
  manufacturers. Newspaper generated black white
  coupons are easiest to counterfeit.
• Misredemptions
• It is of misrepresenting the coupon for a wrong
  size cane. Coupon for 250 gm cane rather than 500
  gm cane.

Leon G. Schiffman Leslie Lazar Kanuk Consumer
Behavior 8th edition, Prentice Hall 2006

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Types of Consumer Promotions ---

• Coupons Tactics to Improve Coupons Effectiveness
• The Face value of the coupon Higher value
• Distribution method Free standing inserts (FSI)
• Attractiveness

Leon G. Schiffman Leslie Lazar Kanuk Consumer
Behavior 8th edition, Prentice Hall 2006

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Types of Consumer Promotions ---

• Premiums
• prizes, gifts/ other special offers consumer
  receive while purchasing products
• In this case consumers pay full price of the
  product. Four types of premiums are
• Free-in-the-mail premiums
• In or on-package premiums
• Store or manufacturer premiums
• Self-liquidating premiums

Leon G. Schiffman Leslie Lazar Kanuk Consumer
Behavior 8th edition, Prentice Hall 2006

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Types of Consumer Promotions ---

• Premiums Four types of premiums
• Free-in-the-mail premiums
• Gifts, individuals receive for purchasing goods.
  To receive the gift, the customer must mail in a
  proof or purchase to the manufacturer, who then
  mails the gift back to the consumer. Sometimes,
  more than one purchase is required to receive the
  gift.
• In or on-package premiums
• small gifts such as toys in cereal boxes.
  Sometimes, the gift is disguised or packaged so
  the consumer must buy the product to find out
  which premium it contains. Ex Package of blades
  with the purchase of razor.
• Store or manufacturer premiums
• Gifts given by either the retail store or
  manufacturer when the consumers purchase a
  product. Ex Fast-food restaurants offer children
  a toy with the purchase of childs meal.
• Self-liquidating premium
• Consumers purchase when the manufacturers bear
  the shipping or handling costs just paying for
  the products price.

Leon G. Schiffman Leslie Lazar Kanuk Consumer
Behavior 8th edition, Prentice Hall 2006

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Types of Consumer Promotions ---

• Premiums Problems
• Time Factor
• The offers would be for a small time otherwise
  it will face a huge loss.
• Cost
• Higher cost premiums create more sales but cost
  more to provide.

Leon G. Schiffman Leslie Lazar Kanuk Consumer
Behavior 8th edition, Prentice Hall 2006

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Types of Consumer Promotions ---

• Premiums Building successful Premium Programs
• Match the premium to the target market
• Carefully select the premiums (avoid fads, try
  for exclusivity)
• Pick a premium that reinforces the firms product
  and image
• Integrate the premium with other IMC tools
  (especially advertising POP displays)
• Dont expect premiums to increase short-term
  profits

Leon G. Schiffman Leslie Lazar Kanuk Consumer
Behavior 8th edition, Prentice Hall 2006

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Types of Consumer Promotions ---

• Contests Sweepstakes

Contests Sweepstakes
Purchase is required to enter No purchase is required to enter
Consumers/ Participants to perform some type of activity Participants need not to perform any activity
The winner is selected based on who performs best or provides the most correct answers The chance of winning a sweepstakes are based on a probability factor
Cant be restriction for the purchase of the products Can be restricted for the customers to one entry per visit to the store or some other location
Consumer goods related Sports related
Leon G. Schiffman Leslie Lazar Kanuk Consumer
Behavior 8th edition, Prentice Hall 2006

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Types of Consumer Promotions ---

• Contests Sweepstakes Problems
• Costs
• to provide prize, entry forms, legal statements,
  supportive advertising etc.
• Consumer Indifference
• State lotteries, internet gambling create
  individual difference.
• Clutter
• Many companies can offer at a given time

Leon G. Schiffman Leslie Lazar Kanuk Consumer
Behavior 8th edition, Prentice Hall 2006

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Types of Consumer Promotions ---

• Contests Sweepstakes Creating successful C S
• Finding the right prize
• Undertake an advantage of a special event
• sports contest or celebration of any renowned
  person

Leon G. Schiffman Leslie Lazar Kanuk Consumer
Behavior 8th edition, Prentice Hall 2006

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Types of Consumer Promotions ---

• Refunds Rebates
• cash returns offered to consumers for the
  purchase of a product
• Consumers pay full price for the product but can
  mail in some type of proof of purchase and then
  the manufacturer refunds a portion of the
  purchase price.
• Refunds
• Rebates

Leon G. Schiffman Leslie Lazar Kanuk Consumer
Behavior 8th edition, Prentice Hall 2006

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Types of Consumer Promotions ---

• Difference between Refunds Rebates

Refunds Rebates
Cash returns on soft goods Cash returns on hard goods
Soft goods are food or clothing Hard goods are ticket items i.e. automobiles
Refunds are of small amount of money Rebates are of large amount of money
Refund on a food item is Tk. 50 Rebate on a car is Tk. 2,000
Refund is always on products Rebates is for both products services
Leon G. Schiffman Leslie Lazar Kanuk Consumer
Behavior 8th edition, Prentice Hall 2006

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Types of Consumer Promotions ---

• Refunds Rebates Problems
• Costs
• mailing record keeping cost involved.
• Lost revenue
• total revenue is decreased.
• Diminished Effectiveness
• no new purchase is evolved.

Leon G. Schiffman Leslie Lazar Kanuk Consumer
Behavior 8th edition, Prentice Hall 2006

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Types of Consumer Promotions ---

• Refunds Rebates Creating effective RR
• Visibility
• Perceived newness
• An impact

Leon G. Schiffman Leslie Lazar Kanuk Consumer
Behavior 8th edition, Prentice Hall 2006

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Types of Consumer Promotions ---

• Sampling
• encourage consumers to try new product
• Sampling is the delivery of actual product to
  consumers for their use or consumption. Samples
  are provided free of charge. Often, companies
  provide samples of products to potential clients.
  Sampling can be used in service sector i.e.
  Saloon or Dentist. Seven types of sampling
• In-store distribution
• Direct sampling
• Response sampling
• Cross-ruff sampling
• Media sampling
• Professional sampling
• Selective sampling

Leon G. Schiffman Leslie Lazar Kanuk Consumer
Behavior 8th edition, Prentice Hall 2006

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Types of Consumer Promotions ---

• Sampling Seven types of sampling
• In-store sampling
• when food product companies have personnel,
  cooking the food and passing it out to
  individuals in the store
• Direct sampling
• samples are mailed or delivered door to door to
  consumers.
• Response sampling
• samples are made available to individuals or
  businesses responding to a media offer on
  television, on the internet or from a magazine
  etc.

Leon G. Schiffman Leslie Lazar Kanuk Consumer
Behavior 8th edition, Prentice Hall 2006

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Types of Consumer Promotions ---

• Sampling Seven types of sampling
• Cross-ruff sampling
• samples of one product on another.
• Media sampling
• samples are included in the media outlet.
• Professional sampling
• samples are delivered by professionals, doctors
  provide free samples to patients.
• Selective sampling
• samples are distributed at a site i.e. state
  fair, parade, hospital, restaurant, sporting
  event etc.

Leon G. Schiffman Leslie Lazar Kanuk Consumer
Behavior 8th edition, Prentice Hall 2006

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Types of Consumer Promotions ---

• Sampling Problems
• Cost
• Samples are mailed, adding to the expense of
  the program.

Leon G. Schiffman Leslie Lazar Kanuk Consumer
Behavior 8th edition, Prentice Hall 2006

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Types of Consumer Promotions ---

• Sampling Effective use of samples
• It introduces a new product or a new version/ an
  existing product to a new target market or a
  prospect.
• Willing to switch brands if the trial use of the
  product was a positive experience.

Leon G. Schiffman Leslie Lazar Kanuk Consumer
Behavior 8th edition, Prentice Hall 2006

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Types of Consumer Promotions ---

• Bonus Packs
• encourage to buy existing product with an extra
  unit
• when an additional extra number of items is
  placed in a special product package then it is
  called bonus packs. Ex Buys 4 pens for the price
  of 3 pens in a bonus pack.

Leon G. Schiffman Leslie Lazar Kanuk Consumer
Behavior 8th edition, Prentice Hall 2006

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Types of Consumer Promotions ---

• Bonus Packs Problems
• When the bonus is small consumers often believes
  the price of the product has not truly changed.
• When the bonus is large, consumers tend to
  believes that the price was first increased up to
  compensate for the additional quantity.
• The size of the bonus catches the consumers
  attention, it may not convey the desired message.
  
• Bonus packs are costly because, additional
  amounts of product sell for the same or a similar
  price.

Leon G. Schiffman Leslie Lazar Kanuk Consumer
Behavior 8th edition, Prentice Hall 2006

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Types of Consumer Promotions ---

• Bonus Packs Effective use of Bonus Packs
• A retailer can build a good relationship with a
  manufacturer that uses a bonus pack to increase
  brand switching.
• Consumers like bonus packs because they get
  additional product at the same price.
• Reduce brand switching at a minimal cost for
  existing product.

Leon G. Schiffman Leslie Lazar Kanuk Consumer
Behavior 8th edition, Prentice Hall 2006

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Types of Consumer Promotions ---

• Price-offs
• encourage an display sales more not the actual
  product
• A price-off is a temporary reduction in the
  price of a product to the consumer. It is not on
  actual item but on a POP display, sign or shelf.
  It stimulates
• Sales of an existing product.
• Work well in the B2B area.

Leon G. Schiffman Leslie Lazar Kanuk Consumer
Behavior 8th edition, Prentice Hall 2006

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Types of Consumer Promotions ---

• Price-offs Problems
• Too many price-off offers can create a
  detrimental impact on the firms image.
• It devastates for profit margins

Leon G. Schiffman Leslie Lazar Kanuk Consumer
Behavior 8th edition, Prentice Hall 2006

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Types of Consumer Promotions ---

• Price-offs Effective use of price-offs
• It has an appeal of a monetary savings to
  consumers
• The reward is immediate

Leon G. Schiffman Leslie Lazar Kanuk Consumer
Behavior 8th edition, Prentice Hall 2006

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Types of Consumer Promotions ---

• Specialties
• Items given free to consumers and other
  stakeholders to help keep a brands name
  top-of-mind.
• These are normally low cost items, i.e.
  calendars, rulers, coffee mugs, T-shirts, pens
  etc.
• Basically non-profit organizations use
  specialties for opening new facilities.

Leon G. Schiffman Leslie Lazar Kanuk Consumer
Behavior 8th edition, Prentice Hall 2006

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Types of Consumer Promotions ---

• Price Reductions
• A featured price that is lower than regular
  price.
• Ex Buy one get one free, 30 more for same price
  etc.
• Sometimes the retailers sacrifices some of its
  profits to clear the stock.

Leon G. Schiffman Leslie Lazar Kanuk Consumer
Behavior 8th edition, Prentice Hall 2006

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