Trade-Oriented and ConsumerOriented Sales Promotions

Business 9318, Fall 2001 Dr. Katherine Gallagher

Objectives
To discuss the role of sales promotion in influencing the trade (wholesalers, retailers, salespeople) To discuss the role of sales promotion in influencing the behavior of consumers

Trade- Oriented Promotions

Directed at wholesalers, retailers, and other marketing intermediaries First step in the sales promotion effort Theoretically, the incentives are passed on to consumers

Objectives
Obtain distribution for new products Maintain trade support for established brands Encourage retailers to display established brands Build retail inventories

Characteristics of Successful Trade-Oriented Promotions

Financial incentive Correct timing Minimal retailer effort and cost Quick results Improve retailer performance

Types of Trade-Oriented Sales Promotions

Trade allowances Point-of-purchase materials Cooperative advertising and vendor support programs Trade contests and incentives Trade shows Specialty advertising Training programs

Trade Allowances
Types of trade allowances
buying allowances promotional allowances slotting allowances

Abuses
forward buying diverting

Alternatives to trade allowances

EDLP pay-for performance

Point-of-Purchase Materials
Types of p.o.p.
permanent p.o.p. temporary p.o.p. in-store media

Functions
informing reminding encouraging merchandising

Benefits both manufacturers and retailers

best for brands with strong consumer franchises

Co-op Advertising
Types
(horizontal co-operative advertising) (ingredient-sponsored co-operative advertising) vertical co-operative advertising
manufacturer programs retailer-initiated projects

Trade Contests and Incentives

Types
product or program sales new account placements merchandising efforts

Potential conflicts

Objectives of Consumer-Oriented Sales Promotions

Obtaining trial and repurchase Increasing consumption of an established brand Defending current customers Targeting a specific market segment Enhancing IMC and building brand equity

Consumer-Oriented Sales Promotion Techniques

Samples Coupons Premiums Contests and sweepstakes Refunds and rebates Bonus packs Price-off deals

Samples
Criteria
low unit value divisible superior benefits short purchase cycle

Methods
door-to-door mail in-store on-package Internet

Coupons
Oldest, most widely used Very effective Problems
forecasting response used primarily by current users, not new users low redemption rates and high costs misredemption

Coupons (2)
Methods of distribution
FSI direct mail newspapers and magazines in/on pack
regular cross-ruff instant

in-store Internet

Premiums
Trend is away from gimmicks to value-added Free premiums
in/on pack mail in airline miles

Self-liquidating premiums

Contests and Sweepstakes

Increasingly popular Contest
involve consumer with the brand

Sweepstakes
game scratch-off card

Problems
legal considerations ? contribution to CFB professional/hobbyist participation

Refunds and Rebates

Generally high response, especially as size of savings increases Problems
negative consumer perceptions

Sales Promotion Addiction

Easier to offer an immediate price savings than to differentiate the brand
loss in perceived value of the brand cherry-pickers

Attribution theory Sales promotion trap

Sales Promotion Trap

OUR FIRM ALL OTHER Cut back Maintain FIRMS promotions promotions Cut back Higher profits for Market share promotions all goes to our firm Maintain Market share goes Market share promotions to all other firms stays constant; profits stay low

Considerations in Developing a Sales Promotion

Short term impact
sales

Long term effect on the brand

brand franchise profitability

Competitive reaction
retaliatory promotions

Quick fix?