Welcome!
Sales Promotion
Dr. Satyendra Singh
Professor, Marketing & International Business
University of Winnipeg, CANADA
Objectives of Sales Promotions
↑$, must not lose (ie. marginal gain minus marginal costs ≥ 0)
Buy extra through incentives (operant)
Schedule of reinforcement – continuous (points, EDLP), partial (EU), shaping
Expedite sales
Trial purchase – new product, may fail w/o promo
Repeat purchase – load, no switch
Consumption – recipe books, bonus, load
Brand equity – involvement
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Why Promotion?
Strategic importance – sales vs image (equity), balance
Reaching specific target – culture
Promotional sensitivity – no promotion, no buy
Declining brand loyalty – switch if other brand is better
Brand proliferation – incentive, ↑competition
Short-term focus – more reliable, immediate than ad
Accountability – easy to measure vs ad
Power of retailers – shelf space
Competition – differentiator, no creative ad always
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Strategies (image?)
Franchise building
Non-Franchise building
Across product lines
Across geographic markets
Tactics (incentive?)
Value of incentive – threshold, % vs $ off
Timing – how long
Distribution – Now or delayed
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Types of Sales Promotions
Consumer Promotions
$ to consumers to build demand – expensive, USP, superior brand
Pull Strategy
Trade Promotions
Push product through the channel to build demand – economical, no pull if push
Push Strategy
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Pull strategy Push strategy
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Consumer Promotion
Sampling
Coupon
Discount
Premiums
Refunds/rebates
Contests
Sweepstakes
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Trade Promotion
Trade allowance
Point of sales display
Contests /incentives
Sales training
Trade shows
Cooperative ad
- Ingredient sponsored
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Consumer Sales Promotion
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KIND OF SALES PROMOTIONS | OBJECTIVES | ADVANTAGES | DISADVANTAGES |
Coupons | ↑ demand | ↑ retailer support | delay purchases |
Deals | ↑ competitor’s reactions | ↓ consumer risk | delay purchases, ↓perceived product value |
Premiums | Build goodwill | Consumers like free merchandise | Consumers buy for premium, not product |
Contests | ↑ consumer purchases | ↑ consumer involvement | Require creative or analytical thinking |
Sweepstakes | ↑ buy, ↓ brand switching | Get customer to try product | ↓ sales after sweepstakes |
Samples | ↑ new product trial | ↓ consumer risk | expensive |
Loyalty programs | ↑ repeat purchases | Help create loyalty | expensive |
Point-of-purchase displays | ↑ product trial | Provide good product visibility | ↓ retailer to allocate high traffic space |
Rebates | ↑ purchases, stop sales decline | Effective at stimulating demand | Easily copied, ↓perceived product value |
Product placements | ↑ new products display | Positive message | Little control over presentation of product |
Communication and Behavioral Objectives
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Immediate Trial Repeat Repeat No ad
sample Discount Coupon
In-store coupon Premium
Delayed Coupon on package coupon
by media mail-in refund
Mail-in refund
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Coupon Redemption Rates, USA, 2015
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Media | 1% |
Direct mail | 5% |
Handout | 5% |
On-shelf | 10% |
Internet | 10% |
Instant | 20% |
Cost per Coupon redeemed
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Distribution costs ($10/mill), 5m circulation | $50k |
Coupon response rate 2% | 100k |
Redemption costs (if face value $1) | $100k |
Retailers’ costs: 10% | $10k |
Total costs of redemption: 50k + 100k + 10k | $160k |
Cost per coupon redeemed: $160k/100k | $1.6 |
Actual product sold on redemption (if misredemption 10%) 100k x .9 | $90k |
Cost per product moved ($160k/$90k) | $1.78 |
Push strategy
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Objective
Get distribution for new product
Maintain support for established product
Build retail inventory
Encourage retailer to display brand
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Trade Promotion
Trade allowance – ad in store, away
Point of sales display – place-based ad
Contests/Incentives – CSR $ vs suitable product
Cooperative ad – HZ, VT, ingredient-sponsored
Sales training – technical products
Trade shows
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What is objective of the promotion?�Is it successful? Assume missing data logically.
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Questions?�s.singh@uwinnipeg.ca