Sales

 Promotions  

Marcomm  &  Sales  Promo.ons   1  

 Advertising  &  Sales  Promotions  

Promo.onal   Origin   Func.onal  transla.on  

Term  

  Advertising aim’s at turning

the buyer or consumer’s
ADVERTISING   Advertere = to turn around
mind toward purchase

  Promovere = to move Promotion aims at

PROMOTION   forward or advance immediately stimulating
purchase

Marcomm  &  Sales  Promo.ons   2  

 Advertising  Vs.  Sales  Promotions  

§  Sales  promo+ons  are  o-en  confused  with  adver+sing  L  

§  What  are  some  differences  between  AD  &  SP???  

Marcomm  &  Sales  Promo.ons   3  

 Ad  Vs.  SP  

§  Adver+sing  is  long-­‐term  focused  while  SP  is  short-­‐term  

§  Adver+sing   gives   you   a   reason   to   buy,   while   SP   gives   you  
an  incen)ve  to  buy  
§  Adver+sing   is   hard   to   measure,   while   SP   is   easy   to  
measure  
§  Timing  of  presenta.on:    
§  Adver+sing  is  before  purchase  and  SP  is  with  purchase    

Marcomm  &  Sales  Promo.ons   4  

 Ad  Vs.  SP  

§  In  the  West,  the  Ra+o  of  AD:SP    

–  used  to  be  75:25  (40  years  back)    
–  Now  is  25:75    
§  In  India,  the  Ra+o  was  60:40  and  now  it  is  40:60.  
 

Marcomm  &  Sales  Promo.ons   5  

 Reasons  for  this  Increased  Promotional  Spend  

§  Growing  Power  of  the  Retailers    

§  Short-­‐term  Pressures  on  Sales  Dept.  
§  Increased  Promo+onal  Sensi+vity  
§  Decreasing  Brand  Loyalty  
§  Increased   Compe++on   &   CluVer   in   the   Market   è  
Differen+a+on  geXng  Harder  
§  Customer  Efforts  to  Bypass  ads  

Marcomm  &  Sales  Promo.ons   6  

 Sales  Promotion  -­‐  Definition  

§  Direct   short-­‐term   inducements   that   offer   an   extra   value  

or   incen+ve   for   the   product   to   the   sales   force,  
distributors   or   the   ul.mate   customer   with   the   primary  
objec+ve  of  crea.ng  an  immediate  sale.  

Marcomm  &  Sales  Promo.ons   7  

 OBJECTIVES  OF  SP  
è  Broadly,  there  are  two  objec+ves:    
§  Trial  
§  Usage  

Marcomm  &  Sales  Promo.ons   8  

 Initiators  of  SP  

INITIATORS OF SP

Manufacturers Retailers

Consumers
Sales force Distributors Consumers
Retail Promotions
Sales Trade Consumer
Force Promotions Promotions
Promotions

Marcomm  &  Sales  Promo.ons   9  

 Trade  Sales  Promotion  
§  Aimed  at  building  rela+onships  with  channel  partners  
§  Any  idea  on  the  types  of  trade  promo+ons???  

Marcomm  &  Sales  Promo.ons   10  

 Trade  Sales  Promotion  
§  Trade  Allowances  
 (Point-­‐of-­‐Purchase  Displays)  

Marcomm  &  Sales  Promo.ons   11  

 Trade  Sales  Promotion  

§  Incentives (Short-term initiatives)

–  quantity discounts
–  cash discounts
–  encourage the reseller to stock more
–  apply “stock pressure”

Marcomm  &  Sales  Promo.ons   12  

 Trade  Sales  Promotion  

§  Contests  
§   The  #  1  dealer  wins  a  trip  to  Thailand  and  back  
for  two  
§   Monthly  Contests  
§   Product-­‐wise  Contests  
§  Trade  Shows  
§  Co-­‐opera.ve  Adver.sing  
§  share   the   cost   when   channel   members   adver+se  
the  manufacturer’s  brand  

Marcomm  &  Sales  Promo.ons   13  

 Consumer  Promotions  

INITIATORS OF SP

Manufacturers Retailers

Consumers
Sales force Distributors Consumers
Retail
Consumer Promotions
Sales Trade
Force Promotions Promotions
Promotions

Marcomm  &  Sales  Promo.ons   14  

 Consumer  &  Retail  Promotions  
§  Both  aim  at  the  end-­‐user  (THE  CONSUMER)  
§  One  is  ini+ated  by  the  manufacturer  and  the  other  by  the  
retailer  
§  This   may   lead   to   conflic+ng   objec+ves   between   the  
manufacturer  and  the  retailer  

Marcomm  &  Sales  Promo.ons   15  

 Consumer  Promotions  

Consumer Promotions

Consumer Trial Promotions Consumer Usage Promotions

1.  Sampling 1.  Price-offs (Rebates, Warranties, Discounts)

2.  Coupons 2.  Bonus packs
(Manufacturer’s and Trade) 3.  Trade-In (Exchange offers)
3. Price-off techniques 4.  Free Product (Buy One Get One Free)
5.  Premiums/Give-away items (Buy Coffee
Get a Mug free)
6.  Contests and Sweepstakes
7.  Frequency / loyalty programs
8.  Demonstrations
9.  Personal Appearances (Celebrities)

16  
 Sampling  

§  Samples  and  Free  Trials  

§  Oldest  of  all  SP  techniques    
§  Gives   an   opportunity   to   experience  
products   (small   quan++es   or   for   a  
short   dura+on)   without   purchasing  
the  product.    
§  Very  useful  in  genera+ng  trial  
§  Examples:  
§  When  to  use  sampling?  

Marcomm  &  Sales  Promo.ons   17  

 Sampling  

§  New  product  category  introduc+on  (Speed  of  trial)  

§  Hendry  “polariza+on”:  Consumers  will  o-en  seVle  on  the  
first  ‘good’  brand  tried  
§  Superior  brand  introduc+on  in  an  established  category  
§  Where   adver+sing   is   inadequate   to   demonstrate   the  
brand’s  benefit(s)  
§  To  precede  seasonal  purchasing  
§  To  force  retail  distribu+on  

 
Marcomm  &  Sales  Promo.ons   18  
 Manufacturers’  Coupons  

§  Vouchers   or   cer+ficates   that   en+tle   the   buyer   to   a   price  

reduc+on  on  the  couponed  item  
§  Short-­‐term  in  nature  (expiry  date)    
§ Free-­‐Standing   Inserts   (FSI)   –   loosely   (i.e.,   inserted)  
within  media,  such  as  newspapers  and  direct  mail  
§ Cross-­‐Product   –   These   consist   of   coupons   placed  
within  or  on  other  products.      

Marcomm  &  Sales  Promo.ons   19  

 Trade  Coupons  
§  Offered  in  the  retailer’s  ads  /  fliers  
§  Done  with  the  consent  of  the  manufacturer  
§  Faster   and   easier   to   redeem   than   manufacturer’s  
coupons  
§  S+mulates  trial  in  local  areas  

Marcomm  &  Sales  Promo.ons   20  

 Price-­‐off  Techniques  
§  Refunds  or  Rebates  
§  Bonus  Packs  
§  Direct  price-­‐offs  
§  Warran+es  

Marcomm  &  Sales  Promo.ons   21  

 Price-­‐off  Techniques  
§  Rebate  (MIR  –  Mail-­‐in  Rebates)  
§  An   amount   paid   by   way   of   reduc+on,   return,   or   refund   on  
what  has  already  been  paid  or  contributed.    
§  Widely   used   in   the   West   by   automobiles   and   durables  
industry    

Marcomm  &  Sales  Promo.ons   22  

 Price-­‐off  Techniques  
§  Bonus  Packs  
§  150  gms  +  50  gms  free  Colgate    
§  Promo.onal  Pricing  /  “on  sale”  pricing/  
discounts  
§  One   of   the   most   powerful   sales  
promo+on  techniques    
§  short-­‐term  price  reduc+on    
§  Warranty:    
§  A  contract  offered  by  a  manufacturer  
to   a   consumer   to   provide   res+tu+on  
in   some   form   (such   as   money   back,  
replacement,   or   free   service   or  
repairs)  

Marcomm  &  Sales  Promo.ons   23  

 Consumer  Promotions  

Consumer Promotions

Consumer Trial Promotions Consumer Usage Promotions

1.  Sampling 1.  Price-offs (Rebates, Warranties, Discounts)

2.  Coupons 2.  Bonus packs
(Manufacturer’s and Trade) 3.  Trade-In (Exchange offers)
3. Price-off techniques 4.  Free Product (Buy One Get One Free)
5.  Premiums/Give-away items (Buy Coffee
Get a Mug free)
6.  Contests and Sweepstakes
7.  Frequency / loyalty programs
8.  Demonstrations
9.  Personal Appearances (Celebrities)

24  
 Consumer  Usage  Promotions  
§  Price-­‐off   (Direct)   –   Manufacturer   uses   price   reduc+ons   trying   to  
increase  sales  
§  Trade-­‐In  (Exchange  Offers)  
§  Loyalty   /   Frequency   programs   (Airlines,   stores,   hotels,   pizza  
purchasing  and  online  book  purchases)  

Marcomm  &  Sales  Promo.ons   25  

 Consumer  Usage  Promotions  
§  Free  Product  
§  Offer   free   products   but   with   the   condi.on   that   a   purchase   be  
made.      
§  The  free  product  is  in  the  form  of  addi+onal  quan++es  of  the  same  
purchased  product    
§  E.g.,  buy  one,  get  one  free.  

Marcomm  &  Sales  Promo.ons   26  

 Consumer  Usage  Promotions  
§  Premiums/  “Give-­‐away”  items  
§  Premiums   differ   from   samples   and   free   product   in   that   these  
o-en   do   not   consist   of   the   actual   product,   though   there   is  
o-en  some  connec+on.    

Marcomm  &  Sales  Promo.ons   27  

 Consumer  Usage  Promotions  

§  Demonstra.ons  

§  Many  products  benefit  from  customers  being  shown  how  products  
are  used  through  a  demonstra+on.      

§  Expensive  to  produce  

§  Personal  Appearances  

§  An  in-­‐person  appearance  by  someone  of  interest  to  the  target  
market,  such  as  an  author,  sports  figure  or  celebrity    

28  
 Consumer  Usage  Promotions  
§  Contests   are   special   promo.ons   awarding   value   to   winners   based  
on  skills  they  demonstrate  compared  to  others.      
§  Example,  a  baking  company  may  offer  free  vaca+ons  to  winners  
of  a  baking  contest.      
§  Contest   award   winners   are   o-en   determined   by   a   panel   of  
judges.      
§  Sweepstakes  or  drawings  are  not  skill  based  but  rather  based  on  
luck.      
§  Winners  are  determined  by  random  selec+on.      
§  Plethora  of  them  in  the  World  Cup,  IPL  

Marcomm  &  Sales  Promo.ons   29  

 CFB  &  Non  CFB  Promotions  
§  Consumer  Franchise  Building  Promo.ons  –    
§  Communicate   dis+nc+ve   brand   aVributes   and   contribute   to   the  
development  and  reinforcement  of  brand  iden+ty.  
§  Examples:   free   samples,   in-­‐store   demonstra+ons   and   service  
materials  like  recipes  
§  Consumer  non-­‐Franchise  Building  Promo.ons  –    
§  Basically   intended   to   generate   immediate   sales,   or   shorten   the  
buying  decision.  
§  Examples:  price-­‐offs,  coupons  and  free  gi-s  

Marcomm  &  Sales  Promo.ons   30  

 Interdependence  of  Ads  &  Promotion  
§  Synerge+c  /  interac+ve  effect  
§  Target   audience   overlap   in   exposure   to   adver+sing   and  
promo+on  
§  Ratchet  Effect  (William  Moran)  

Sales Promotion Alone Sales Advertising then Promotion

150

100

A P A P A P
P P P

Marcomm  &  Sales  Promo.ons   31  

 Negative  Consequences  of  SP  

§  CluVer  from  increased  compe++ve  promo+ons    

§  (as  they  are  very  easy  to  copy)  
§  A   heavily   priced   promoted   brand,   in   the   absence   of   prior  
adver+sing  that  strengthens  brand  aXtude,    
§  risks  being  regarded  as  a  ‘cheap’  brand  or  a  brand  that  “must  be  
in  trouble”.      

Marcomm  &  Sales  Promo.ons   32  

 Sum  Up!!!  
§  What  is  SP?  Objec+ves  &  Recent  Trends  
§  Adver+sing  vs.  SP  
§  Ini+ators  of  SP  
§  Types   –   Sales   Force,   Trade,   Consumer   and   Retailer  
Promo+ons  
§  CFB  and  Non  CFB  Promo+ons  
§  Interdependence  of  ads  and  SP  
§  Nega+ve  consequences  of  SP  

Marcomm  &  Sales  Promo.ons   33