ADV 318J Midterm: Exam 4 Study Guide

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17 May 2016
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Exam 4 Study Guide (15,16 & 18)
Chapter 15: Sales Promotion and POP
Q: Sales promotions and POP are ____ and work in ways ____ or _____ don’t.
A: Sales promotions and POP work are IBP tools and work in ways that traditional or digital media don’t
Sales Promotion: using incentives to create a perceptions of greater brand/product value
POP plays a role on point of purchase but is not the leading tool of IPB
oMaterials used in the retail setting to attract consumers using displays to highlight price
info, primary benefits
Sales promotion is key in IBP campaigns- short term sales
oConsumer price discount – samples
oDealer incentives
3 types of sales promotions
Consumers: induce household consumers to purchase a brand
Trade Market: motivate distributers and wholesalers, and retailers to stock and feature a brand
Business Market: Cultivate buyers in large corporations who make purchase decisions
Q: What does the message in sales promotion feature?
A: Price reductions, free samples, a prize (or a incentive) for consumers to try a brand or retailers to
feature a brand in stores. (Example: glad kitchen trash bags feature free sample inside)
Consumer-Market sales promotions: Price promotions and includes
Coupons/ecoupons, Price off deals, Premiums, Contests and sweepstakes, Sampling and trail
offers, Rebates, Loyalty/frequency programs
Trade Market Sales promotions:
P-O-P displays, Incentives, Allowances, Cooperative advertising, Sales training
Business to market sales promotion
Trade shows, Premiums, Incentives, Loyalty and frequency programs
Purpose of Sales Promotion: stimulate short-term demand, encourage brand switching, induce trial use,
promote price orientation, obtain immediate often measurable results
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Purpose of Advertising: cultivate long-term demand, encourage brand loyalty, encourage repeat
purchases, promote image/feature orientation, obtain long-term effects-often difficult to manage
The importance and growth of sales promotions
When a firm determines that a more immediate response is needed than adv sales promotions
are designed to provide that effect to target consumers in a household, retailers, distributors, or
business buyers.
Growth in the Use of Sales Promotions
Firms are shifting $ from media adv budgets into promotions
oMore pressure for short term profits – pressures from stockholders to increase quarter
by quarter revenue – consumer shops for free fires they will buy something else
(McDonalds)
oIncreased needs for accountability – companies are demanding more accountability in
marketing, adv, and promotions and it’s easier to document the more immediate effects
of sales promotion.
oCan be cheaper than traditional media
oEasy and quick to measure effectiveness
oConsumer behavior is more sophisticated and fickle- demands greater value- more
deals increase the value of a brand in the shopper mind- not necessarily mean they are
choosing the lowest priced item
oConsumers expect short term price reduction
oCan combat parity- gaining attention from the amount of products by using sales
promotions such as coupons- sales comparing shampoos (easier to choose coupon ones)
oRetailers wield more power – Target, Home Depot, and Costco are dominating the
retail in the US. Consumers demand better quality products at a lower price these
retailers adapt to the preferences – deals are determined in P-O-P displays, slotting fees
(payment for shelf space), case allowances, and co-op adv.
Manufactures use more and more sales promotion to gain good relations with
the powerful retailers because they are a critical link to the consumer
Objectives for Consumers Market Sales Promotion
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Stimulate Trial Purchase: used when a firm wants to attract new users, sales promotion tools
can reduce the consumer’s risk of trying something new- which may stimulate a purchase
oThis is trying to get people to try the brand of coffee not the product category of coffee
(they can’t initiate product category in mature categories like coffee)
Stimulate Repeat Purchase: loyalty or frequency programs – coffee punch cards
Stimulate Larger Purchases: Price reductions for two for one can stimulate consumers to stock
up- shampoo is double packed for a reason.
Introduce a brand: it motivates trial purchase and attention which is why it’s common for new
brands – Curand distributed kids band-aids in McDonald’s Happy Meals (huge success)
Combat or Disrupt competitor’s strategies: A well timed sales promotion that offers more
discounts can disrupt the competitor’s campaign!
Contribute to Integrate Brand Promotion: additional value a different message that can be used
in IBP/ marketing mix
Consumer Market Sales Promotion Techniques
Coupons: Entitles a buyer o a designated price reduction for a product or service
o360 billion used- online couponing (Groupon- loses a lot of money even though there are a
lot of followers)
Advantages: discount to price sensitive consumers while still selling the product full
price to other consumers, induce brand switching, manufacture controls timing and
distribution of coupons- so the retailer doesn’t damage the brand, stimulates
repeated purchase, regular consumers to trade up within a brand array- users of low
price diapers will try the premium version of the brand with a coupon
Disadvantages: coupons expire and the timing of that is out of the control for the
consumer, heavy redemption by regular brand buyers reduces a firm’s profitability,
must be careful distribution can be more than face value of coupon, fraud of
coupons: redemption of coupon of consumers who do not purchase the coupon
brand, redemption of coupon by salesclerk without consumers purchases, illegal
copying of coupons
Price off deals: offers a consumer cents or dollars off merchandise at the P-O-P through special
marked packages- off the manufactures profit margin-
o they like it because it controllable price off at the P-O-P can be positive against competitors
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