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Chapter 8

MCS 3620 Chapter Notes - Chapter 8: Canadian Tire Money, Marketing Buzz, Costco


Department
Marketing and Consumer Studies
Course Code
MCS 3620
Professor
Bharat Sud
Chapter
8

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Chapter 8 Marketing Communications
Sales Promotion
Sales Promotion
Sales Promotion: An activity that provides incentives to bring about immediate response from customers
(distributors included)
Customer must be motivated to take advantage of the offer
The distributor must be motivated to support the offer by providing merchandising support
Company’s sales force must be motivated to sell the promotion to its trade customers
Customer Promotions: Incentives offered to customers to stimulate purchases of encourage loyalty
Includes coupons, free samples, contents, rebates, prizes, reward programs etc.
Planned to pull the product through the distribution channel
Org. creates demand for a product by directing its promo efforts directly at the customer
Many companies now include experiential marketing activities, often referred to as buzz marketing, in their
promo strategies
Trade Promotions: An incentive offered to channel members to encourage them to provide marketing &
merchandising support for a particular product
Include options such as discounts, allowances, cooperative advertising funds, dealer premiums &
incentives & point of purchase materials
Offering financial incentives to distributors encourages them to support the manufacturers promo plans
Push the product through the channel of distribution
Sales Promotion Planning
A sales promo plan is 1 component of a much larger plan and must directly fit into this, the marketing
communications plan
Sales promo plan adopts a short-term view & achieves objectives of more immediate nature
Sales promotions are activities that complement advertising
Advertising has goals of awareness comprehensions, conviction & action
Promos focus in on action
Very often an outside person will help with the sales promotion
The promo agency must assess the info provided by the client and then prepare a strategic plan that meet
objectives
Information in sales promo brief often includes…
Market Profile
Overview of sales & market share trends provides market perspective to the promo planners
Know if brand is leader, follower or challenger
Is market growing? What brands are growing in market?
Competitor Activity Profile
What communication strategies to the key competitors use
What are the roles of the various elements in the mix for each brand
What brands dominate the market and what are their mixes?
Target Market Profile
Customers described in terms of demo, psycho, geo graphic & behavioural characteristics
Shopping behaviour of targets
Sales Promo Objectives
Sales promotion plans focus on:
1. Generating trial purchases
2. Encouraging repeat/multiple purchases
3. Building brand loyalty
Budget
Funds for the sales promotion plan come from the overall marketing budget
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Will this be a large-scale national promotion or restricted to specific regions?
How much will the prize be?
What advertising is needed to create awareness of promo
The Sales Promotion Plan
Sales Promotion Plan: An action plan for communicating incentives to appropriate target markets at the right
time
Objectives are clearly defines, strategies justified and tactile details documented
Backend considerations are very important
E.g. details about how offer will be handled from the time the consumer responds to time the goods
are delivered must be precisely planned
The structure & content of a sales promo plan are the focus of this section
Sales Promo Objectives
Sales promotion objectives are statements that clearly say what the promo plan is to accomplish
Objective statements should be realistically achievable, quantifiable in nature (for measurement) and
directed at a carefully defined target market
The nature of the promo plan determines the objectives (consumer promotion vs. trade promotion)
Objectives for both are quite different but complement eachother when implemented
Consumer Promo Objectives
Most common objective is to encourage consumers to make a trial purchase
When a product is new or in growth stage of development there is a need to distinguish 1 brand from
another
Media-delivered coupons are a great promo too for encouraging trial purchase
2nd objective is to stimulate repeat purchases by existing customers
Or make existing customers purchase more at 1 time
3rd objective deals with CRN and objective is to encourage brand loyalty for extended period
Loyalty card is a good way to do this cause it brings consumer back
Trade Promo Objectives
Overall goal is to give sales a jolt in the short run
Trade promo plans are designed to encourage distributors to carry a product & then sell it to retailers and to
increase the volume sold for the products they already carry
1st objective is to secure listing w/ distributors
Listing = agreement made by wholesaler to distribute a manufacturer’s product to the retailer it
supplies
Typically trade promos in form of financial incentives are used to secure listings
2nd objective is to build sales volume on either a seasonal basis or a predetermined cyclical basis
throughout the year
3rd objective is to secure merchandising support from distributors
Their support is crucial b/c once product leaves the manufacturer’s warehouse the manufacturer
isn’t in control anymore of how its sold
Funds are allocated to getting product out of warehouse and onto retail sales floors
Manufacturer will look for a sales price & maybe a brand mention of the sale price in retailer’s
flyer
Sales Promotion Strategy
Decisions about sales promotion strategy focus on the selection of the best promo activity to meet the
objectives
Decisions point the org, in a certain direction and if agreed to, the tactical details then are developed
E.g. org can choose coupons, free samples etc.
Other decisions may include the selection of prices (cash, merch etc.)
Key decisions about trade promo strategy involve the allocation of funds among the different alternatives
Depending on objectives could be given to listing allowances, trade and promo allowances etc.
Manager must also decide about the balance between consumer (pull) promos and trade promos (push)
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