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Canada (158,217)
MCS 3620 (28)
Bharat Sud (21)
Chapter 8

Chapter 8

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University of Guelph
Marketing and Consumer Studies
MCS 3620
Bharat Sud

Chapter 8: Sales Promotion Sales Promotion Sales Promotion: An activity that provides incentives to bring about immediate response from customers, distributors and an organization's sales force  Three distinct groups are considered when planning sales promotion strategies: ◦ 1. The consumer or final user must be motivated to take advantage of the offer ◦ 2. The distributor (reseller of goods) must be motivated to support the offer by providing merchandising support ◦ 3. The company's sales force must be motivated to sel the promotion to its trade customers. Because the intent of a promotion is to provide some added excitement to the product, an organization's sales representatives must present it ethusiastically to the trade distributors Consumer Promotions: Incentives offered to consumers to stimulate purchases or encourage loyalty  For example: Coupons, free samples, contests, rebates, price incentives and reward programs Pull: Demand created by directing promotional activities at consumers or final users, who in turn pressure retailers to supply the product or service  For example: Creates demand and causes consumers to look for the product in stores or request a service by asking for it specifically, they put pressure on the retailer to provide it Trade Promotion: An incentive offered to channel members to encourage them to provide marketing and merchandising support for a particular product  Include: ◦ Discounts and allowances ◦ Cooperative advertising funds ◦ Dealer premiums and incentives ◦ Point-of-purchase materials Push: Demand created by directing promotional activities at intermediaries, who in turn promote the product or service among consumers Pull and Push Promotion Strategies Pull – The promotion strategy is directed at consumers, who in turn request the product or service from distributors and pull it through the channel Push – The promotion strategy is directed at distributors, who resell the product. Incentives help push the product form one distributo to another Sales Promotion Planning  Activities that complement advertising  Primary goals of sales promotion is to focus on one specific area – action  Sales promotion planning involves developing a plan of action for communicating incentives to the appropriate target markets (consumers and trade customers) at the right time  Sales promotion includes the following: Market Profile  An overview of sales and market share trends provides market perspective to the promotion planners  It is important to know if the market is growing and what brands are growing in the market Competitor Activity Profile  What brands dominate the market and what are their mixes?  An evaluation of this kind of information may suggest that various combinations of activities have more or less impact on consumers Target Market Profile  Customers are described as demographic, psychographic, geographic, and behavioural characteristics Sales Promotion Obejectives  Avariety of background factos will determine the objectives of the promotion campaign  Focuses on three distinct objectives: ◦ Generating trial purchases ◦ Encouraging repeat or multiople purchases ◦ Building long-term brand loyalty  Objectives for trade promotion plans concentrate on building sales and achieving merchandising support Budget  Determining how much money is available for pomotions, knowing the size of the budget is crucial when the promotion agency is thinking about potential pconcepts  Will it inolve an expensive grand prize, or will it be restricted to specific regions? The Sales Promotion Plan Sales Promotion Plan: An action plan for communicating incentives to appropriate target markets at the right time  Objectives are clearly defined, strategies are justified, and tactical details are precisely documented Sales Promotion Objectives  Statements that clearly indicate what the promotion plan is to accomplish  Should be achievable, quantitative in nature to facilitate measurement, and directed at a carefully defined target market EXAMPLE 8.4 (look at coupon) 1. Most common objective of consumer promotion is to encourage consumers to make a trial purchase ◦ When a produce is new, a trail-oriented promotions are common ◦ Even when a product is in the growth stage of development there is a need to distinguish one brand from another ◦ At this stage, incentives that encourage purchase of specific brand reamin essential ◦ Media-delivered coupons is a promotion tool for encouraging trail purchase, as are product samples 2. Second objective is to stimulate repeat purchases by existing customers ◦ It is to encourage consumers to make multiple purchases at one time ◦ Awell-conceived contest will encourage multiple entries by consumers ◦ Persistent purchases of the brand in the contest tie the consumer to the brand for a period of time 3. Third objective deals with customer relationship management (CRM) ◦ It is to encourage brand loyalty for an extended period ◦ Promotions encourage instant activity, but there are promotion alternatives that can meet both short-term and long-term brand objectives ◦ Loyalty cards offer rewards attracting consumers to come back EXAMPLE 8.5 (look at coupon) 1. First objective is to secure a listing with distributors  Alisting is an agreement made by a wholesaler to distribute a manufacturer's product to the retailer it supplies 2. Second objective is to build sales volume on either a seasonal basis or a predetermined cyclincal basis throughout the year  It is common for for a company to offer temporary discounts for its key brands on a quarterly basis because it recognizes that consistent activity keeps a popular brand in a preferred position with the trade and consumers 3. Third objective is to secure merchandising support from disributors  Their support is crucial because once the product leaves the manufacturer's warehouse the manufacturer is no longer in control of how it is sold  Funds are allocated to activities that get the product out of a distributor's warehouse and into displays on the retail sales floor Sales Promotion Strategy  Decisions about sales promotion strategy focus on the selection of the best promotion activity to meet the objectives  Preference may be given to listing allowances, trade and performance allowances, and cooperative advertising allowances  The manager must decide about the balance between consumer promotions (pull) and trade promotions (push)  Key decisions about trade promotion strategy involve the allocation of funds among the diffeent alternatives  Successful promotions use both and are carefully integrated with other forms of marketing communications to maximize impact on the intended target audience  Second component of the sales promotion strategy involves integration with the advertising strategy  Sales promotion will only work if it receives the necessary media support, so another decision must be made about allocating funds specifically for promotion-relatd programs ◦ The media strategy will focus on two objectives: ▪ Creating awareness for the promotion ▪ Providing details about how the consumer can take advantage of the promotion (e.g. How to send in order forms for premium offers or entry forms for contests)  Television is an ideal medium for creating instant awareness of the promotion  In-store advertising can also assist in achieving awareness objectives while playing a key role in communicating details of the offer  Trade customers must be made aware of consumer promotion offers, a task that falls on the shoulders of the manufacturer's sales repesentatives  The sales representatives will integrate the consumer promotion offer with their trade promotion plans Logistics and Fulfillment  Involves working out all of the details of the offer  Depending on the nature of the promotion, there will be a variety of dates and deadlines, there will be other companies involved in planning and implementing the offer and there will need to be a system in place to deliver the goods to consumers  Questions that help start to create a plan of action for implementing the awareness and fu
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