Title: The Promotional Mix Consumer and Trade Promotions
1 The Promotional MixConsumer and Trade Promotions
The Promotional Mix
Choosing the right promotional mix
Why too much Sales Promotions
3 The Promotion Mix Chapter 12 Advertising Sales Promotion Elements of the Promotion Mix DM/Personal Selling Public Relations 4 The Promotional Mix Advertising
Advertising is paid ongoing non personal communication from a mass media source.
Awareness and information for new products
Reminder. Keep the brand visible and top-of-mind (Sapolito and Ivory)
5 The Promotional Mix Sales Promotion
Short-term inducements to consumers
Coupons rebates sweepstakes
Very closely integrated with advertising
Often used to generate trial among non-users
Short -term inducements to retailers and wholesalers to buy and stock more of the brand
6 The Promotional Mix
Personal Selling Is face-to-face selling by a company sales rep to the customer
Important for complex industrial products or for consumer durable. Can actually demonstrate the product.
Has high per customer contact cost
Publicity Unpaid editorial communication about your product in the mass media
Charitable activity by firmsRonald McDonald
Credibility advantage (eg. WSJ or BW editorial coverage)
7 Advertising vs. Sales PromotionsPush vs. Pull
What is Push versus Pull strategies
Good strategy involves Integration
Pull (Advertising/consumer promotions) versus Push (trade promotions) working together in an integrated fashion.
8 Selecting the Promotional Mix (Advertising or Promotions)
Push or Pull
Size of the budget
Stage in the products life cycle
Buyer readiness stage
9 Buyer Readiness States Awareness Preference Purchase Impact of a 1) coupon 2) personal selling 3) TV ad 4) free samples 10 Why Sales PromotionsFour Rationales
Inventory cost shifting
Consumers may have lower inventory costs than retailers or manufacturers. (GM zero percent financing)
Consumer Heterogeneity in Loyalty Brand Loyal vs. Switchers
In-store Price discount promotions to consumers.
Price Discrimination (Coupon promotions)
Promotions are essential to respond to competition
11 Consumer Promotions Couponing
People who are willing to pay more tend to have a higher personal time cost and are therefore less likely to clip coupons
Price discrimination. Consumers self-select.
Disadvantage is non-redemption costs
in 1995 companies spent 8 Bn on distributing 251 Bn coupons of which 3.6 Bn were redeemed at a total value of around 4.0 Bn.
12 Consumer Promotions In-store Price Deals
Function of these promotions to reduce subsidy to the loyals while competing for switchers
Helps manufacturers and retailers to attract brand switchers.
But problem is that it also offers discount to brand loyal consumers who would have bought regardless.
In order to achieve this function these types of price promotions should not follow predictable patterns
Advantage is that it easier to implement. No non-redemption costs or coupon distribution costs.
13 In-store versus Out of store promotions
In store price deals versus home delivered promotions (coupons in Saturday newspaper)
Would a retailer prefer the manufacturer to offer in-store price deals or home-delivered coupons
Store traffic and inter-retailer competition consideration.
Why do we see in-store price promotions
14 Other Consumer Promotions
Useful for generating trial for a new product
Sweepstakes generates excitement
15 Trade Promotions
Slotting allowance. Lump-sum payment paid to retailers to get shelf-space
Helps compete for retailer shelf-space
Existing products slotting allowance is a charge for renting retail space.
New products it gives retailers insurance against possible failure.
Can help retailers to separate good new products
Helps manufacturer to signal the quality
Quantity discounts that are linked to the quantity lifted by the retailer.
Used as a competitive tool to reduce retailers investment in the competitors product.
Used to increase retailer stocking during the peak selling season.
16 Trade Promotions
Advertising and display allowance.
Helps compete for retailers in-store merchandising effort
Retail incentives that are linked to specific actions by the retailer.
17 Why Too Much Sales Promotion
47 trade promos 28 on consumer promos and only 25 on media advertising. Why
Cost effectiveness of network television advertising declining
Cable TV resulted in decline in national network
Less daytime TV watching greater proportion of dual working member households.
0.8 growth in U.S. population and consumers in the 1990s more deal-prone fight for market share.
Brand proliferation (19000 new products each year) fight for market share
18 Competitive RationalePrisoners Dilemma in Sales Promotion
Consumer price sensitivity increasing due to promotions.
Why do firms promote so much
Coke (In 00 millions of dollars) Promote Do not Promote Do not Promote (7 12) (10 10) Pepsi (12 7) (8 8) Promote What would you do 19 Analysis Framework Segmentation Positioning (Vintage) Company Analysis Competitor Analysis Consumer Orientation Competitive Advantage Marketing Strategy Consumer Behavior (TiVo) Branding and Product Strategy Steinway Product Optical Distortion Pricing Process Price Pricing Strategies Virgin Promotional Mix Promotion Place Market
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