Promotions can be an effective tool for driving traffic and increasing sales. We explore several options for creating promotional campaigns, including discounting, "buy one, get one" strategies, incentives/frequent buyer programs, holiday themed promotions, time sensitive promotions and more. The goal is to identify a set of promotional tools that can be effective in accomplishing short-term and long-term sales goals, without negatively impacting profit margins.

1. Marketing Essentials
WEEK 5
Sales Promotions

2. Sales Promotions

3. Sales Promotions
A barking dog is often more useful
than a sleeping lion.”
~ Washington Irving

4. Sales Promotions
Common types of sales promotions
• Discounts (Price Deals)
• Coupons
• Sweepstakes/Contests
• Buy One - Get One (BO-GO)
• Gift with Purchase (Premiums)
• Incentive / Frequent Buyer
• Holiday / Themed Promotions
• Others: In-store displays, sampling, bundling,
rebates, trade-ins, free trial/demo

5. Sales Promotions
More than any other element of the marketing mix,
sales promotion is about ACTION.
It’s about stimulating customers to buy a product.

6. Sales Promotions
Definition
Media and non-media marketing pressure
applied for a predetermined, limited period of
time in order to stimulate trial, increase
consumer demand, or improve product quality.
(American Marketing Association)

7. Sales Promotions
Price-Value Relationship
• Every product or service has an established
perceived price or value
• Sales promotions change this price-value
relationship by increasing the value and/or
lowering the price.

8. Sales Promotions
Target Audiences for Sales Promotions
• Consumers
• Resellers
• Company Sales Force

9. Sales Promotions
Compared to the other components of the
marketing mix - Advertising, Publicity, Events -
Sales Promotion commonly:
• Operates on a shorter time line
• Uses a more rational appeal
• Returns a tangible or real value
• Fosters an immediate sale
• Contributes highly to profitability

10. Sales Promotions
When to use Sales Promotions
Where do sales promotions fall in the overall
marketing mix?
• Marketing budget
• Product life cycle stage (New Vs. Old)
• Competition in the market
• Target Audience
• Type of product

11. Sales Promotions
When to use Sales Promotions
Marketing budget
Sales promotions are particularly attractive
alternatives when the marketing budget is
limited, as it is for many small businesses.

12. Sales Promotions
When to use Sales Promotions
Product life cycle stage
Often used in the growth
and maturity stages to
stimulate consumers to
choose the product over the
competition rather than in
the introduction stage when
building awareness (via
Advertising/PR) is usually
more important.

13. Sales Promotions
When to use Sales Promotions
Competition in the market
An effective tool in a highly competitive market,
when the objective is to convince retailers to
carry your product or to influence consumers to
select it over the competition.

14. Sales Promotions
When to use Sales Promotions
Target Audience
Is your customer sensitive to the price/value
relationship that exists in your category?
Sales Promotions can often encourage trial
usage which leads to brand affinity, but you
must deliver on the quality.

15. Sales Promotions
When to use Sales Promotions
Type of product
Sales Promotions tend to work best when
applied to impulse items whose features can be
judged at the point of sale, rather than more
complex items that might require a longer
purchase cycle (research/comparisons) or a
hands-on demonstration.

16. Sales Promotions
Discounts/Price Based Promotions

17. Sales Promotions
Discounts/Price Based Promotions
Price deals are usually intended to:
• Encourage trial of a new product or extension
• Recruit new buyers for a mature product
• Convince existing customers to increase
purchases, accelerate their use or purchase
multiple units.

18. Sales Promotions
Discounts/Price Based Promotions
Ways to Implement:
• In-Store/POP Displays
• Advertising
• Direct Mail
• Event
• Associations / Groups
• Seasonal / Themed
• Referrals
• Group-buying (Groupon/Living Social/Amazon)

19. Sales Promotions
Discounts/Price Based Promotions
• Increased sales gained from price-based
promotions are usually at the expense of profits
• Company must also guard against the possible
negative effect of discounting on brand image

20. Sales Promotions
Coupons

21. Sales Promotions
Coupons
The first coupon was created in 1887 by Asa
Chandler, one of the partners at Coca-Cola. By
1931, it’s estimated that 1 in 9 Americans had
received one of these free Coca-Colas.

22. Sales Promotions
Coupons
In 2009 there were $528.5 billion worth of
coupons available; yet only $3 billion worth of
coupons were redeemed

23. Sales Promotions
Coupons
The key objective with a coupon promotion is to
maximize the redemption rate -
the proportion of customers actually using the
coupon Vs. what was distributed.
• Measure short term Vs. long term sales impact
• Coupon promotions are often used for new
products or to encourage sales of existing
products that are slowing down

24. Sales Promotions
Coupons
Average Redemption Rate = ???
Average face value = ???
(Promotion Marketing Association)

25. Sales Promotions
Coupons
Distribution Methods
• On-Package (encourage trial or repeat purchase)
• Print Advertising: Newspaper/Magazine
• Back of receipts
• Free Standing Inserts (FSI)
• Online/Email
• Direct Mail (ex: ValPak)
• Events
• Mobile Phone

26. Sales Promotions
Coupons
Distribution Methods
• Mobile Phone

27. Sales Promotions
Coupons
• May simply encourage customers to buy
what they would have bought anyway
• Can cause customer disappointment if
retailers do not hold sufficient stock of the
promoted product

28. Sales Promotions
Sweepstakes & Contests

29. Sales Promotions
Sweepstakes & Contests
What’s the difference between a
Sweepstakes and a Contest???

30. Sales Promotions
Sweepstakes & Contests - What’s the Difference?
Contest: Audience applies skill, analytical or
creative thinking to try to win a prize. Winners
are determined by judges or by which contestant
comes closest to a predetermined criteria.
ONE PROFESSIONAL & AMATEUR FIRST PLACE WINNER
in each category will receive a prize package including:
* A $100 B&H gift card
* $100 certificate for Canson Infinity media
* A DSLR camera
* A PhotoServe portfolio ($860 value)
* A Crumpler bag
* A PDN PhotoPlus Expo Gold Expo Pass
* A subscription to PDN®

31. Sales Promotions
Sweepstakes & Contests - What’s the Difference?
Sweepstakes: A promotion in which winners are
determined purely by chance.

32. Sales Promotions
Sweepstakes & Contests
Contests and sweepstakes often create
excitement and generate interest for a brand,
create great content, can go “viral,” but…
• Time consuming
• Expensive
• No guarantee of success
• Legal Issues
• Hard to accurately measure impact on sales
• May lose focus of the brand
• Fail to build long-term brand affinity

33. Sales Promotions
Buy One > Get One (BO-GO)

34. Sales Promotions
Buy One > Get One Free Vs. 50% Off
Example #1
• Sell 1 Pizza for $20 / Cost = $2.50
Buy One > Get One FREE
2 Pizzas for $20 = $15 Profit
($20-$5 = $15)
Give 50% OFF
1 Pizza for $10 = $7.50 Profit
($10-$2.50 = $7.50)

35. Sales Promotions
Buy One > Get One Free OR 50% Off
Example #2
• Sell 1 Pizza for $20 / Cost = $2.50
Buy One > Get One FREE
2 Pizzas for $20 = $15 Profit
($20-$5 = $15)
Buy One > Get One 50% OFF
2 Pizzas for $30 = $25 Profit
($30-$5 = $25)

36. Sales Promotions
Gift With Purchase / Premium Promotions

37. Sales Promotions
Gift With Purchase / Premium Promotions
“The prize in a cereal box”

38. Sales Promotions
Gift With Purchase / Premium Promotions
• Commonly found with magazine subscriptions,
cigarettes, cosmetics and fragrances
• Ability to partner with affiliated brands or
products; can you barter?
• Can introduce new products or line extensions
through relevant promotional items

39. Sales Promotions
Gift With Purchase / Premium Promotions

40. Sales Promotions
Gift With Purchase / Premium Promotions
• The premium may be given for free or offered
to consumers for a significantly reduced price
• Set “purchase targets” - buy a certain quantity
or dollar amount to receive free gift
• Instant gratification
• No confusion about returning coupons or proof
of purchase.

41. Sales Promotions
Gift With Purchase / Premium Promotions
Measurement and Evaluation
• Increase Sales
• Increase customer goodwill
• Retail / employee excitement about your
product and offer
• Generate repeat store visits or purchases
• Faster sell-through
• Gather Customer data

42. Sales Promotions
Loyalty/Frequent Buyer Programs

43. Sales Promotions
Loyalty/Frequent Buyer Programs
Encourage and reward repeat purchases by
acknowledging each purchase made and offering
a premium as purchases accumulate
• Airlines
• Grocery & Drug Stores
• Car Wash
• Hair Salons

44. Sales Promotions
Loyalty/Frequent Buyer Programs
Decide what you want to accomplish:
• Reward customers for their frequency and
increased spending.
• Design a tiered structure that rewards heavy
buyers with privileges & special offers
• Shift the pattern of frequent buyers' behavior
by offering incentives and rewards for buying on
off-peak hours or days.

45. Sales Promotions
Loyalty/Frequent Buyer Programs
Enrollment Tactics:
• Simple form that collects buyer info such as
addresses, phone and email
• Create a "New Membership Kit" which includes
rules, awards, points, privileges, etc., if your
program will be more complex
• Make enrollment easy and attractive by offering
an incentive to join
(free small gift, % off first purchase or # of points)

46. Sales Promotions
Loyalty/Frequent Buyer Programs
Program Structure:
Reward the behavior YOU desire, not what the
customer desires. Set your program to reward
different customers for different spending levels.
• Purchases: Reward customers based on the
dollar amount of purchase.
Spend $250 during July and receive a gift
certificate worth $25 off any purchase in August

47. Sales Promotions
Loyalty/Frequent Buyer Programs
Program Structure:
Points: Buyers earn points for every dollar they
spend. You then determine what award they
receive at each point level.
Could give points for every visit to your store.
Then for every $100 they spend, they get
additional points, etc.

48. Sales Promotions
Loyalty/Frequent Buyer Programs

49. Sales Promotions

50. Sales Promotions
Resources
www.promo.com
www.pmalink.org Promotion Marketing Assoc
www.couponpros.org Assoc of Coupon Professionals
www.isp.org.uk Institute of Sales Promotions (UK)