FSU ADV 3008 - Price Incentive Sales Promotion

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Price Incentive Sales Promotion:Integrated Marketing Communication (IMC)A management concept designed to make all aspects of marketing communication work together as a unified forceTypes of IMC:AdvertisingSales PromotionPublic RelationsDon’t really work independently of each otherThey cheapen the price to value ratio of the productAs price decreases, value decreasesSales Promotion:A direct inducement which offers an extra value (more for the money) or incentive for the product to the sales force, distributors, or the final consumer with the primary objective of creating an immediate sale (a behavior)Incentive to behave in a certain way (summary); a bribeShort term behavior orientedAdvertising vs. Sales Promotion:Advertising Creates an image over timeHow we think about the product and companyRelies on emotional appealsAdvertising appeals to the heartSales promotion appeals to the walletContributes somewhat (moderately) to profitabilityAdds intangible value to the productAdds nothing of real valueEx: Nike swooshDoesn't change the product or make it betterPeople will buy sneaker because it has Nike logoSales Promotion vs. Advertising:Creates immediate actionRational appealsBOGOContributes significantly to short term profitabilityImmediateAdds tangible valueEx: Consumer gets an additional product because of promotionSales promotion complements advertisingThey work togetherCoordinating Promotions:Awareness (of brand) before promotionName and benefits existSpeak with one voiceThe 2 tools should speak with one voiceBehavioral Learning Theory:Future behavior is determined by reinforcement accompanying past behaviorReinforcement determines future behaviorBuy or don’t buyBuy a product and like it, more likely to re-buy productEx: certain sandwich, make up, shoe, etc.If don’t like product, don't re-buy itPromotional tools act as reinforces along with product performance (the primary reinforcement) to increase the probability of repeat purchaseProduct is the primary enforcer (trigger)Promotion is the kickerBut it cant save a bad productShaping:The process of learning a complex behavior by learning a series of successive approximations of the final behaviorOver a period of time; graduallyTry to shape consumers (“play doh”)Errors in Implementation:Improper fading of incentivesRisk: Go back to what you used to buyOveruseMore likelyCan’t stop giving coupons/incentives because consumers expect it and won’t buy product without itEx: PizzaEx: Dog FoodBuy brand because of couponsNo coupons  don't buyShaped to buy only with a couponValue = retail – couponNo way to get full retail pricePrice Oriented Promotional Tools:Samples:Product given to consumer free of chargeOpportunity to try the product before making a purchaseEliminate financial riskEliminate inconvenienceEx: Costco SamplesEx: Test drive a carFocus on price as an incentive to use productSamples Effective When:Brand is clearly superiorAny competing brand can say its betterIf you give samples, it proves your point and increases credibilityProduct comes in limited varietiesPurchase cycle is shortLeads to a quicker turn around between sampling and actual purchaseLess time to forgetAttitudes or behaviors must be created or changedEx: Change attitude about diet drinksCoke Zero marketed for MenDiet coked used by women0 calorie, 0 sugarGet men to try it by giving samplesAdvertise it as an alternative to coke, not a diet drink*Samples aren’t effective in every situationCoupons:Another type of price incentiveCertificates presented to a dealer that give the bearer a stated savings on the purchase of a productLikely users are current users of the productRetains current usersSomeone who already uses product and already pays retail priceIs there a point to giving coupons then?Defensive aspect:Helps retain customersEncourages brand switchingLoyal to price, not brandIncreases in-home inventoryCoupon works for larger, more expensive size onlyIn-home Inventory:The amount of product the consumer currently has at homeNot the brand, but the productLengthens purchase cycleBecause you stock up and inventory is highEx: $5 advil bottle vs. $7 advil bottleOnly $7 bottle is on saleMoney Refunds/Rebates:A partial refund following a purchase (cash back from manufacturer)Consumer purchases productMail in proof of purchaseRefund sent at a later timeRedemption Problems:Delay of reinforcementOften 6-8 weeksRather instant savings over ones you have to wait for the rebate to come inEffort requiredHave to follow rules (form, receipt, deadline, etc.*Fall Out Factor:A certain % will buy product because of rebate and won’t follow through on rebateeither forget or are too lazy and never claim it Rebates are more advantageous to the manufacturerEx: Electronics (phones, tv’s, etc.)Very popular for more expensive items (cars)Added Value Sales Promotion:Added Value Promotions:Addresses issue of decreased value with price incentivesProduct is sold at full priceConsumers get more for their moneyTangible or intangibleEx: 50% more product (increases value)Doesn’t reduce price/value ratioEx: Mountain Dew prize codes under lidSame price but now has prize codeIncreased valueCommon with cosmeticsPremium:*An extra item offered at a low price or free as an extra incentive to purchaseA separate, different itemEx: Buy 2 regular price, get 1 freeObjectives of Premiums:Encourage brand switchingSteal competitor’s customersTrade up to larger sizeGets you to spend more moneyEx: spend $50 to get free make-up kitIncrease repeat purchaseGets you to come backAlso keeps you from going to competitorsIncreases brand loyaltyCollect a set of the productsEx: Collect McDonalds Happy Meal toysPut a long term message in front of the consumerMethods of Distributing:In packageEx: Cracker Jack Box (surprise inside!)In storePackage itselfMailSend coupons in and get free offer back in the mailEx: Cereal boxes  shirt, watch, toys, etc.OnlinePromotions Geared to ConsumersSweepstakes:A game where participants have an equal chance of winning a prize, but make no payment to enterIncreases engagementIncreases awarenessEx: Mc.Donalds Monopoly (1 in 4 wins)Brings people inNo purchase necessaryStill don’t have to give you a card without a purchaseNeed to send in personal letter to corporate officeOdds of Winning:$501 in 134,875 chance of winningFind odds in the official rules pageMost people win food (gets people to come back)$1,000,0001 in 306,939,484 chance of winningLottery:Sweepstakes


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FSU ADV 3008 - Price Incentive Sales Promotion

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