Price Incentive Sales PromotionIntegrated Marketing CommunicationA management concept designed to make all aspects of marketing communication work together as a unified forceAdvertisingSales promotionPublic relationsSales promotionA direct inducement which offers an extra value of incentive for the product to the sales force (people who make the product), distributors, or the final consumer with the primary objective of creating an immediate saleIncentive to behave in a certain wayShort term behaviorBribe the consumerAdvertising vs. Sales PromotionCreates an image over timeRelies on emotional appealsAdvertising to the heartSales promotion to the walletContributes somewhat to profitabilityAdds intangible valueEX: Lebron sponsoring the shoe does not do anything for the productSales Promotion vs. AdvertisingCreates immediate actionBuy one get one free, couponRational appealsSaving money from buying one product can be put towards something elseContributes significantly to short term profitabilityNow until…..Short term eventsAdds tangible valueSaving money, getting more for your moneyCoordinating promotionsAwareness before promotionSpeak with one voiceBoth focus on the same target market, same emotional appeal, same message strategy, same types of mediaBehavioral LearningFuture behavior is determined by reinforcement accompanying past behaviorThey gradually learned where to do their business based on product performancePromotional tools act as reinforces along with product performance (the primary reinforcement) to increase the probability of repeat purchaseIf someone doesn’t like the product or it’s a bad product, it doesn’t matter how good the sales promotion isSales promotion cannot fix bad productsShapingThe process of learning a complex behavior by learning a series of successive approximations of the final behaviorGiving a coupon every time you bought a productThe consumer gets used to saving money each time they use the productErrors of ImplementationImproper fadingOveruseRelying on the incentivesDoesn’t associate the with the quality of the brand, the consumer associates with the couponPrice Oriented Promotional ToolsSamplesProduct driven to consumer free of chargeIf you do this too often, you cheapen the value of the product to the consumer and they do not want to pay the retail price when the price reduction special is overOpportunity to try the product before making a purchaseEX: SamplingEliminate financial riskI don’t want to waste my money and not like itSampling eliminates this riskEliminate inconvenienceWhere is the product sold, what does the package look like?ConvenienceEX: Getting guys to like Coke Zero (same as diet coke)Samples Effective When:Brand is clearly superiorTestingBlind taste tests for coke zeroProduct comes in limited varietiesPurchase cycle is shortThey may forget about the productAttitudes or behaviors must be created or changedEX: Diet coke is for women, but coke zero is more manlyCouponsCertificates to a dealer that give the bearer a stated savings on the purchase of a productThe people who already use the product are most likely to use the couponLikely users are current users of the productRetains current usersEncourages brand switchingIncreases in-home inventoryCoupon for larger amounts - more product at home compared to a competitor productLengthens purchase cycleMay not purchase product as oftenMoney Refunds/RebatesA partial refund following a purchaseConsumer purchases productMail in proof of purchaseRefund sent a later timeEX: Buying a computer or carRedemption ProblemsDelay of reinforcementWe want things now, we don’t want to wait 6 weeks for a rebateEffort required30% of people don’t fill out the rebate formADDED VALUE SALES PROMOTIONAdded Value PromotionsProduct is sold at full priceConsumers get more for their moneyDoesn’t reduce price/value ratioEX: buy Mountain Dew to get extra points towards Modern WarfarePremiumAn extra item offered at a low price or free as an extra incentive to purchaseEX: Spend a certain amount get a free bagEX: Buy 4 tires get $60 Visa gift cardRetains the price value of the tire instead of cheapening the value and just taking off $60Objectives of PremiumsEncourage brand switchingTrade up to larger sizeIn order to get the extra itemIncrease repeat purchaseEX: McDonald’s Kids Meal toyEach week a different collectable toy for the same themePut a long term message in front of the consumerThe logo is on the premiumMethods of distributionIn packageBottom of the boxIn storeSouvenir cupsPackage itselfMailOnlineSweepstakesA game where participants have an equal change of winning a price, but make no payment to enterIncreases engagementIncrease awarenessEx: Visa Card - chance to go to the Olympic gamesEx: McDonalds Monopoly featuring LBJLotterySweepstakes with a charge to enterIllegal in most situationRaffle is a lotteryExceptions are made for non-profits because they refer to it as a donationDonations from non-profit organizationsContestWinners selected based on skillNot everyone is equalCharge to enterPromotions to Retailers (if not carried at store level, we cant buy the productMore money spend than on consumer promotionsMore money spent on promotions geared to retailers than to consumersObjectivesRetail incentive to push vs. pull productPush - use company’s sales to force and trade promotion activities and create consumer demandPull - promotions directly to the consumer, requires high spending on advertising and consumer promotion to build up consumer demandMaintain or increase distributionIncrease types of retailers who carry out product; increase our salesMaintain or expand shelf spaceCritical at retail level, maintain or expand better placingPreempt competitionChange consumer purchase patternsChanges awareness and preference from consumers; better shelf space/ displays in the storeTypes of Retail PromotionsBuying allowances (cash allowances)Temporary price reductionsFrom manufacturer to retailerRetailers makes more money and sells more; consumer saves money too (win-win)Advertising allowances (co-operative advertising)Payments by the manufacturer to the retailerFunding of the retailer’s advertising of the productContestsSweepstakesPoints of Purchase (P.O.P.)Promotional materials placed at the point of purchaseA lot of advertising is not paid attention to on TV, but in stores you are more likely to pay attentionTypes of P.O.POutside signsWindow displaysCounter displaysDisplay
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