Marketing mix case study (ppt and speaker's note)

MKTG Chapter 18 – Sales Promotion and Personal Selling

Consumer and Trade Promotion

Sales Promotion – a short-term inducement of value offered to channel members or ultimate consumers to arouse interest in buying a good or service.

Buy now ---- Buy more ---- Buy ours.

Sales-promotion objectives include:

· building short-term sales

· building long-term market share

· enticing trial

· luring consumers from competitors

· rewarding loyalty

· building stronger customer relations and build new accounts

Sales Promotion can be divided into Consumer Promotion and Trade Promotion

Consumer Promotion is designed to stimulate consumer purchasing. Tools include:

·

· Contests, games

· Coupons

· Delayed payment incentives

· Demonstrations, exhibits

· Fairs, tradeshows

· Frequent buyer (loyalty) programs

· Low-interest financing

· Packages & bundling

· Premiums, gifts with purchase

· Sales, discounts

· Refunds / rebates

· Samples

· Shopper marketing (POP – Point of Purchase)

· Sweepstakes, lotteries

Coupons – discounts on the price of specific items

· Ideal for achieving trial purchase among new users

· Reduce price to price sensitive customers

· Encourage large purchases

· Protect market share

· Distribution options – in-store, print media, electronic, on a package or attached to the item or a complementary item…

· WATCH OUT - Coupons may be used by already loyal customers. Also, misrepresentation and fraud problems.

Rebates

· A predetermined amount of money returned directly to the customer by the manufacturer (or retailer) after a purchase has been made.

· Rebates are ideal for products in the mature stage of the product life cycle since they encourage multiple purchases of inexpensive packaged goods.

· WATCH OUT – consumers may have negative perception of rebates, logistics are tricky

· Slippage occurs when consumers fail to claim the rebate.

Price Bundling – offering two or more products together at a reduced price.

· Offers more price-sensitive customers a “deal”

· Stimulates higher volume of purchases

· WATCH OUT – should be logical and increase overall profits.

Premiums

· Bonus Packs — an extra amount of a product at the regular price by providing larger containers or extra units.

· Premiums — an offer of an extra item of merchandise or service either free or at a low price that is used as an incentive for purchase.

· A premium provides added value, tempts consumers to buy, and helps differentiate one brand from another at the point of purchase.

· Tangible gifts are often used as a reward for loyalty and can be a key ingredient in a customer retention program.

Loyalty (Frequent Buyer) Programs

· Promotional programs that reward customers for continuing to purchase the same brand of a product or service over time

· Points, loyalty cards, Canadian Tire money…

· Allows organizations to mine their data for future applications.

· WATCH OUT - consumer fatigue due to too many programs, diminished utility/value of cards, loyalty card “players”

Contests and Sweepstakes

· Contests help create temporary excitement for a brand and are good for achieving repeat purchase. Common in mature stage.

· WATCH OUT – legal issues can be tricky, professional or hobby contest-takers interfere with objectives, may not increase brand equity

· Sweepstakes is a chance promotion usually involving a large prize giveaway, much like a lottery. Gambling laws usually apply; therefore, “skill-testing question”

· Game contest involves repeat visits to collect game pieces (often promoted as “play and win”).

· An instant win involves pre-determined, pre-seeded winning tickets, in the overall fixed universe of tickets.

Sampling

· An effective way of generating trial purchase, converting non-users and users of competitive brands to your brand.

· WATCH OUT – expensive, benefits often difficult to gauge from a sample.

· A free sample may be a trial-size package or an actual-size package – objective is to convert a trial user to a regular user.

On-site sampling (often called experiential marketing) involves the free distribution of goods at selected locations (e.g., a traveling van decorated to look like the branded good they are giving away). Street teams distribute samples and engage passersby in order to create buzz for the product.

Trade Promotion is designed to gain reseller/channel support and to improve selling efforts. Tools include:

1.

1. Cooperative advertising

1. Dealer premiums

1. Discounts

1. Display materials (point-of-purchase)

1. Free goods

1. Trade and performance allowances

1. Push money

1. Conventions and trade shows

1. Training

Developing the sales-promotion program – the marketer must decide on:

· size of the incentive & conditions for participation

· how to promote and distribute the promotion program

· length of the promotion

· how much to spend

· how to evaluate the effect of the promotion

Personal Selling

Personal selling is direct communications between a sales representative and one or more prospective buyers in an attempt to influence a purchase situation.

Relationship selling – multi-stage process that involves building, maintaining, and enhancing interactions with customers for the purpose of developing long-term satisfaction through mutually beneficial partnerships.

1. Generating Leads (Prospecting) – Identify prospective customers

2. Qualifying leads – evaluate prospects based on Monetary, Authority, and Need

Pre-approach (not in our textbook)

· Learn about the prospect company (what it needs, who is involved in the purchase decision) and its buyers (their personal characteristics and buying styles)

· Decide on the best approach, which might be a personal visit, a phone call, or a letter




3. Approach and probe needs

· Prepare to make the best impression and the best start to the relationship

· Consider appearance, opening lines, and follow-up remarks

· Determine the prospective customer’s needs and desired criteria

4. Propose the Solution (Presentation and Demonstration)

· Tell the product “story” to the buyer, following the AIDA formula of gaining attention, holding interest, arousing desire, and obtaining action

Negotiation (not in our textbook)

· Work toward a win-win result based on negotiation points of price, quality, volume, financing, risk, and promotional perks.

· Win the order without making deep concessions that will hurt profitability 


5. Overcoming Objections – Listen carefully for sticking points and work to overcome/solve them creatively

6. Closing – Recognize closing signals from the buyer, including physical actions, statements or comments, and questions 


7. Follow-Up/Maintenance – Ensure customer satisfaction and repeat business 
with conscientious follow up.

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