Ch-20 (Types and Techniques of Sales Promotion)
Ch-20 (Types and Techniques of Sales Promotion)
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Ch-20
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Price Deals
Price deals are probably the most commonly used promotional techniques.
A price deal for customers means a reduction in the price of the promoted product which means that the customer saves money on purchase.
Such deals are suitable when brand loyalty is low, product category is considered a commodity and price is the primary consideration of the customers.
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20-4
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Price Discounts Price discounts (also called cents-off deals) are communicated to the consumers through advertising, at the point-of-purchase, by listing the reduced price on the package or signs near the product or window display, or by the sales people.
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Advantages
i. ii. iii. iv. Flexibility and convenience of implementation. Retain present customers Offer immediate value and hence produce stronger consumer response. Accelerated purchases
v.
Since they are for a limited period and keep the consumer out of the market
for a longer period, thereby discouraging competitors.
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Disadvantages i. ii. May rapidly lose its advantage if competitors announce a similar offer. Competitors are very likely to retaliate, leading to the danger of triggering a promotion war, in which no one benefits except the consumer. iii. Such discounts are short-term and are unlikely to produce any long-term gains because the incentive is to purchase now by creating a sense of urgency. iv. A price discount can make them suspicious about the quality of the item and they may reject the product (Don E Schultz, Marketing News, August 1990).
v.
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Price-pack Deals
Price-packs are also called value-packs. These may take any of the two forms, bonus pack and banded pack. In case of bonus pack offer, an additional quantity of the same product is offered free when the standard pack size of the product is purchased at the regular price. This type of deal is often seen in case of laundry products, food products and personal care products, etc.
Banded pack offer, when two or more units of a product are sold at a reduced price compared to the regular price
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Advantages and Disadvantages Advantages: i. ii. iii. Generally effective in converting product triers into users. Extra quantity is an incentive and a reward. Consumers, who buy bonus packs of consumables, stay out of the market and are not exposed to competitors offers.
Disadvantages i. ii. iii. The cost of the additional product may be small to the manufacturer but the cost of the larger new pack may make the offer expensive. Retailers break the banding and sell the bonus product at regular price if the product happens to enjoy brand strength. In case of consumer durables, such a deal is quite likely to hurt the brand image and disrupt price-quality perceptions of customers.
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purchase, while the rebate represents repayment of only part of the money
paid for purchase. However, both these terms are used interchangeably in the real world of marketing. Refund offers can induce excitement in consumers at relatively low cost.
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Coupons
Coupons can be considered as certificates offered by retailers or manufacturers that entitle the owner to some stated savings or claim the specified thing.
Coupons bear a date of expiry and cannot be redeemed after the cut off date.
Offer of a coupon is a very versatile technique and can be used to achieve many different sales promotion objectives. Distribution of Coupons Direct to Consumer Media Distributed Product-Distributed
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Coupons can be used to Serve many Objectives 1. 2. 3. 4. 5. To Encourage Product or Service Trial To Encourage Brand Switching To Encourage Repeat Purchase To Supplement Print Media Advertising To Use Price Discrimination
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Advantages and Disadvantages Advantages: i. ii. A very versatile promotion tool as they can help in inducing trial of an existing or new product. A marketer can use coupons to encourage those who have tried a brand to become regular users.
iii.
iv.
It is fairly convenient to reach a large number of prospects with coupons in a short time.
Coupons can help to load-up the consumers and this may help in blocking the moves of competitors when there is reliable information.
v.
Line-extension products can be introduced easily by enclosing or banding the coupon with the vehicle product. Cont.
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Disadvantages: i. ii. One major disadvantage of coupons is wrong redemption. Response to coupon promotion may be unpredictable because of factors such as media, timing, value, brand share, competitive moves, etc. iii. iv. In-pack or on-pack coupons generally do not attract new tries. Coupons for products, whose value is unknown, generally are not quite as effective as for known and established brands.
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Advantages:
i. Contests and sweepstakes can create a high level of awareness and build or reinforce the image of the product or service.
ii.
iii.
Consumers may associate the impressive prizes with the product or service.
The promotions are more successful in getting the print advertisement read, or the audio-visual ad seen.
iv.
Contests and sweepstakes can help gain store displays, generate store
traffic and encourage the trial of a product if the prizes are sufficiently attractive.
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Disadvantages: i. Contests and sweepstakes generally are not effective in generating trial of a new product. ii. Heavy media expenditure is often required to make these events successful.
iii.
iv.
The promoter has to check thoroughly the rules and regulations that may
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Premiums
A premium (gift) is a reward given to the consumer for performing a particular act, generally purchasing a product or service. The premium may be free or
available to the consumer by paying a price well below the regular market
price. There are many varieties of premiums which are sometimes referred to as direct premiums and mail premiums. Direct premiums are used to reward the customers immediately at the time of purchase, and mail premiums require the customers to take some action, such as mailing the proof of multiple purchases to the marketer. After the receipt of the proof, the marketer sends the premium to the consumer.
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the outside of the product package or to the product itself if no outer package is used.
Near-pack premium: Sometimes the premium is bulky in size and hence cannot be enclosed inside the pack or put on the pack it is kept near the
promoted product and the consumer takes one with the purchased product.
Container-premium: In this type of premium the product itself is packed inside the premium, which is a container, and this container can be used for Cont. some other purpose after the product has been consumed.
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Advantages
i.
ii.
Depending on the preferences, premiums can be selected to appeal to the target groups in a market.
iii.
If the promotion objective is to increase usage, some product related premium would be more useful.
iv.
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ii.
The appeal to the consumer is an important factor and this aspect must be
pre-tested in some way. This would, of course, add to the cost of the promotion.
iii.
Even regular consumers may shy away from the product if the premium does not measure up to their likes.
iv.
Too frequent use of premium with any product is likely to lessen the importance of the product in the eyes of the consumer.
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Free-in-Mail Premiums
Free-in-mail premiums are unique because the promotion objectives may be quite different. In-mail premiums do not provide an immediate reward at the time of purchase, as do the premiums already discussed. Consumers have
to take some action to claim the premium, such as sending the proof of a
single or multiple purchases and wait for some period of time for the delivery of the premium through mail or courier. A premium that serves as dealer-loader is a premium that is kept as display in the store and after the promotion is over, this dealer-loader is given to the store manager/owner free. The purpose is to reward the dealer for stocking the promoted product.
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Disadvantages i. It is not possible to measure the sales increase which can be directly
demand, and unless some arrangement has been made with the supplier for
such an emergency, there would be problems.
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