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Advertising Lecture 7 Review
Terms in this set (61)
Describe sales promotion in product distribution.
Sales promotion plays a key strategic role in the channel of distribution.
Describe the relationship between name brands and retailers.
Big name brands must be supported with sales promotion, POP, and advertising to get the support of retailers through shelf space allocation.
What is POP?
POP stands for Point of Purchase or POS aka Point of Sales (Part of the Sales Promotion in the Promotion of 4 P's). This can be displays or visual signage.
Describe the power struggle between name brands and retailers.
-The top 10 retailers control 45% (in US) of all packaged goods sales so they can dictate which brands get how much shelf space.
-This means that retailers have a lot of bargaining power and leverage over the manufacturer but used to be different in the olden times.
-The effect means that if you're not a big brand, then you have to listen to the retailers
What are sales promotion?
Using incentives to create a perception of greater brand value and get consumers to buy the marketed product.
What are the types of sales promotions?
-Consumer-Market Sales Promotion
-Trade-Market Sales Promotion
-Business-Buyer or Business-Market Promotion
Describe the consumer-market sales promotion type.
Seeks to induce household consumers to purchase a firm's brand and aims at the general consumers with coupons, buy-one get-ones, and more.
Describe the trade-market sales promotion type.
Seeks to motivate distributors, wholesalers, and retailers to stock and feature a certain brand through incentives given to them by the brand.
Describe the business-buyer or business-market sales promotion type.
Seeks to cultivate buyers in large corporations who make purchase decisions.
Give an example of business-buyer or business-market sales promotion type. (Just Participants)
Large corporations could be like Dell to UTD.
What are two statistics that highlight the importance of sales promotion?
-$490 Billion in 2018
-Growth Rate: 4-8 Percent/Year
What are some of the reasons for growth in sales promotion?
-Demand for Accountability*
-Consumer Response to Promotions
-Proliferation of Brands
-Increased Power of Retailers
Elaborate more on the demand for accountability as a reason for growth in sales promotion.
-The main reason for fast growth.
-Sales promotions are the easiest way to get quick sales quota like for salesmen and brand managers.
List out the key differences between sales promotions to advertising (in a general sense). (Sales Promotion v. Advertising)
-Short Term Demand v. Long Term Demand
-Encourage Brand Switching v. Brand Loyalty
-Induce Trial Use v. Encourage Repeat Purchase
-Promote Price v. Promote Image
-Immediate Results v. Promote Image
-Immediate Results v. Long-Term Effects
-Measurable Results v. Difficult to Measure
Elaborate more on the measurability key difference from sales promotions v. advertising.
An ad campaign say the Bud Light Puppy Ad during the Super Bowl could be hard to gauge precise statistics v. a sales promotion with a coupon where one is just measuring the number of coupon redemptions.
What are the objectives of the consumer-market sales promotion type?
1. Stimulate trial purchases.
2. Stimulate repeat purchases
3. Stimulate larger purchases.
4. Introduce a new brand.
5. Combat/Disrupt competitors or taking sales from competitors.
Describe examples of the combat or disrupt competitors objective of consumer-market sales promotion type.
Price matching with coupons of other brands/companies and can be in different aspect like physically with the Whopper Detours for Burger King to McDonald's.
What are the different consumer-market sales promotion techniques?
-Samples and Trials Offers
-Frequency Programs (Also known as Loyalty Programs)
Give an example of a price-off deal.
$1 off for 10 gallons of gas.
Discuss the key difference between a contest and sweepstakes from a marketing standpoint.
A contest requires a participant to do something like an action of liking a Facebook page whereas sweepstakes the participant needs to enter w/no action needed on their end.
Give an iconic example of a frequency program/loyalty program.
The 1st loyalty program ever was the American Airlines Frequent Flier Miles/Advantages Miles.
Describe coupons as a consumer-market sales promotion technique.
Known as the #1 sales promotion techniques (most widely used) and targets price sensitive consumers while the buyer is entitled to a price reduction for a product or service.
What are the advantages of coupons over the other consumer-market sales promotion techniques?
-Give a discount to price sensitive consumer while selling product at full price to others
-Induce brand switching (Win-Win Situation)
-Timing and distribution can be controlled
-Stimulates repeat purchases
-Gets regular users to trade up within a brand array
Give an example of how coupons encourage repeat purchases.
On the back of a grocery store receipt, there will be a coupon (Bounce-Back Coupon) for an item that was just purchased indicated on the receipt.
What is one of the biggest disadvantages of sales promotion including coupons overall?
Describe cannibalism in terms of coupons.
When a consumer uses a coupon is that the company is losing out on their sales and profits immediately and in the future.
What are the disadvantages of coupons as a consumer-market sales promotion technique?
-Time of redemption cannot be controlled
-No way to prevent current customers from redeeming coupons
-Coupon programs require costly administration
-Fraud is a serious, chronic problem
Give an example of why time of redemption cannot be controlled is a disadvantage of coupons.
When a large amount of consumers redeem coupons in say the last week of redeemability. It could also lead to stock-out in stores potentially during peak redemption periods.
What are price-off deals as a consumer-market sales promotion technique?
They offer consumers a reduced price at point of purchase through specially marked packages.
What is the key difference between coupons and price-off deals as consumer-market sales promotion techniques?
Price-off deals are typically found within the packaging of a product like on a milk carton v. coupons are usually stand-alone.
What are premiums as a consumer-market sales promotion technique?
Free or reduced cost for an item with the purchase of another item.
What are the different types of premiums as a consumer-market sales promotion technique?
Free Premiums and Self-Liquidating Premiums.
Describe what free premiums are as a consumer-market sales promotion technique and give an example.
These are providing items at no cost like Costco giving consumers conditioner for free upon purchase of a shampoo.
Describe what self-liquidating premiums are as a consumer-market sales promotion technique and give an example.
A kind of premiums that require consumers to pay most of the cost of the item like an Instagram store saying consumers just need to pay for shipping and handling to get the product for free or at a extremely reduced price.
What is the most famous and successful free premium ad campaign?
McDonald's Happy Meals Toys
Commercial Break: Describe the Jelly Beans Easter ad campaign.
It was a sales promotion print ad that detailed a self-liquidating premium for consumers to get an Jelly Bean-inspired Easter egg mold if they pay for shipping and handling.
Describe contests/sweepstakes as a consumer-market sales promotion technique.
-Contests are entrants who compete for prizes based on skill or ability.
-Sweepstakes are entrants who are picked to win by chance.
-They both create excitement and interest.
What is an iconic example of a sweepstakes as a consumer-market sales promotion technique?
McDonald's Monopoly Game
What are some of the disadvantages of contests/sweepstakes as a consumer-market sales promotion technique?
-Legal and regulatory requirements are complex.
-Consumers may focus on the game rather than the brand.
-Difficult to get an IBP (Integrated Brand Promotion) message across in a game.
Describe samples as a consumer-market sales promotion technique.
Also known as sampling. It gives consumers an opportunity to use a brand on a trial basis with little or no risk.
What is the biggest advantage of samples and trial offers as a consumer-market sales promotion technique?
This technique is really effective for new products.
What is a big disadvantage of samples as a consumer-market sales promotion technique?
It can be considered expensive to just give away the products and stock.
What are the different types of samples/sampling as a consumer-market sales promotion technique?
-Door to Door
Describe trial offers as a consumer-market sales promotion technique.
These are often used for more expensive products and are restricted to a specified time period. Companies hope that they garner enough interest to offset risk/loss of potential profit.
What are some examples of iconic trial offers?
-1st Apple Mac in 1984
-Chevy 24-Hours Test Drive
Describe rebates as a consumer-market sales technique.
-Money back offers requiring the buyer to mail a request for money back from the manufacturer and is often tied to multiple purchases.
Companies get a "gold mine" in business and marketing and is specifically known as the easiest way to build a database of a companies customers since the consumers are sending their information for free rather than going through a marketing research company
What is a unique characteristic of rebates as a consumer-market sales technique from a company standpoint?
Many consumers fail to bother sending the money back request. It allows companies get a "gold mine" in business and marketing and is specifically known as the easiest way to build a database of a companies customers since the consumers are sending their information for free rather than going through a marketing research company.
Describe frequency programs as a consumer-market sales technique.
Also known as continuity programs and loyalty programs. They offer customers discounts or free products for repeat patronage and to increase brand loyalty. These can be commonly seen in the airline, travel, and restaurant businesses.
What are the different trade-market sales promotion techniques?
-Sales Training Programs
-Cooperative (Co-Op) Advertising
Describe incentives as a trade-market sales promotion technique.
Also known as push money. Manufacturers give monetary incentives to retailers and it almost is like a bride for retailers to push the products.
What are the different types of allowances as a trade-market sales promotion technique?
Describe the merchandise allowance and slotting fee types of allowances as a trade-market sales promotion technique?
-Merchandise Allowances: If you sale X amount then you will X amount for free.
-Slotting Fees: Manufacturers paying extra money to get a prime spot on the retailers' shelf.
Describe an example of sales training programs as a trade-market sales promotion technique. (Best Buy - Apple)
A Top Retailers' Salesmen (Best Buy) after getting a lot of sales can get together with the Top Salesman (Apple) from the manufacturer and go through their sales programs.
What is a unique characteristic of sales training programs as a trade-market sales promotion technique?
It is highly coveted by the retailers since the manufacturers are often at a higher-level of quality.
Describe an example of cooperative/co-op advertising as a trade-market sales promotion technique. (Pepsi - Kroger)
Pepsi says "Put Pepsi Mango on Featured Sales Sheet" to Kroger and will pay 10% of the sales promotion back to Kroger.
What are the different business-buyer or business-market sales promotion techniques?
-Premiums and Advertising Specialties
Describe the relationship between sales promotion, the Internet, and New Media.
Sale promotions like sampling can remove risks associated with a consumer trial offer thus creating an incentive for Internet firms to make websites "sticky".
What does keeping a website "sticky" mean?
Simply keeping people on the website longer.
Why does Internet firms want to keep websites "sticky"?
The average duration of stay increases and thus increasing the probability of consumers purchasing through incentives.
What are the disadvantages of sale promotion in a general sense?
-Create a price orientation
-Borrow from future sales
-Time and expense
Elaborate and give an example on creating a price orientation as a disadvantage of sale promotions.
Consumer get used to discounted price and don't want to pay the full price. This was seen with the BOGO from Little Cesar's.
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