DEFINITION OF SALES PROMOTION
Sales promotion is any type of tool undertaken by an organization to increase its sales and the usage or trial of a product or service. It is possible talk about different types of sales promotions. Often they are original and creative, and hence a comprehensive list of all available techniques is virtually impossible because every day a new type of promotion is introducted on the market.
Sales promotions traditionally are complementary to advertising. They are used to reinforce and encourage customers to try the product and than purchase it. Sales promotion provides a range of short-term tactical measures to induce sales or particular products or services now rather than at some point in the future. In that sense, they are sales accelerators. Its aim is to provide extra value to the product or service, crating the extra impetus to purchase products that customer might not normally buy. (Hughes and Fill, 2007).
According to Shimp (2000), sales promotion is used to induce the trade and/or consumers to buy a brand and to encourage the sales force to aggressively sell it. In retail, sales promotion is also used to encourage desired behavior from customers - come to store rather than a competitors, buy one brand rather than another, purchase larger quantities.
Shimp (2000) is adding that effective sales promotion, from a consumer-response perspective, must make it relatively easy for consumers to obtain their reward, and the size of the reward must be sufficient to justify the consumers` efforts. This was summarized by Raghubir et.al (2004) who defined that from the customers` perspective economic effects of sales promotion can be divided into monetary and non-monetary gains or loses.
Apart from economic effects of promotion, Raghubir (2005) is suggesting that promotions are also a source of information that consumers use to make judgements about products and their prices. On the top of that, third effects of sales promotion are the affective benefits which are based on the hedonic benefits of exploration, value expression and entertainment. The affective costs include regret (of missing a promotion), embarrassment, and irritation (due to the need to comply with restriction to avail of a promotion).
Brassington and Pettit (1997) carried out classifications of sales promotion techniques from consumer perception:
1.
Money-based promotion:
• Reduced price offers - One of the most frequently employed tactics in the sales promotion repertoire of retailers is the provision of “special discounts”. Such in-store promotions take place within a store in an unannounced and unpredicted manner at the point of sale, allowing consumers to experience unexpected savings, or “windfall gains” (Ha, et.al, 2006). On the top of that, if customer experience unexpected or unanticipated saving (or gains), they are likely to spend the saved amount more easily comparing to situation, when they have been looking for saving on purpose or if they were expecting gains (Arkes et.al, 1994).
- on shelf reduced price offers at the point of sale of the product. The reduction does not appear on product itself, but on leaflets advertising or on surrounding notices
- on pack offer actually features on the product pack itself. The offer originates from manufacturer or it has form of joint promotion between the manufacturer and one particular retailer.
• Coupons more complex money-based sales promotion. They are printed vouchers which consumers take to a retail outlet and uses to claim a set amount of money off a product. There are various forms of coupons. They can be printed within advertisements, on leaflets delivered from door to door, on inserts within magazines and newspapers, through direct mail, at the point of sale and on packs and latest popular one are e-coupons which are used for discounts while shopping online. Yeshin (2006) is adding that coupons can be designed to have different impacts on the consumer and therefore they can be further divided into coupons valid for this purchase, next purchase or multiple purchases. On the cost side, one of the major costs of a coupon program is the value of the coupons redeemed. If only consumers who would have bought the promoted brand anyway redeem coupons, then coupon redemption would always result in lower profitability. On the other hand, profitability of the couponing operation depends on both the incremental sales and the redemption rate (Leone and Srinivasan, 1996). From customer perspective, Huff and Alden (1998) propose that attitudes toward coupons are influenced by the following factors: (1) familiarity with coupons, (2) attitudes of family and friends toward using coupons, (3) fear of embarrassment or losing face when using coupons, and (4) the consumer's price consciousness.
• Rebates it is also called `cash-back` scheme which involves a little more work and loyalty from the consumer. Tokens or labels to be collected from packaging, involving a number of purchasing episodes, and then mailed in to qualify for either hard cash or a substantial coupon (retailer or product specific). However, rebates are associated with greater expenditures of time and energy for redemption than free features. Therefore, retailers and marketers need to be aware of the extent to which perceptions of the time and effort are involved in redeeming different types of discounts. Consequently, the redemption effort is likely to have a negative influence on perceptions of the value (Munger and Grewal, 2001).
• Hughes and Fill (2007) are adding another technique “try before you buy promotion” in which consumer has opportunity to have product for limited period of time for free.
• On the top of that, Yeshin is adding “price-matching promotion” in which retailer is offering to match competitors price within certain area. This marketing tool is a signal of price beating offers and claims that store has the lowest prices what may have important implications for consumer price perceptions and behaviour. It may be more efficient for retailers to offer and advertise price-matching guarantees than to advertise specific low prices. The rationale is that a price-matching guarantee generally includes all the merchandise in a store while advertised prices include only a fraction of the stock. A price-matching guarantee thus constitutes an “umbrella pricing” tactic which is indicative of the overall price level of a store (Srivastava and Lurie, 2004).
2.
Product-based promotion: • Extra product
a) Extra free This technique involves offers such as `20% extra free`. To make sure, customer understand what 20 per cent looks like, the packaging, for example a can, would have band around the top of the label in a different colour from the usual packaging giving a rough idea of which part of the contents is free. However, Ong et.al (1997) suggests that consumers appear not to give bonus pack offers too much credence. Their surveys shows, that they slightly agree that the offer was hard to believe. As for pricing, consumers suspect that manufacturers do raise prices slightly in conjunction with offered bonus pack.
b) BIGIF or BOGOF again, in promotion customers are offered extra free product. The BIGIF stands for Buy 1 Get 1 Free and BOGOF is written version of it - Buy one get one free. Effectively, the offer is saying `100 extra free`. As Parguel et.al (2007) stated, although the incremental cost is difficult to assess, pre-wrapped bundles are more expensive than separate-item ones,. In reality, separate-item bundles deliver value, drive volume, retain loyalty and build share, without modifying the processes at work at the manufacturer and retailer levels.
c) Banded packs Yeshin define that these can be same product or assorted product and it basically means that there would be some kind of discount if more products are bough (3 for 2, 20% of if bought 2…)
d) Samples The importance of product trial an direct behavioural experience with a product is recognized by marketing mangers (Ndubisi & Moi, 2005) therefore main objective of samples is to persuade people to try a product
- On-pack samples can be given away with existing products - Trial sizes can be sold in retail outlets at a minimal price
- Print media this allow targeting of fairly narrowly profiled audiences, what can be efficient way of distributing samples to potential buyers
- Direct mail if samples are small, light and non-perishable, they can be distributed by direct mail, either to people already on a mailing list, or to those who respond to an offer made in an advertisements - Door to door popular, but expensive way of distributing samples. Effectively, samples are putting directly into people’s hands in an environment, where it is likely to be remembered and used.
3.
Gift, prize or merchandise based promotion
a) Self-liquidating offers invite the customers to pay a small amount of money, and usually to submit specified proofs of purchase, in return for goods that are not necessarily directly related to the main product purchase. The money paid is usually just enough to cover the cost price of the goods and a contribution to postage and handling.
b) Free mail-in consumer can claim a gift, free of charge, in return for proofs of purchase and perhaps the actual cost of postage (but no handling charges or the cost of the gift itself)
c) Free inside or on-pack means offering free gifts contained inside or banded on to the outside of the pack.
d) Free with product is similar to an on-pack offer, except that the gift is not attached to product, but has to be claimed at the checkout.
e) Customer loyalty schemes these are designed to encourage repeat buying, especially where switching is easy and generic brand loyalty is low.
f) Contest and sweepstakes this allow organisation to offer very attractive and valuable incentives, such as cars, holidays or large amounts of cash to very small number of purchasers who happen to be lucky enough to win. Contests have to involve a demonstration of knowledge, or of analytical or creative skills to produce winner. On the other hand, sweepstakes do not involve skill, but offer every entrant an equal chance of winning through the luck of the draw.
4.
Store based promotion
a) Point of sale display methods includes posters, displays, dispensers, dump bins and other containers to display products.
b) Demonstration is powerful means of gaining interest and trial.
The key aims and objectives of sales promotions for retailers will be to increase sales through a range of promotional techniques:
- Increase in-store and customer traffic the use of coupons and money-off vouchers - Increase frequency of purchase discounted promotions for next purchase
- Increase in-store loyalty through the use of storecards and rewards systems
- Increase own brand sales encourage customers to purchase own brand products through a range of sale promotion incentives such as trial packs, in-store demonstrations and so on
- Achieve consistent demand reduce fluctuations, provide sales promotions in particular time bands to encourage a more consistent approach to shopping (Hughes and Fill, 2007).
According to Dawes (2004) successful price promotion:
(1) have no identifiable positive or negative longer-term effect on the volume for the brand that was promoted;
(2) do temporarily expand the category for the duration of the promotion;
(3) have an identifiable negative effect on the sales volume of one competing retailer chain in the period of the promotion, but not on the sales volume of the other two retailers;
(4) did have a longer-term negative impact on category sales for the retailer than ran the promotion. From retailers perspective, sales promotion and in fact generally whole marketing promotion been for a while two poles of battlefield profit versus cost basis. The management of companies is facing challenging decision to which side they should incline to. On one hand, the highly competitive market place compels marketers to increase their spending on the promotional mix. On the other hand, simultaneously, promotional expenditures are being examined closely by top management as one for the most promising areas left for cutting costs and increasing profits (Srinivasan & Anderson, 1998). On the other hand, from customers’ perspective, promotions provoke two reactions in people. The first is an increase in consumption, i.e. more quantity of a product is acquired. The second is storage of the product for the future, i.e. the consumer acts anticipating his purchases. These expectations or anticipations increase the probability of purchase when customers encounter an unexpected price promotion on a brand while decreasing purchase likelihood to a greater extent if they expect the brand to be promoted and it is not (Raghubir et.al 2004). On the top of that, Alvarez & Casielles (2004) adding that the influence of sales promotions on the consumer will also depend on the consumer’s characteristics and these can be divided into three types of consumer segments:
(2) those who find them neither attractive nor necessary, and will therefore act by reducing their choice probability; and
(3) those who remain indifferent and are therefore not affected by these actions in their final decision. Retailers also use promotional incentives to encourage desired behaviours from consumers. Sales promotion is more short-term oriented and capable of influencing behaviour (Ndubisi & Moi, 2005). However, in many market sectors, brands are perceived as being on constant promotion, which results in consumer confusion as to the real price of the brand (Lucas, 1996). Therefore, if the consumer is capable of anticipating when a sales promotion action will take place, the results obtained will decrease. Moreover, it is necessary for the consumer not to be able to anticipate sales promotions, and thus not to incorporate these incentives into the product’s characteristics (Alvarez & Casielles, 2004). According to research conducted by Gilbert and Jackaria (2002), in which they investigated four most common sale promotion tools in UK supermarkets (Buy One Get One Free, price discounts, coupons and samples), only discounts has statistically significant influence on consumer`s reported buying behaviour. On the other hand, although BOGOF was statistically not significant, brand switching behaviour and purchase acceleration were statistically significant. On the top of that, buy one get one free promotion is the most popular promotion type among consumers followed by discount. Borges et.al (2005) are adding, that knowing the implications of promotional assortment on the promotion utility, retailers can propose promotional actions that increase store traffic and develop the price image of the store. There is greater efficiency by managing buying association as retailers can reduce redundancy effects and produce more profitable promotional actions. Moreover, Kostolny (2008) suggesting that one of the main rules of sales promotion is that it is exchange of advantages. On one side, customer is gaining in different variation lower price per unit. On the other side, in exchange for it seller is expecting increases in turnover by attracting new customers, increasing present customers` flow or buying repetition, or by bigger spent from current customers.
Actually, the most used sales promotions activities are:
(a) Buy-One-Get-One-Free (BOGOF) - which is an example of a self-liquidating promotion. For example if a loaf of bread is priced at $1, and cost 10 cents to manufacture, if you sell two for $1, you are still in profit - especially if there is a corresponding increase in sales. This is known as a PREMIUM sales promotion tactic.
(b) Customer Relationship Management (CRM) incentives such as bonus points or money off coupons. There are many examples of CRM, from banks to supermarkets.
(c) New media - Websites and mobile phones that support a sales promotion. For example, in the United Kingdom, Nestle printed individual codes on KIT-KAT packaging, whereby a consumer would enter the code into a dynamic website to see if they had won a prize. Consumers could also text codes via their mobile phones to the same effect.
(e) Free gifts e.g. Subway gave away a card with six spaces for stickers with each sandwich purchase. Once the card was full the consumer was given a free sandwich.
(f) Discounted prices e.g. Budget airline such as EasyJet and Ryanair, e-mail their customers with the latest low-price deals once new flights are released, or additional destinations are announced.
(g) Joint promotions between brands owned by a company, or with another company's brands. For example fast food restaurants often run sales promotions where toys, relating to a specific movie release, are given away with promoted meals.
(h) Free samples (aka. sampling) e.g. tasting of food and drink at sampling points in supermarkets. For example Red Bull (a caffeinated fizzy drink) was given away to potential consumers at supermarkets, in high streets and at petrol stations (by a promotions team).
(i) Vouchers and coupons, often seen in newspapers and magazines, on packs.
(j) Competitions and prize draws, in newspapers, magazines, on the TV and radio, on The Internet, and on packs.
(k) Cause-related and fair-trade products that raise money for charities, and the less well off farmers and producers, are becoming more popular.
(l) Finance deals - for example, 0% finance over 3 years on selected vehicles.
These types of examples above are focused upon consumers but sometimes promotions can be aimed at wholesales and distributors as well. These are known as Trade Sales Promotions. Examples here might include joint promotions between a manufacturer and a distributor, sales promotion leaflets and other materials (such as T-shirts), and incentives for distributor sales people and their retail clients.
Principal aims of Sales Promotion
Sales promotion is usually adopted to achieve most of the five major promotional objectives:
• Building Product Awareness
Many sales promotion techniques are effective in exposing customers to products for the first time and can serve as key promotional components in the early stages of new product introduction. Additionally, as part of the effort to build product awareness, several sales promotion techniques possess the added advantage of capturing customer information at the time of exposure to the promotion. In this way sales promotion can act as an effective customer information gathering tool (i.e., sales lead generation), which can then be used as part of follow-up marketing efforts.
• Creating Interest
Marketers find that sales promotions are very effective in creating interest in a product. In fact, creating interest is often considered the most important use of sales promotion. In the retail industry an appealing sales promotions can significantly increase customer traffic to retail outlets. Internet
marketers can use similar approaches to bolster the number of website visitors. Another important way to create interest is to move customers to experience a product. Several sales promotion techniques offer the opportunity for customers to try products for free or at low cost.
• Providing Information
Generally sales promotion techniques are designed to move customers to some action and are rarely simply informational in nature. However, some sales promotions do offer customers access to product information. For instance, a promotion may allow customers to try a fee-based online service for free for several days. This free access may include receiving product information via email.
• Stimulating Demand
Next to building initial product awareness, the most important use of sales promotion is to build demand by convincing customers to make a purchase. Special promotions, especially those that lower the cost of ownership to the customer (e.g., price reduction), can be employed to stimulate sales.
• Reinforcing the Brand
Once customers have made a purchase sales promotion can be used to both encourage additional purchasing and also as a reward for purchase loyalty (see loyalty programs below). Many companies, including airlines and retail stores, reward good or “preferred” customers with special promotions, such as email “special deals” and surprise price reductions at the cash register.
Different Types of Sales Promotion
According with the latest marketing theories (Brassington and Pettit -1997), sales promotion can be classified based on the primary target audience to whom the promotion is directed. These include: * Consumer Market Directed - Possibly the most well-known methods of sales promotion are those intended to appeal to the final consumer. Consumers are exposed to sales promotions nearly everyday, and as discussed later, many buyers are conditioned to look for sales promotions prior to making purchase decisions.
* Trade Market Directed – Marketers use sales promotions to target all customers including partners within their channel of distribution. Trade promotions are initially used to entice channel members to carry a marketer’s products and, once products are stocked, marketers utilize promotions to strengthen the channel relationship.
* Business-to-Business Market Directed – A small, but important, sub-set of sales promotions are targeted to the business-to-business market. While these promotions may not carry the glamour associated with consumer or trade promotions, B-to-B promotions are used in many industries.
Consumer Sales Promotion (B2C)
Consumer sales promotions encompass a variety of short-term promotional techniques designed to induce customers to respond in some way. The most popular consumer sales promotions are directly associated with product purchasing. These promotions are intended to enhance the value of a product purchase by either reducing the overall cost of the product (i.e., get same product but for less money) or by adding more benefit to the regular purchase price (i.e., get more for the money).
While tying a promotion to an immediate purchase is a major use of consumer sales promotion, it is not the only one. As we noted above, promotion techniques can be used to achieve other objectives such as building brand loyalty or creating product awareness. Consequently, a marketer’s promotional toolbox contains a large variety of consumer promotions.
Next we discuss the following 11 types of consumer sales promotions: 1. Coupons
2. Rebates
3. Promotional Pricing 4. Trade-In
5. Loyalty Programs
6. Sampling and Free Trials 7. Free Product
8. Premiums
9. Contests and Sweepstakes 10. Demonstrations
11. Personal Appearances
Coupons
Most consumers are quite familiar with this form of sales promotion, which offers purchasers price savings or other incentives when the coupon is redeemed at the time of purchase. Coupons are short-term in nature since most (but not all) carry an expiration date after which the value may not be received. Also, coupons require consumer involvement in order for value to be realized. In most cases involvement consists of the consumer making an effort to obtain the coupon (e.g., clip from newspaper) and then presenting it at the time of purchase.
Coupons are used widely by marketers across many retail industries and reach consumers in a number of different delivery formats including:
* Free-Standing Inserts (FSI) – Here coupon placement occurs loosely (i.e., inserted) within media, such as newspapers and direct mail, and may or may not require the customer to cut away from other material in order to use.
* Cross-Product – These consist of coupons placed within or on other products. Often a marketer will use this method to promote one product by placing the coupon inside another major selling product. For example, a pharmaceutical company may imprint a coupon for a cough remedy on the
box of a pain medication. Also, this delivery approach is used when two marketers have struck a cross promotion arrangement where each agrees to undertake certain marketing activity for the other.
* Printout – A delivery method that is common in many food stores is to present coupons to a customer at the conclusion of the purchasing process. These coupons, which are often printed on the spot, are intended to be used for a future purchase and not for the current purchase which triggered the printing.
* Product Display – Some coupons are nearly impossible for customers to miss as they are located in close proximity to the product. In some instances coupons may be contained within a coupon dispenser fastened to the shelf holding the product while in other cases coupons may be attached to a special display (see POP display below) where customers can remove them (e.g., tear off).
* Internet – Several specialized websites, such as HotCoupons.com, and even some manufacturer’s sites, allow customers to print out coupons. These coupons are often the same ones appearing in other media, such as newspapers or direct mail. In other cases, coupons may be sent via email, though to be effective the customer’s email program must be able to receive HTML email (and not text only) in order to maintain required design elements (e.g., bar code).
* Electronic – The Internet is also seeing the emergence of new non-printable coupons redeemable through website purchases. These electronic coupons are redeemed when the customer enters a designated coupon code during the purchase process.
Rebates
Rebates, like coupons, offer value to purchasers typically by lowering the customer’s final cost for acquiring the product. While rebates share some similarities with coupons, they differ in several keys aspects. First, rebates are generally handed or offered (e.g., accessible on the Internet) to customers after a purchase is made and cannot be used to obtain immediate savings in the way coupons are used. (So called “instant rebates”, where customers receive price reductions at the time of purchase, have elements of both coupons and rebates, but for our purposes we will classify these as coupons due to the timing of the reward to the customer.)
Second, rebates often request the purchaser to submit personal data in order to obtain the rebate. For instance, customer identification, including name, address and contact information, is generally required to obtain a rebate. Also, the marketer may ask those seeking a rebate to provide additional data such as indicating the reason for making the purchase.
Third, unlike coupons that always offer value when used in a purchase (assuming it is accepted by the retailer), receiving a rebate only guarantees value if the customer takes actions. Marketers know that not all customers will respond to a rebate. Some will misplace or forget to submit the rebate while others may submit after a required deadline. Marketers factor in the non-redemption rate as they attempt to calculate the cost of the rebate promotion.
Finally, rebates tend to be used as a value enhancement in higher priced products compared to coupons. For instance, rebates are a popular promotion for automobiles and computer software where large amounts of money may be returned to the customer.
Promotional Pricing
One of the most powerful sales promotion techniques is the short-term price reduction or, as known in some areas, “on sale” pricing. Lowering a product’s selling price can have an immediate impact on demand, though marketers must exercise caution since the frequent use of this technique can lead customers to anticipate the reduction and, consequently, withhold purchase until the price reduction occurs again.
As we will see in the Setting Price Tutorial, promotional pricing is also considered within the framework of the Price marketing mix component. More on of this technique is provided in that discussion.
Trade-In
Trade-in promotions allow consumers to obtain lower prices by exchanging something the customer possess, such as an older product that the new purchase will replace. While the idea of gaining price breaks for trading in another product is most frequently seen with automobile sales, such promotions are used in other industries, such as computers and golf equipment, where the customer’s exchanged product can be resold by the marketer in order to extract value.
Loyalty Programs
Promotions that offer customers a reward, such as price discounts and free products, for frequent purchasing or other activity are called loyalty programs. These promotions have been around for many years but grew rapidly in popularity when introduced in the airline industry as part of frequent-filer programs. Loyalty programs are also found in numerous other industries, including grocery, pizza purchasing and online book purchases, where they may also be known as club card programs since members often must use a verification card as evidence of enrollment in the program.
Many loyalty programs have become ingrained as part of the value offered by a marketer. That is, a retailer or marketing organization may offer loyalty programs as general business practice. Under this condition loyalty program does not qualify as a sales promotion since it does not fit the requirement of offering a short-term value (i.e., it is always offered). However, even within a loyalty program that is part of a general business practice, a sales promotion can be offered such as special short-term offer that lowers the number of points needed to acquire a free product.
Samples and Free Trials
Enticing members of a target market to try a product is often easy when the trial comes at little or no cost to the customer. The use of samples and free trials may be the oldest of all sales promotion techniques dating back to when society advanced from a culture of self-subsistence to a culture of trade.
Sampling and free trials give customers the opportunity to experience products, often in small quantities or for a short duration, without purchasing the product. Today, these methods are used in almost all industries and are especially useful for getting customers to try a product for the first time.
Free Product
Some promotional methods offer free products but with the condition that a purchase be made. The free product may be in the form of additional quantities of the same purchased product (e.g., buy one, get one free) or specialty packages (e.g., value pack) that offer more quantity for the same price as regular packaging.
Premiums
Another form of sales promotion involving free merchandise is premium or “give-away” items. Premiums differ from samples and free product in that these often do not consist of the actual product, though there is often some connection. For example, a cellphone manufacturer may offer access to free downloadable ringtones for those purchasing a cellphone.
Contests and Sweepstakes
Consumers are often attracted to promotions where the potential value obtained is very high. In these promotions only a few lucky consumers receive the value offered in the promotion. Two types of promotions that offer high value are contests and sweepstakes.
Contests are special promotions awarding value to winners based on skills they demonstrate compared to others. For instance, a baking company may offer free vacations to winners of a baking contest. Contest award winners are often determined by a panel of judges.
Sweepstakes or drawings are not skill based but rather based on luck. Winners are determined by random selection. In some cases the chances of winning may be higher for those who make a purchase if entry into the sweepstake occurs automatically when a purchase is made. But in most cases, anyone is free to enter without the requirement to make a purchase.
A sub-set of both contests and sweepstakes are games, which come in a variety of formats such as scratch-off cards and collection of game pieces. Unlike contests and sweepstakes, which may not require purchase, to participate in a game customers may be required to make a purchase. In the United States and other countries, where eligibility is based on purchase, games may be subjected to rigid legal controls and may actually fall under that category of lotteries, which are tightly controlled.
Demonstrations
Many products benefit from customers being shown how products are used through a demonstration. Whether the demonstration is experienced in-person or via video form, such as over the Internet, this promotional technique can produce highly effective results. Unfortunately, demonstrations are very expensive to produce. Costs involved in demonstrations include paying for the expense of the demonstrator, which can be high if the demonstrator is well-known (e.g., nationally known chef), and also paying for the space where the demonstration is given.
Personal Appearances
An in-person appearance by someone of interest to the target market, such as an author, sports figure or celebrity, is another form of sales promotion capable of generating customer traffic to a physical location. However, as with demonstrations, personal appearance promotion can be expensive since the marketer normally must pay a fee for the person to appear.
Trade Sales Promotions
As note in the Promotion Decisions Tutorial, certain promotions can help “push” a product through the channel by encouraging channel members to purchase and also promote the product to their customers. For instance, a trade promotion aimed at retailers may encourage retailers to instruct their employees to promote a marketer’s brand over competitors’ offerings. With thousands of products competing for limited shelf space, spending on trade promotion is nearly equal that spent on consumer promotions. Many sales promotions aimed at building relationships with channel partners follow similar designs as those directed to consumers including promotional pricing, contests and free product. In addition to these, several other promotional approaches are specifically designed to appeal to trade partners. These approaches include:
1. Point-of-Purchase Displays 2. Advertising Support Programs 3. Short Term Allowances
4. Sales Incentives or Push Money 5. Promotional Products
6. Trade Shows
Below is a discussion of each approach.
Point-of-Purchase Displays
Point of purchase (POP) displays are specially designed materials intended for placement in retail stores. These displays allow products to be prominently presented, often in high traffic areas, and thereby increase the probability the product will standout. POP displays come in many styles, though the most popular are ones allowing a product to stand alone, such as in the middle of a store aisle or sit at the end of an aisle (i.e., end-cap) where it will be exposed to heavy customer traffic.
For channel partners, POP displays can result in significant sales increases compared to sales levels in a normal shelf position. Also, many marketers will lower the per-unit cost of products in the POP display as an incentive for retailers to agree to include the display in their stores.
Advertising Support Programs
In addition to offering promotional support in the form of physical displays, marketers can attract channel members’ interest by offering financial assistance in the form of advertising money. These
funds are often directed to retailers who then include the company’s products in their advertising. In certain cases the marketer will offer to pay the entire cost of advertising, but more often, the marketer offers partial support known as co-op advertising funds.
Short Term Trade Allowances
This promotion offers channel partners price breaks for agreeing to stock the product. In most cases the allowance is not only given as encouragement to purchase the product but also as an inducement to promote the product in other ways such as by offering attractive shelf space or store location, highlighting the product in company-produced advertising or website display, or by agreeing to have the retailer’s sales personnel “talk-up” the product to customers.
Allowances can be in the form price reductions (a.k.a. off-invoice promotion) and buy-back guarantees if the product does not sell in certain period of time.
Sales Incentives or Push Money
Since sales promotions are intended to stimulate activity that leads to meeting promotional objectives, it makes sense that these can also apply to those in a channel member’s organization who also affect sales. Thus, a marketer may offer sales promotions to their reseller’s sales force and customer service staff where they are used as incentives to help sell more of the marketer’s product. Sometimes called push money, these promotions typically offer employees cash or prizes, such as trips, for those that meet sales requirements.
Promotional Products
Among the most widely used methods of sales promotions is the promotional product; products labeled with the brand or company name that serve as reminders of the actual product. For instance, companies often hand out free calendars, coffee cups and pens that contain the product logo.
Trade Shows
One final type of trade promotion is the industry trade show (a.k.a. exhibitions, conventions). Trade shows are organized events that bring both industry buyers and sellers together in one central location. Spending on trade shows is one of the highest of all sales promotions. In fact, the Promotion Marketing Association estimates that over (US) $20 billion is spent annually by marketers to participate in trade shows.
Marketers are attracted to trade shows since these offer the opportunity to reach a large number of potential buyers in one convenient setting. At these events most sellers attempt to capture the attention of buyers by setting up a display area to present their product offerings and meet with potential customers. These displays can range from a single table covering a small area to erecting specially built display booths that dominate the trade show floor.
Business-to-Business Sales Promotions
The use of sales promotion is not limited to consumer products marketing. In business-to-business markets sales promotions are also used as a means of moving customers to action. However, the promotional choices available to the B-to-B marketer are not as extensive as those found in the consumer or trade markets. For example, most B-to-B marketers do not use coupons as a vehicle for sales promotion with the exception of companies that sell to both consumer and business customers (e.g., products sold through office supply retailers). Rather, the techniques more likely to be utilized include: * price-reductions * free product * trade-in * promotional products * trade shows
Of the promotions listed, trade shows are by far the mostly widely used sales promotion for B-to-B marketers.
Trends in Sales Promotion
Marketers who employ sales promotion as a key component in their promotional strategy should be aware of how the climate for these types of promotions is changing. The important trends in sales promotion include:
Customers Expectations
The onslaught of sales promotion activity over the last several decades has eroded the value of the short-term requirement to act on sales promotions. Many customers are conditioned to expect a promotion at the time of purchase otherwise they may withhold or even alter their purchase if a promotion is not present. For instance, food shoppers are inundated on a weekly basis with such a wide variety of sales promotions that their loyalty to certain products has been replaced by their loyalty to current value items (i.e., products with a sales promotion). For marketers the challenge is to balance the advantages short-term promotions offer versus the potential to erode loyalty to the product.
Electronic Delivery
Sales promotions are delivered to customers in many ways such as by mail, in-person or within print media. However, the Internet and mobile technologies, such as cellphones, present marketers with a number of new delivery options. For examples, the combination of mobile devices and geographic positioning technology will soon permit marketers to target promotions to a customer’s physical location. This will allow retailers and other businesses to issue sales promotions, such as electronic coupons, to a customer’s mobile device when they are near the location where the coupon can be used. Tracking
As we discussed in our coverage of advertising, tracking customer’s response to marketers’ promotional activity is critical for measuring success of an advertisement. In sales promotion, tracking is also used. For instance, grocery retailers, whose customers are in possession of loyalty cards, have the ability to match customer sales data to coupon use. This information can then be sold to coupon marketers who may use the information to get a better picture of the buying patterns of those responding to the coupon.
Internet Communication
For many years consumers typically became aware of sales promotions in passive ways. That is, most customers obtained promotions not through an active search but by being a recipient of a marketer’s promotion activity (e.g., received coupons in the mail). The Internet is changing how customers obtain promotions. In addition to websites that offer access to coupons, there are a large number of community forum sites where members share details about how to obtain good deals which often include information on how or where to find a sales promotion. Monitoring these sites may offer marketers insight into how customers feel about certain promotions and may even suggest ideas for future sales promotions.
Clutter and Need for Creativity
In the same way an advertisement competes with other ads for customers’ attention, so to do sales promotions. This is particularly an issue with inserted coupon promotions that may be included in mailing or printed media along with numerous other offerings. The challenge facing marketers is to find creative ways to separate their promotions from those offered by their competitors.
References
Brassington, F.; Pettitt, F. (2003), Principles of marketing, 3rd edition, Pearson Education Limited, Harlow
Clow, Kenneth E. & Baack, Donald (2004). Integrated Advertising, Promotion, and Marketing Communications. New Jersey: Pearson Prentice Hall.
Yeshin, T. (2006), Sales promotion, Thomson Learning, London
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TURKCELL COMMUNICATION COMPANY
Company info:
GSM network started in Turkey with Turkcell in February 1994. Then, it has increased the variety of its services based on mobile audio and data communication, number of subscribers. In 2008, Turkcell had 37 million users. With this, Turkcell is a leader of Turkey’s GSM network sector and it is also the third biggest GSM operator in Europe.
Turkcell is the first Turkish company to be listed on the New York Stock Exchange (NYSE), where its shares have been traded since 2000 along with trading on the IMKB.
Turkcell has investments in foreign countries as well. Turkcell's participations in Azerbaijan, Kazakhstan, Georgia and Moldova through Fintur.
Turkcell, with its wide coverage area and its large variety of services abroad is able to provide its subscribers with mobile communication services in Turkey and around the world. With its investments, Turkcell now covers all the settlements in Turkey that have a population of more than 3000. In 2009, Turkcell has signed contracts with 609 operators in 202 countries, ranking it among the top operators in the world in terms of provision of international services. Turkcell also ranks among the top operators in terms of GPRS roaming, with contracts signed with 363 operators from 144 countries.
Their vision is easing and enriching the lives of our customers with communication and technology solutions.
Their strategic priorities are maintaining market and technological leadership while retaining our competitive advantage, increasing customers' satisfaction and loyalty through improving customers' experience, maintaining growth through new investments and business models.
Products
Turkcell Services:• Short message
• MaxiMeSaj (MMS)
• Interactive Voice Response (IVR) System
Service Categories (According to the Benefit Provided to the Customer):
• Chat & Messaging Applications
• Logo & Melody Applications
• Game & Contest Applications
• Corporate Applications
Turkcell has offered services like "TurkcellEDGE", "Turkcell BlackBerry", "TurkcellConnect" and "TurkcellE-Postacı" to its customers. Among other services of Turkcell, that aim to make the lives of its customers easier that can be cited as examples are Turkcell Mobil Ödeme which enables the
customers to use their credit cards with their mobile phones when using the Turkcell infrastructure, and ‘CepteCevap’ which gives answers to questions sent by SMS.
Packets Of Turkcell
Individual Gnçtrkcll:
Gnçtrkcll is a youth club for young people around Turkey. Turkcell launched ‘Turkcell’s youth club: gnctrkcll’, by taking into account the life styles and needs of young people and bringing together the subscribers that have similar lifestyles and needs. It is not a tariff or campaign, it is a club that presents surprising offers, special campaigns and opportunities, various facilities and meets youth popular brands. Every Turkcell and Hazırkart members can join this club without an obligation of being in any tariff.
Hazırkart:
Hazır Kart (literally Instant Card) is launched for subscribers with lower spending levels, or who preferred to have more incoming than outgoing calls. Hazır Kart subscribers have access to all Turkcell's global GSM services.
İşTcell:
İşTcell is a pack for companies and individuals. It creates and advantage in callings between company workers and also with other İşTcell members. Corporate lines are automatically put in İşTcell pack and individuals can join this pack by cancelling their other members of gnçtrkcll and kampuscell.
Turkcell Platinum:
Turkcell Platinum is for differen segment, for privileged customers. The advantages are asistant services, different pricing and private customer agent.
Turkcell Gold:
It is related with Turkcell Platinum. We can say that Turkcell Gold is a lower version of platinum pack. It represents special services too.
Corporate
Turkcell has also corporate actions for companies. İşTcell for companies and Mobil Ofis are the most populer ones. Turkcell also makes some campaigns and sales promotions for companies to increase the number of using.
In Social Responsibility, Turkcell has also supported many social projects so far that it believes will add value to the society from education, technology and sports to art andculture art. To give an
example; Turkcell has been conducting ‘Kardelenler (Snowdrops) projects, which is one of the biggest social responsibility projects in the world. Under the project, every year many school-age girls whose families cannot afford to send them to school, are granted a scholarship.
And also “Running Towards the Future” project allows any student in the 7-17 age groups to do sports without any preconditions imposed on them.
In the technology sector, Turkcell has been contributing to the development of the IT and
telecommunication industries in our country with the support it provides to CeBIT IT Eurasia fair. This organization is also sponsored by Turkcell for the past ten years.
Market Share
There are currently three GSM operators in Turkey: Turkcell, Vodafone, and Avea. As of the end of December 2008, there were approximately 66 million GSM lines and the mobile line penetration rate in Turkey was approximately 92%, according to the operators' announcements.
Turkcell’s competitors are Vodafone with a market share of 25% and Avea with a market share of 19%.
Market Share *
* As of the end of 2008,based on operators' announcements.
Financial Situation
Turkcell's shareholder structure is as follows: 51% is held by Turkcell Holding A.Ş., 4.15% by Çukurova Holding A.Ş., 13.07% by Sonera Holding B.V., 2.32% by MV Holding A.Ş., and the free float is 29.38%. Çukurova Group controls the company despite holding only 18% of the share capital, due to a complicated shareholding/voting structure.
References
http://www.turkcell.com.tr
