[MUSIC] Welcome to the last module of the integrated marketing communications course. In this module, we will learn about the communications tools that we can mix to communicate our marketing and branding messages. Advertising, sales promotions, public relations, digital marketing, content marketing are only few examples of marketing communications tools. In this lecture specifically, we will learn about sales promotions. Sales promotions provide incentives to the distribution channel, to the company's own sales people, or to the consumers. In this lecture, we will focus on the sales promotions designed specifically for consumers. Consumer promotions encourage customers to take the final step and make a purchase. They intend to acquire and retain consumers, boost sales in short run, clear inventory, increase awareness, differentiate from competitors, and encourage brand switching. Generating sales is a short term objective, whereas building a brand is a long term goal. In order not to harm brand image and positioning in the long run, we need to make sure that consumer promotions are carefully designed to support them. Holding promotions too frequently will habituate customers to buy only while the promotions are in effect. Avoiding promotions altogether will let competitors draw customers away. Both advertising and sales promotions provide consumers reasons to buy a product or service. The difference between them is that sales promotions provide consumers reasons to buy now, urgently. It's also important to consider the target audience and the types of promotions to which they would be more responsive. For example, promotion-prone consumers respond to deals and will more easily switch to a brand when it is offered on deal. That means a competitor can offer a deal and the promotion-prone consumer will switch. Price sensitive consumers do not care about the brand name. They just want the cheapest product. Sales promotions will boost sales for promotion-prone and price sensitive consumers. However, neither of them is loyal, and as a result, not attractive in the long run. Brand loyal consumers usually do not need a promotion to make a purchase. If they are loyal to a competing brand, a promotion is not going to convince them to switch. The best group to pursue is brand-preference consumers. These consumers usually have a small set of brands that they prefer. Deals on one of those brands will modify their purchase behavior, and can even enhance their loyalty in the long run. There are many types of consumer promotions. We will talk about price-offs, coupons, premiums, contests and sweepstakes, and sampling activities. Price-offs are temporary reductions in the sales price of a product. Price-off promotions intend to stimulate sales, increase store traffic by attracting more consumers to enter the store, entice new consumers by reducing the financial risk of a trial, and hence encourage brand switching. Despite the effectiveness of price-offs on stimulating sales, we should always be aware that such promotions increase sales, but not the profits. That's why they work better with higher margin products. Price has a signalling value. A price discount may cause consumers perceive the product lower quality, company being in a bad situation and even trying to liquidate stocks, and may have a negative effect on brand image. Additionally, price-offs increase consumers' price sensitivity. Consumers may become reluctant to pay full price for the product. Most consumers are quite familiar with coupons. They offer consumers price savings or other incentives when the coupon is redeemed at the time of purchase. Coupons are short term in nature, since most of them carry an expiration date. Coupons require consumer involvement. In most cases, involvement consists of consumer making an effort to obtain the coupon, for example, clip from newspaper, and then presenting it at the time of purchase. Consumers' conscious effort to clip or redeem the coupon helps create brand awareness and engagement. Coupons are usually sent out by print media, direct mail, in or on product package, in store or via Internet. The disadvantage of coupons is reduced profits due to the reduction in the price with the coupon. Its attractiveness depends on its face value, depth of discount it provides, its distribution method, ease of redemption, and consumers' preference for the brand. Some consumer promotions offer free products with the condition that a purchase is made. These are premiums. The free product may be in the form of additional quantities of the same product. For example, buy one, get one free, specialty packages, for example, value packs that offer more quantity for the same price, or just gifts. Premiums are highly used because perceived value of the gift is usually higher than what it costs to the brand. Additionally, consumers pay the full price for the product. The fit among the premium, the target audience and the brand image is important. The premium needs to be something consumers want. It's usually better to offer an exclusive premium to increase the perceived value of the gift. While premiums attract customers and help enhance brand image, we usually don't expect them to boost short term profits. In fact, in most cases, companies may lose money on premiums. Consumers are often attracted to promotions where the potential value obtained is very high. There are two types of promotions that offer high value to consumers, contests and sweepstakes. Contests are special promotions awarding value to winners based on skills that they demonstrate compared to others. For instance, Frito-Lay hosts Do Us a Flavor contest, in which people submit flavor ideas and then the public votes on a winner. These contests encourage brand engagement of the participants, create curiosity about a result regarding the flavor and regarding who wins the contest, and has news value. Have you heard of those Real Beauty Should Be Shared contests? Dove has made a name for itself by using real looking models in marketing campaigns to promote self-esteem in women and girls. In this context, Dove asks consumers to choose a friend and tell why their friend represents real beauty by filling in their friend's name and two things that makes them beautiful. The award is to become the next face of Dove. Sweepstakes on the other hand, are not skill based, but rather based on luck. Winners are determined by random selection. Both sweepstakes and contests allow marketers to interact with and gain a better understanding of their target audience and provide customers a positive image of the company and its products. Companies can capture data from individuals who enter the contest or sweepstakes, and then analyze this data and utilize it in their marketing activities. The goals of contests and sweepstakes should be to encourage traffic to a website or a retail location. It's doubtful that they will boost sales, but they will create awareness and exposure. Contests are usually more engaging and rewarding when compared to sweepstakes as they require more personal involvement. Finally, we will talk about product sampling. Sampling is one of the most effective promotion tools because it puts our product in the hands and minds of potential customers. Sampling provides a way for customers to try out our product without the risk. Sampling may change people's future purchase decisions if the product provides obvious and important benefits during the trial. Sampling encourages trial purchases and is most effective for new products, new versions of products, and current products to new markets. In this lecture, we have learned about different types of consumer promotions and their advantages and disadvantages. Please keep in mind that we need to tailor consumer promotions very carefully in order to prevent the potential harm on our brand's image. [MUSIC]
