TB-Ch16-7e-William

Part Five: Integration and Evaluation Chapter Sixteen: Sales Promotion, Events, and Sponsorships CHAPTER SIXTEEN Sales Promotion, Events, and Sponsorships GENERAL CONTENT: MULTIPLE-CHOICE QUESTIONS A marketing discipline that utilizes a variety of incentive techniques to structure sales-related programs targeted to consumers, trade, and/or sales levels that generate a specific, measurable action or response for a product or services is known as ___________. advertising public relations sales promotion personal selling event sponsorship (c; moderate; p. 453) Who is the target audience of sales promotion? consumers trade, such as distributors and retailers sales representatives a and b a, b, and c (e; moderate; p. 453) Which of the following is NOT a typical target audience of sales promotion? consumers trade, such as distributors and retailers sales representatives media All of the above are target audiences of sales promotion. (d; moderate; p. 453) What is the ultimate goal of sales promotion? action awareness persuasion intention liking (a; moderate; p. 453) Which of the following typically receives a greater percentage of marketing communication budgets? advertising consumer sales promotion trade promotions event sponsorship public relations (c; moderate; p. 454) Which of the following statements is false regarding sales promotion? Shoppers today are better educated and more selective, which means they are more loyal to brands than in the past. Although consumers are an important target for promotions, so are other people, such as the company’s sales representatives and members of the trade. Over the years advertising and sales promotion have been battling for their share of the marketing communication budget, but sales promotion, particularly trade promotion, is winning that budget battle. The chief reasons for the growth of sales promotion are the pressure for short-term profits and the need for accountability of marketing communication efforts. From the consumers’ perspective, sales promotion reduces the risk associated with a purchase by giving them something of added value. (a; moderate; pp, 453–454) Which of the following is a reason for the growth of sales promotion? pressure for short-term profits need for accountability economic reasons reduces consumers’ risk all of the above (e; moderate; p. 454) Which of the following change in the marketplace is a reason for the growth of sales promotion? Consumers are more likely to switch brands because they are better educated, more selective, and less loyal to brand names than in the past. Consumers have come to expect constant short-term price reductions such as coupons, sales, and price promotions. In most industries, the battle is for market share rather than general product growth, and sales promotion encourages people to switch products, increasing market share. Dominant retailers demand a variety of promotional incentives before allowing products into their stores. all of the above (e; easy; pp. 454–455) Which of the following is NOT a change in the marketplace that is a reason for the growth of sales promotion? Consumers are more likely to switch brands because they are better educated, more selective, and less loyal to brand names than in the past. Consumers have come to expect constant short-term price reductions such as coupons, sales, and price promotions. In most industries, the battle is for market share rather than general product growth, and sales promotion encourages people to switch products, increasing market share. Dominant retailers demand a variety of promotional incentives before allowing products into their stores. Sales promotion is a useful tool for building brand equity. (e; difficult; pp. 454–455) Which of the following is a set of activities targeted to salespeople to motivate them to increase their sales levels? programs to better prepare salespeople to do their jobs, such as sales manuals, training programs, sales presentations, and supportive materials incentives that motivate salespeople to work harder temporary price reductions or a sale price a and b a, b, and c (d; moderate; p. 455) Which of the following is NOT a type of consumer promotion? price deals sampling spiffs contests and sweepstakes premiums (c; moderate; pp. 455–456) Which of the following is a type of consumer promotion known as a consumer price deal? banded packs refund rebate premium contest (a; difficult; p. 456) Which of the following is a type of consumer promotion known as a consumer price deal? cents-off deal price-pack deal bonus packs banded packs all of the above (e; easy; pp. 455–456) Which of the following is NOT a type of consumer promotion known as a consumer price deal? cents-off deal price-pack deal bonus packs banded packs refund (e; difficult; pp. 455–456) A temporary price reduction or a sale price is known as a ___________. refund rebate price deal spiff price-off (c; moderate; p. 455) A type of consumer promotion in which there is a reduction in the normal price charged for a good or service announced at the point of sale or through mass or direct advertising is known as ___________. price-pack deals cents-off deals bonus packs banded packs coupons (b; moderate; p. 455) Which of the following are the two types of coupons? refund and rebate immediate and delayed percentage and cents-off retailer and manufacturer price cut and added value (d; moderate; p. 456) ________ coupons can be redeemed only at the specified retail outlet, and ________ coupons can be redeemed at any outlet distributing the product. Retailer-sponsored; manufacturer-sponsored Manufacturer-sponsored; retailer-sponsored Refund; rebate Rebate; refund Immediate; delayed (a; moderate; p. 456) Which of the following is NOT a way manufacturer-sponsored coupons are delivered? through media directly, such as direct mail or door-to-door in or on the package through the retailer All of the above are ways to deliver manufacturer-sponsored coupons. (e; moderate; p. 456) A type of consumer sales promotion in which a marketer offers to return a certain amount of money to the consumer who purchases the product is known as a ________. rebate refund coupon a and b a, b, and c (d; moderate; p. 456) Allowing the consumer to try the product or service is called ________. trial sampling premium specialties point-of-purchase display (b; easy; p. 456) Which type of consumer sales promotion will more likely lead to consumer trial by giving the product to consumers? price deals coupons refunds and rebates sampling premiums (d; easy; p. 456) Which type of consumer sales promotion creates excitement by promising “something for nothing” and offering impressive prizes that consumers can either compete for or win by chance? price deals coupons sweepstakes sampling premiums (c; easy; p. 456) ________ require participants to compete for a prize or prizes based on some sort of skill or ability. Sweepstakes Games Contests Premiums Sampling (c; moderate; p. 456) ________ require only that participants submit their names to be included in a one-shot drawing or other chance selection. Sweepstakes Games Contests Premiums Sampling (a; moderate; p. 456) A ________ is a type of sweepstake, but it differs from a one-shot drawing type because the time frame is longer. game contest premium spiff slick (a; moderate; p. 456) A type of consumer promotion that is a tangible reward for a particular act, usually purchasing a product or visiting the point-of-purchase is known as a ________. sample price deal contest sweepstake premium (e; moderate; p. 456) What are the two general types of premiums? direct and mail free and self-liquidating immediate and delayed direct and indirect retailer-sponsored and manufacturer-sponsored (a; difficult; p. 456) Which type of premium awards the incentive immediately, at the time of purchase? direct self-liquidating retailer-sponsored manufacturer-sponsored free (a; moderate; p. 456) Which of the following is NOT a type of direct premium? co-op premiums, given to consumers at the retail site but paid for by the manufacturer store premiums, given to customers at the retail site in-pack premiums, inserted in the package at the factory on-pack premiums, placed on the outside of the package at the factory container premiums, in which the package is the premium (a; moderate; pp. 456, 458) Which type of premium usually requires that a payment be mailed in along with some proof of purchase before the customer receives the premium? mail-in premium self-liquidating premium cost-based premium rebate refund (b; moderate; p. 458) ________ present(s) the brand’s name on something that is given away as a reminder, such as calendars, pens, T-shirts, mouse pads, and so forth. Premiums Take-aways Give-aways Specialty advertising Specialty promotions (d; moderate; p. 458) Which of the following is NOT a use of consumer promotions? generate awareness generate trial maintain or increase market share used as a brand reminder All of the above are uses of consumer promotions. (e; moderate; pp. 458–460) Which of the following is NOT a recommended type of consumer promotion to encourage trial of a new product? sampling coupons price deals sweepstakes All of the above are recommended for encouraging trial of a new product. (d; difficult; p. 458) Which of the following is NOT a recommended type of consumer promotion to maintain or increase market share? sampling price deal coupons premiums contests (a; difficult; p. 459) Which of the following is NOT a recommended type of consumer promotion in the reminder stage? coupons sampling rebates specialty items All of the above are recommended for the reminder stage. (b; difficult; p. 460) Which of the following refers to the trade? brokers distributors wholesalers retailers all of the above (e; easy; p. 461) Brokers, distributors, wholesales, dealers, franchisees, and retailers are referred to as ________. resellers trade gatekeepers suppliers merchandisers (b; moderate; p. 461) Which of the following is a type of trade promotion? sweepstakes coupons point-of-purchase displays sampling rebates and refunds (c; moderate; p. 461) Which of the following is a type of trade promotion? point-of-purchase displays retailers kits contest trade shows and exhibits all of the above (e; easy; pp. 461–462) A manufacturer-designed display distributed to retailers who use it to call their customers’ attention to product promotions is known as a ________. merchandising display point-of-purchase (POP) display rack job spiff display slick (b; moderate; p. 461) Which of the following is NOT a form of point-of-purchase (POP) display? take-aways merchandising display price cards dump bins special racks (a; difficult; p. 461) ________ are a type of trade promotion that contain materials that support retailers’ selling efforts or that help representatives make sales calls on prospective retailing customers. Promotion kits Point-of-purchase (POP) kits Trade Incentives Retailer kits Spiffs (d; moderate; p. 461) Print ads that are ready to be sent to the local print media as soon as the retailer or dealer adds identification, location, promotion prices, or other information are known as ________. spiffs push money ad slicks ad comps ad incentives (c; moderate; p. 461) Which type of trade promotion rewards a reseller financially for purchase of a certain level of a product or support of a promotion? trade incentives and deals contests point-of-purchase displays price deals retailer kits (a; moderate; p. 462) Which is the most common type of trade deals? point-of-purchase displays push money spiffs contests buying allowances and advertising allowances (e; moderate; p. 462) Where do companies within the same industry gather to present and sell their merchandise, as well as to demonstrate their products? trade shows industry shows industry forums industry consortiums trade consortiums (a; easy; p. 462) What are the two primary roles for a trade promotion? trade support and consumer acceptance consumer acceptance and excitement trade support and excitement switching behavior and excitement trade support and image enhancement (c; moderate; p. 462) Consumer promotions are important in a(n) ________ strategy. push pull end-user promotion intermediate (b; moderate; p. 462) Trade promotions are important in a(n) ________ strategy. push pull end-user promotion intermediate (a; moderate; p. 462) A monetary bonus paid to a store’s salesperson based on the units that salesperson sells over a period of time is known as ________. push money spiffs bonuses a and b a, b, and c (e; moderate; p. 462) ________ are premiums, such as a free trip to the Super Bowl, that a manufacturer gives to a retailer for buying a certain amount of a product. Bonuses Loaders Spiffs Co-ops Pushes (b; moderate; p. 462) Which of the following type of incentive rewards retailers by giving them the display after the promotion is over? bonuses dealer loaders display allowance buying allowance trade exhibit (b; moderate; p. 463) ________ is a contractual arrangement between the manufacturer and the resellers, and the manufacturer agrees to pay a part or all of the advertising expenses incurred by the retailers. Cooperative advertising Display advertising Buying allowance Advertising allowance Dealer loader (a; moderate; p. 463) A direct payment of cash or goods given to the retailer if the retailer agrees to set up the point-of-sale display is known as a ________. buying allowance bonus dealer loader display allowance cooperative allowance (d; moderate; p. 463) ________ occurs when companies support an event either financially or by donating supplies and services. Ambush marketing Sponsorship Co-marketing Co-branding Tie-in (b; moderate; p. 464) ________ means building a product’s marketing program around a sponsored event, such as the Olympics or a golf tournament. Event marketing Sports marketing Co-marketing Co-branding Tie-in (a; moderate; p. 464) Which of the following is NOT considered a type of sponsorship or event marketing? sports sponsorships festivals, fairs, and other annual events cause marketing co-marketing supporting the arts (d; moderate; p. 464) ________ is the term given to promotional stunts used at events, such as the Olympics, by companies that are not official sponsors. Ambush marketing Sponsorship Co-marketing Co-branding Tie-in (a; moderate; p. 464) Which of the following are ways that marketers can use the Internet for sales promotion programs? sampling sweepstakes and contests price deals coupons all of the above (e; easy; p. 465–466) Which of the following is a promotion to increase customer retention? event marketing loyalty programs sampling coupons sweepstakes (b; moderate; p. 466) Which of the following is NOT a type of partnership program? co-branding licensing loyalty programs tie-ins All of the above are types of partnership programs. (c; moderate; pp. 466–467) ________ is where manufacturers develop marketing communication programs with their main retail accounts, instead of for them. Ambush marketing Sponsorship Tie-ins Co-marketing Licensing (d; moderate; p. 466) When two companies come together to offer a product, the effort is called ________. co-branding sponsorship tie-ins co-marketing licensing (a; moderate; p. 467) In which of the following does a company with an established brand “rent” that brand to other companies, allowing them to use its logo on their products and in their advertising and promotional events? co-branding sponsorship tie-ins co-marketing licensing (e; moderate; p. 467) Which of the following is a type of partnership program used by manufacturers of two or more brands, such as Doritos corn chips and Pace salsa, to leverage similar strengths to achieve a bigger impact in the marketplace? tie-ins licensing sponsorship bonuses spiffs (a; moderate; p. 467) Which of the following is a criticism of sales promotion? cannot account for results results in a brand-insensitive consumer difficult to integrate with other elements of the communications mix not effective difficult to determine specific objectives (b; difficult; p. 468) Which of the following is true regarding advertising? adds tangible value to the product or service creates an immediate action creates a brand image over time contributes greatly to short-term profitability added value strategies rely on rational appeals (c; moderate; p. 469 [Table 16.2]) Which of the following is false regarding advertising and sales promotion? Sales promotion strategies can be rational or emotional Advertising creates a brand image over time, and sales promotion creates immediate action. Advertising and sales promotion contribute moderately to short-term profitability. Advertising adds intangible value to the product or service through image. Sales promotion adds tangible value to the product or service. (c; difficult; p. 469 [Table 16.2]) Which of the following is an important dimension of measurement of promotion effectiveness? response rate redemption rate payout planning a and b a, b, and c (e; moderate; p. 470) GENERAL CONTENT: TRUE/FALSE QUESTIONS Sales promotion not only targets consumers, but intermediaries and sales representatives as well. (True; moderate; p. 453) Sales promotion is primarily designed to motivate people to act by offering incentives. (True; easy; p. 453) The majority of marketing communication budgets is spent on consumer sales promotions. (False; moderate; p. 454) The chief reasons for the growth of sales promotion are the pressure for short-term profits and the need for accountability. (True; moderate; p. 454) One reason for the growth of sales promotion is that it reduces the risk of trying a new product by giving something of added value to motivate action. (True; moderate; p, 454) Shoppers today are more brand loyal, so promotion incentives have to provide substantial incentives to encourage brand switching. (False; difficult; p. 454) Advertising is often the most effective strategy for increasing sales of a parity product when the products in the category are largely undifferentiated. (False; moderate; p. 455) Sales-force promotions include two general sets of promotional activities directed at salespeople: (1) activities that better prepare salespeople to do their jobs and (2) incentives that motivate salespeople to work harder. (True; easy; p. 455) A price deal is a temporary price reduction or a sale price, and there are four types: cents-off deals, price-pack deals, bonus packs, and banded packs. (True; moderate; pp. 455–456) The two general types of coupons are immediate and delayed. (False; moderate; p. 456) Rebate and refund mean basically the same thing. (True; moderate; p. 456) A game is a type of contest, only differing by the length of time it runs. (False; moderate; p. 456) Store premiums, in-pack premiums, and on-pack premiums are all types of self-liquidating premiums. (False; moderate; pp. 456, 458) Specialty advertising presents a brand’s name on something that is given away as a reminder, such as a pen, cap, or mouse pad. (True; easy; p. 458) Consumer promotions can be used to generate awareness, trial, maintain or increase market share, and as a brand reminder. (True; moderate; pp. 458–460) A manufacturer-designed display distributed to retailers who use it to call their customers’ attention to product promotions is known as a spiff. (False; moderate; p. 461) Ad slicks are print ads that are ready to be sent to the local print media as soon as the retailer adds identification, location, promotion price, or other information. (True; moderate; p. 461) The most common types of trade deals are buying allowances, advertising allowances (including cooperative advertising), and display allowances. (True; moderate; p. 462) A trade forum is where companies within the same industry gather to present and sell their merchandise, as well as to demonstrate their products. (False; moderate; p. 462) Spiffs are monetary bonuses paid to a store’s salesperson based on the units that salesperson sells over a period of time. (True; moderate; p. 462) Most trade promotions are designed to motivate in some way trade members to cooperate with the manufacturer’s promotion. (True; easy; p. 463) Companies undertake sponsorships to build brand associations and to increase the perceived value of the brand in the consumer’s mind. (True; moderate; p. 464) Guerilla marketing is the term given to promotional stunts used at events by companies that are not official sponsors. (False; moderate; p. 464) Sweepstakes and contests are effective promotional tools for driving people to marketers’ Internet sites. (True; moderate; p. 465) Loyalty programs that require membership are popular with marketers because they also generate information for customer databases. (True; moderate; p. 466) A tie-in is where manufacturers develop marketing communication programs with their main retail accounts, instead of for them. (False; moderate; pp. 466–467) Marketers license their brand identity to other manufacturers because it makes them money and extends their brand visibility. (True; moderate; p. 467) The reason tie-ins are successful is that brands can leverage similar strengths to achieve a bigger impact in the marketplace. (True; moderate; p. 467) One disadvantage of promotions is that, although they can help introduce a new product and create brand awareness, they cannot build a brand over time. (False; moderate; p. 468) The general decline in consumer brand loyalty is due to the increase in sales promotion use by marketers. (False; difficult; p. 468) Sales promotion often relies on rational appeals, and advertising often relies on emotional appeals. (True; moderate; p. 469) Promotions add tangible value to the good or service and contribute greatly to the profitability of the brand. (True; moderate; p. 469) In most cases, advertising is needed to support promotions. (True; moderate; p. 469) Response rates and redemption rates are used to evaluate the effectiveness of promotional programs. (True; moderate; p. 470) Turnover rate is an important measure of a promotion’s effectiveness. (False; moderate; p. 470) GENERAL CONTENT: ESSAY QUESTIONS Discuss five reasons for the growth of sales promotion. Answer: Students can discuss any five of the following reasons: (1) Pressure for Short-term Profits (2) Accountability for Marketing Communications Efforts (3) Economic Reasons—Traditional media costs have escalated to the point where alternative media must be considered. (4) Immediate Response—It is relatively easy and quick to determine whether a sales promotion strategy has accomplished its objectives because there is usually an immediate response of some kind. (5) Reduces Consumers’ Risk—From their perspective, sales promotion reduces the risk associated with a purchase by giving them something of added value. (6) Consumer Behavior—Shoppers are better educated, more selective, and less loyal to brand names than in the past, which means they are more likely to switch brands. (7) Pricing—Consumers have come to expect constant short-term price reductions, such as coupons, sales, and price promotions. (8) Market Share—In most industries, the battle is for market share rather than general product growth. Sales promotion encourages people to switch products, increasing market share. (9) Parity Products—Sales promotion is often the most effective strategy for increasing the sales of a parity product when the products in the category are largely undifferentiated. When the products are similar, promotions become the tie-breaker in the consumer’s decision making. (10) The Power of the Retailer—Dominant retailers demand a variety of promotional incentives before allowing products into their stores. (moderate; pp. 454–455) Name and describe the seven common types of consumer promotions. Answer: The most common types of consumer promotions are: (1) Price Deals—A temporary price reduction or a sale price. There are four common price deals: (a) cents-off deal—a reduction in the normal price charged for a good or service announced at the point of sale or through mass or direct advertising; (b) price-pack deal—provide the consumer with something extra through the package itself (e.g., a prize in the cereal box); (c) bonus packs—contain additional amounts of the product free when consumers purchase the standard size at the regular price; and (d) banded packs—more units of a product sold at a lower price than if they were bought at the regular single-unit price. (2) Coupons—Provide a discount on the price of a product. Two general types are: retailer and manufacturer. Retailer-sponsored coupons can be redeemed only at the specified retail outlet. Manufacturer-sponsored coupons can be redeemed at any outlet distributing the product. (3) Refunds and Rebates—A marketer’s offer to return a certain amount of money to the consumer who purchases the product. (4) Sampling—Allowing the consumer to try the product or service. (5) Contest and Sweepstakes—Create excitement by promising “something for nothing” and offering impressive prizes. Contests require participants to compete for a prize based on some sort of skill or ability. Sweepstakes require only that participants submit their names to be included in a drawing or other chance selection. A game is a type of sweepstakes, but it differs from a one-shot drawing type of sweepstake because the time frame is longer. (6) Premiums—A tangible reward for a particular act, usually purchasing a product or visiting the point-of-purchase. Premiums are a type of incentive that works by adding value to the product. The two types are direct and mail. Direct premiums award the incentive immediately, at the time of purchase and can be store premiums, in-pack premiums, on-pack premiums, or container premiums. Mail premiums require the customer to take some action before receiving the premium. A self-liquidating premium usually requires that a payment be mailed in along with some proof of purchase before the consumer receives the premium. (7) Specialties (Specialty Advertising)—Presents the brand’s name on something that is given away as a reminder, such as a calendar, pen, or cap. (moderate; pp. 455–458) Explain the purposes of consumer promotions and the useful types of consumer promotions for each. Answer: Consumer promotions can be used for: (1) Awareness—Sometimes awareness can be increased when advertising is combined with an appropriate promotion to call attention to the brand name in order to get people to try the product. (2) Trial—Sales promotion does this by arranging for experiences, such as special events where people can try the product or see it demonstrated. Trial is one of sales promotion’s most important objectives; however, the important thing is to get the right people—the targeted audience—involved with the product. Sales promotion has other tools that lead to trial, such as sampling. Another way sales promotion can motivate people to try a new product is to offer a price deal. Coupons may encourage trial, induce brand switching, and reward repeat business. (3) Maintain or Increase Market Share—To convince prospective users to switch from an established competing brand. A price deal can be used to reward loyal users in order to encourage their repeat business. To maintain a brand’s presence or increase its market share after it is launched, marketers use promotional tools such as coupons, premiums, special events, and contests and sweepstakes. In addition to serving as a reward for buying a product, premiums can enhance an advertising campaign or brand’s image. (4) Brand Reminder—You can change advertising copy to remind customers about the positive experience they had with the product and use sales promotion to reinforce their loyalty with coupons, rebates, and other rewards. Specialty advertising serves as a reminder to reconsider the product. They also build relationships, such as items given away as new-year or thank-you gifts. (difficult; pp. 458–460) Name and describe the five types of trade promotions. Answer: The types of trade promotions are: (1) Point-of-Purchase (POP) Displays—Manufacturer-designed displays distributed to retailers who use them to call their customers’ attention to product promotions. Several different types are given in Table 16.1. (2) Retailer (Dealer) Kits—Materials that support retailers’ selling efforts or that help representatives make sales calls on prospective retailing customers. The kits contain supporting information, such as detailed product specifications, how-to display information, and ad slicks—print ads that are ready to be sent to the local print media as soon as the retailer or dealer adds identification, location, promotion price, or other information. (3) Trade Incentives and Deals—A manufacturer may reward a reseller financially for purchase of a certain level of a product or support of a promotion. The retailer promotional efforts can take the form of special displays, extra purchases, superior store locations, or greater local promotion. In return, retailers can receive special allowances, such as discounts, free goods, gifts, or cash from the manufacturer. The most common types are buying allowances for increasing purchases and advertising allowances, which include deals on cooperative advertising and display allowances—that is, deals for agreeing to use promotional displays. (4) Contests—Used to motivate resellers. Contest are far more common than sweepstakes, mainly because resellers find it easy to tie contest prizes to the sale of the sponsor’s product. (5) Trade Shows and Exhibits—A trade show is where companies within the same industry gather to present and sell their merchandise, as well as to demonstrate their products. Exhibits are spaces that are designed to showcase the product. (moderate; pp. 461–462) Name and describe the various partnership programs. Answer: (1) Co-marketing—Where manufacturers develop marketing communication programs with their main retail accounts, instead of for them. They can strengthen relationships between manufacturers and retailers. Programs are usually based on the lifestyle and purchasing habits of consumers who live in the area of a particular retailer. The partnership means that the advertising and sales promotion build equity for both parties. (2) Co-branding—When two companies come together to offer a product. (3) Licensing—Legally protected brand-identity items, such as logos, symbols, and brand characters must be licensed: a legal contract gives another company the right to use the brand-identity element. The company with an established brand “rents” that brand to other companies, allowing them to use its logo on their products and in their advertising and promotional events. They do this because it makes them money and extends their brand visibility. (4) Tie-Ins—An effective strategy for marketers using associations between complementary brands to make one-plus-one equals three. The intention is to spur impulse sales. Ads are also designed to tie the two products together and the sponsoring companies share the cost of the advertising. The reason for success is that brands can leverage similar strengths to achieve a bigger impact in the marketplace. (moderate; pp. 466–467) APPLICATION QUESTIONS: MULTIPLE-CHOICE QUESTIONS What is the name of the award given in the sales promotion industry? CLIO award Echo award REGGIE award Caines award EFFIE award (c; moderate; p. 451) Which of the following was the objective of “History’s Lost and Found Auction Block” promotion as discussed in the chapter’s opening vignette? develop a model of convergence of television and new-line media by integrating programming content with the Internet drive History’s Lost and Found viewership and broaden the channel’s audience provide a unique and entertaining experience within an auction format to create the opportunity to “own a piece of history” develop a strategic alliance with a major auction site to maximize exposure and awareness of the History Channel all of the above (e; moderate; p. 452) Dana is developing an integrated marketing communications campaign for a client, and she wants to include an element that will provide an incentive for consumers to purchase the product. She also wants to generate excitement for the brand. Which tool should she use to accomplish these goals? advertising personal selling public relations sales promotion direct marketing (d; moderate; p. 453) Allan has worked in the advertising creative field for many years and is moving into sales promotion creation for his agency’s clients. Although he is aware that consumers and the trade are primary target audiences for sales promotion, he just learned that there is another target audience. What is it? government agencies local media special interest groups sales force vendors (d; moderate; p. 455) Melissa is in the grocery store to purchase lunch food and snacks for her family. She is in the cookie aisle and noticed some neon-colored little signs attached to the shelf for a brand she is interested in. The sign, called a “shelf-talker,” says “was $3.59, now $2.89!” What type of consumer promotion price deal is this? cents-off deal price-pack deals bonus packs banded packs coupon (a; easy; p. 455) Lee was in a drug store to purchase some toiletry items that he needed. He picked up his favorite brand of toothpaste and noticed that the package said “30 percent more free.” He noticed that the price was what he normally pays for that toothpaste. Which type of consumer price deal is this? cents-off deal price-pack deal bonus pack banded pack coupon (c; moderate; p. 456) Every Wednesday, the local newspaper has all the grocery store shopping ads inserted. An ad for a local grocery store had a coupon for $2.00 off of Post’s Raisin Bran breakfast cereal. However, the coupon could be used only at that store. Which type of coupon is this? manufacturer-sponsored retailer-sponsored co-op instant delayed (b; moderate; p. 456) Kodak is trying to create excitement for its line of digital cameras. They used a promotion where participants submit pictures electronically in the “Kodak Moments” promotion, and judges will select a grand prize winner to receive a vacation for four to Disney World with several other lower-level winners receiving Kodak products. What type of consumer promotion is this? coupon sweepstake game contest premium (d; moderate; p. 456) Which of the following was NOT a factor complicating the relaunch of Johnsonville’s Brown Sugar and Honey breakfast sausage links as described in “A Matter of Practice”? Several large competitors already have a product offering in that flavor of sausage links. Johnsonville is better known for it bratwurst line even though it has had a breakfast line for years. The window of opportunity for ownership of this new flavor is small as the larger competitors are bound to launch their own versions. The much larger competing brands are filling the market with new packaging, two-for-one pricing strategies, and considerably more media support in advertising. Johnsonville is definitely a little guy in the breakfast sausage category, with distribution in only 60 percent of the country, compared to 90 percent for competitors. (a; difficult; p. 457) Tropicana Orange Juice had a promotion where consumers could send in 10 UPC symbols along with $4.95 for shipping and handling and receive a nice Hawaiian shirt in return. Which type of premium is this? store premium in-pack premium on-pack premium container premium self-liquidating premium (e; moderate; p. 458) As described in “The Inside Story,” what other type of business did Volkswagen partner with to promote the Phaeton, a luxury car to rival Mercedes? television station radio station hotel restaurant health club (c; moderate; p. 459) Beverly works at a specialty kitchen store, and the manufacturer of a brand of gourmet mustard that is sold through her store pays her $1.00 for every jar she sells to consumers. What is this called? retailer kit contest spiffs loaders buying allowance (c; moderate; p. 462) A beer manufacturer offered grocery stores an elaborate display to include near the entrance in their stores, with a picnic table, gas barbeque, coolers to hold beer, and several lounge chairs. Larger stores even had a jet ski included in the display. For their efforts, the manager of the store could keep the items in the display. What type of incentive is this known as? dealer loaders bonuses buying allowances retailer kits cooperative allowance (a; moderate; pp. 462-463) Which of the following was NOT listed as a mandate of loyalty programs that were given in the “Practical Tips” box? Identify your best customers. Concentrate only on your best customers because they are the ones generating the greatest profit. Connect with those best customers. Retain the best customers, usually by rewarding them for their patronage. Cultivate new “best customers.” (b; moderate; p. 466) What type of promotion is Upromise, which was discussed in the “Hands-On” case at the end of the chapter? loyalty program price deal premium sweepstake game (a; easy; p. 473) APPLICATION QUESTIONS: MINI-CASE MULTIPLE-CHOICE Everyone knows McDonald’s, the worldwide fast food chain. McDonald’s has been a user of consumer promotions for years. They offer a kids’ Happy Meal that always includes a toy, and often times the package itself is a promotion, such as pumpkin buckets at Halloween. They have also used a promotion patterned after the popular Monopoly game where everyone wins something small, like a soft drink or french fries, but someone could win $1 million dollars by participating. The Monopoly promotion usually lasts several months. McDonald’s also participates in promotions with movies, such as Star Wars and several Disney movies. Another promotion McDonald’s is considering is a program where consumers will receive one free Happy Meal for every 10 they purchase. Mini-Case Question. What type of consumer promotion is the toy in the Happy Meal? direct premium self-liquidating premium sample price deal game (a; moderate; p. 456) Mini-Case Question. Maria won $1 million playing Monopoly at McDonald’s. What type of consumer promotion is this? direct premium self-liquidating premium contest price deal game (e; easy; p. 456) Mini-Case Question. What type of premium is the pumpkin bucket for the Happy Meals? in-pack premium on-pack premium container premium bonus pack self-liquidating premium (c; easy; p. 458) Mini-Case Question. The promotion in which customers receive one Happy Meal for every 10 they purchase is known as a(n) ________. price deal premium tie-in refund loyalty program (e; easy; p. 468) Mini-Case Question. What type of partnership program does McDonald’s enter into when its promotions are related to movies? co-marketing co-branding licensing tie-in loyalty program (d; moderate; p. 467) APPLICATION QUESTIONS: SHORT-ANSWER As described in the chapter’s opening vignette, how did the History Channel implement the History’s Lost and Found “Auction Block” promotion? Answer: The History Channel forged a strategic marketing alliance with eBay. Important to the alliance was the fact that eBay owns Butterfields Auction House, which was able to research, procure, and authenticate all auction items that were part of this programming and promotion alliance. At the beginning of each week, a new segment of History’s Lost and Found, “Auction Block” was featured, and show hosts introduced an item, detailed its historical significance, and opened the bidding. Viewers were directed to the eBay and History Channel web sites to view and bid on the featured items. Throughout the week, viewers were reintroduced to the item and kept abreast of the latest bid. The Friday show concluded the auction, revealed the winning bid, and previewed the following week’s item. (moderate; p. 452) Consumer packaged goods manufacturers are heavy users of one type of consumer promotions called price deals, and there are four common types of price deals. Name and describe them. Answer: The four types of price deals are: (1) Cents-off Deals—A reduction in the normal price charged for a good or service announced at the point of sale or through mass or direct advertising. (2) Price-pack Deals—Provide the consumer with something extra through the package itself (i.e., a prize in a cereal box). (3) Bonus Packs—Contain additional amounts of the product free when consumers purchase the standard size at the regular price. (4) Banded Packs—More units of a product sold at a lower price than if they were bought at the regular single-unit price, and sometimes the products are physically packaged together, such as bar soap or six-packs of soft drinks. (moderate; pp. 455–456) Clinique and other cosmetic counters at department stores frequently have gift with purchase promotions where customers receive a nice cosmetic bag filled with lotions, make-up, and other items such as brushes and mirrors. For really nice gifts, customers have to pay a certain amount, such as $29.99, but they usually get a larger bag and several full-sized products that would cost considerably more if the customer purchased them separately. Name and describe this type of consumer promotion, and discuss the various types of this specific promotion. Answer: This is an example of a premium. A premium is a tangible reward for a particular act, usually purchasing a product or visiting a point-of-purchase. Premiums are a type of incentive that work by adding value to the product, and they are either free or low in price. The two general types of premiums are direct and mail. Direct premiums award an incentive immediately, at the time of purchase, which this is an example of. There are four variations of direct premiums: (1) store premiums, given to customers at the retail site (i.e., this example); (2) in-pack premiums, inserted in the package at the factory; (3) on-pack premiums, placed on the outside of the package at the factory; and (4) container premiums, in which the package is the premium. Mail premiums require the customer to take some action before receiving the premium. A self-liquidating premium usually requires that a payment be mailed in along with some proof of purchase before the customer receives the premium. (moderate; pp. 456, 458) As described in “A Matter of Practice,” what were the objectives of Johnsonville’s relaunch of the new flavor of breakfast sausages and how did they achieve those objectives? Answer: The specific objectives were to increase trial, lift the line, and build on success. To get current customers to increase purchase volume and frequency and to encourage consumers of competing brands to switch, Johnsonville used grocery store sampling. To support the sampling effort, spot television was used regionally. (moderate; p. 457) What was the goal of Volkswagen’s Phaeton promotion, as described in “The Inside Story,” and how did they achieve it? Answer: Program objectives were to expose targeted drivers to the Phaeton, a luxury car to rival Mercedes, BMW, and Lexus; to increase awareness, consideration, and traffic in the showroom; and to reach aggressive sales goals. At the cornerstone of the program was a partnership with the W Hotels. Volkswagen customers who were invited to take part in this exclusive program came to the W Hotel in several cities to receive the Phaeton for an up to four-hour test drive. As part of the partnership, VW customers were offered a special “Phaeton Rate” at the hotel. (moderate; p. 459) Louis is a food broker that calls on independently owned grocery stores in Louisiana and Mississippi. Part of his job is to assist with grocers with product displays, and manufacturers provide information for him, in the form of Retailer Kits, to assist retailers. Describe this type of trade promotion. Answer: Retailer (Dealer) Kits—Materials that support retailers’ selling efforts or help representatives make sales calls on prospective retailing customers are often designed as sales kits. The kits contain supporting information, such as detailed product specifications, how-to display information, and ad slicks—print ads that are ready to be sent to the local print media as soon as the retailer or dealer adds identification, location, promotion, price, or other information. (moderate; p. 461) There has been a shift from a pull promotion strategy to a push promotion strategy over that past few decades. Compare and contrast these two strategies, and name and describe three common types of incentives and trade deals used with retailers as part of a push strategy. Answer: Advertising, consumer promotion, and publicity stories can influence consumers to demand a product, which is a pull strategy because consumers will go to the retailer and ask for it, which will “pull” the product through the channel. A push strategy pushes the product through the channel by convincing (motivating or rewarding) members of the distribution network to carry the product. The most common types of incentives and trade deals used with retailers as part of a push strategy include (students need to name and describe any three of the following): (1) Bonuses—A monetary bonus (a.k.a. push money or spiffs) is paid to a store’s salesperson based on the units that salesperson sells over a period of time. (2) Dealer Loaders—Premiums that a manufacturer gives to a retailer for buying a certain amount of a product. A buying loader rewards retailers for buying the product. Display loaders reward retailers by giving them the display after the promotion is over. (3) Buying Allowances—Manufacturer pays a reseller a set amount of money, or a discount, for purchasing a certain amount of the product during a specified time period. (4) Advertising Allowances—Manufacturer pays the intermediary a certain amount of money to advertise the manufacturer’s product. It can be a flat dollar amount or it can be a percentage of gross purchases during a specified time period. (5) Cooperative Advertising—In a contractual arrangement between the manufacturer and the resellers, the manufacturer agrees to pay a part of or all of the advertising expenses incurred by retailers. (6) Display Allowance—A direct payment of cash or goods is given to the retailer if the retailer agrees to set up the POP display. (moderate; pp. 462–463) Bob watched the Wachovia Golf Classic last weekend on television. Name and describe the type of promotion Wachovia is participating in, explain why companies do it, and discuss the variations of this type of promotion. Answer: Sponsorships occur when companies support an event, such as a sporting event, concert, or charity, either financially or by donating supplies and services. Event marketing means building a product’s marketing program around a sponsored event, such as the Wachovia Golf Classic. Sponsorships and event marketing include: sports sponsorships (events, athletes, teams); entertainment tours and attractions; festivals, fairs, and other annual events; cause marketing; and supporting the arts. Companies undertake sponsorships to build brand associations and to increase the perceived value of the brand among consumers. The events also give sales representatives the opportunity to interact with prospective and current customers in a social environment, so it’s building the image and reputation of the company as well as supporting lead generation and customer-reward programs. (moderate; p. 464) Nike is not a sponsor of the Olympics, but during the last summer Olympics, Nike ran a “Bronze, Silver, and Gold” promotion during the time the games were occurring. Name and describe this marketing activity. Answer: Ambush marketing is the term given to promotional stunts used at events, such as the Olympics, by companies that are not official sponsors. (easy; p. 464) An advertising agency’s client wants to use the Internet for sales promotion programs. Discuss the types of sales promotions that are appropriate for this medium. Answer: There are a number of ways advertisers can use the Internet for sales promotion programs, including sampling, sweepstakes and contests, price deals, and coupons. Sampling has been a mainstay of interactive promotions on the Internet. Some companies offer them from their own sites, but most farm out the efforts to online companies that specialize in handling sample offers and fulfillment. There are also freebie portals that have offers for free goods. Sweepstakes and contests are effective promotional tools for driving people to marketers’ Internet sites. Some sites offer price promotions only to online purchasers. Finally, coupons can be delivered via the Internet. (moderate; pp. 465–466) List the four mandates of loyalty programs that were given in the “Practical Tips” box. Answer: (1) Identify your best customers. (2) Connect with those best customers. (3) Retain the best customers, usually by rewarding them for their patronage. (4) Cultivate new “best customers.” (moderate; p. 466) Gucci allows manufacturers of complementary products to use its brand identity on their products. What is this called, and why does Gucci do this? Answer: This is called licensing, which is a legal contract giving another company the right to use the brand-identity element. In brand licensing, a company with an established brand (e.g., Gucci) “rents” that brand to other companies, allowing them to use its logo on their products and in their advertising and promotional events. Gucci does this because it makes them money and extends their brand visibility. (moderate; p. 467) Stephanie has a Target Visa card. It’s a regular Visa card, but when she uses it at a Target store, her child’s school receives 1 percent of her purchase. When she uses the card elsewhere, the school receives 0.5 percent of her purchase. In fact, the school has helped sign up people for the cards by sending brochures home with every student, and now the school receives $500–$2,000 every quarter from Target. What type of promotion is this? Answer: This is a type of partnership program called co-branding, which is where two companies (i.e., Visa and Target) come together to offer a product. This is also a type of sponsorship, that is, support of a cause (e.g., education) and a type of loyalty program. (moderate; pp. 464, 466–467) Your roommate is taking this class with you because he thought it would be a fun course to take, but he’s an engineering major and is having trouble seeing the differences between all these IMC tools. Specifically, he doesn’t really see much difference between advertising and sales promotion. Discuss four differences between advertising and sales promotion to help him understand better. Answer: Although advertising and promotion both contribute to the effectiveness of a marketing communication plan, they have four differences: (1) Advertising creates a brand image over time; sales promotion creates immediate action. (2) Advertising relies on emotional appeals; promotion’s added value strategies rely on rational appeals, whereas impulse appeals use emotion. (3) Advertising adds intangible value to the product or service through image; sales promotion adds tangible value to the product or service. (4) Advertising contributes moderately to short-term profit; sales promotion contributes greatly to short-term profitability. (moderate; p. 46 [Table 16.2]) As described in “It’s a Wrap” at the end of the chapter, what were the results of the History Channel’s “Lost and Found” promotion? Answer: The promotion resulted in a significant increase in viewership (i.e., 26 percent increase in total audience), generated more than 500 million online impressions, received significant publicity (i.e., more than 100 million impressions), and significantly boosted traffic to the History Channel’s web site (averaged 50,000 views per month on the “Lost and Found” section during the promotion). (difficult; p. 471) The Upromise program that was described in the “Hands-On” case at the end of the chapter can be described as a “win-win” situation. Describe the Upromise promotion and explain why you think it is a “win-win” situation? Answer: Upromise is a college savings loyalty network program. When consumers shop at participating stores, a portion of the receipts is set aside for a college savings plan in the consumer’s name. There is no cost for the shopper, other than the time necessary to sign up for the program. Upromise allows families to pool contributions, meaning grandparents and other relatives can use their grocery purchases to help as well. The program also allows recent grads to enroll in the program to pay off their student loans. So, it certainly is a “win” situation for consumers. For marketer’s, it’s a “win” too, because they feel that if consumers know that they are giving money, they might do more business with them because they like the marketer’s values. Companies can also track participant purchases because people in the program have to use either a major credit card or a grocery chain card. A small brand can build customer loyalty and encourage consumers to switch by offering a larger credit than its competitors. Marketing costs are low because program sponsors do the bulk of the advertising. (moderate; p. 473) APPLICATION QUESTIONS: MINI-CASE SHORT ANSWER Kraft is known for its cheese products, but this company also manufactures several consumer packaged goods products, such as mayonnaise, salad dressing, barbeque sauce, macaroni and cheese, and other types of food products that are sold in grocery stores. A large portion of Kraft’s marketing communication budget (i.e., more than 50 percent) is spent on incentives given to wholesalers and retailers to get its products to the consumers. Mini-Case Question. What is the target audience called that Kraft is targeting with incentives to get its products to consumers in the stores? Name and describe the other targets of sales promotion as well. Answer: The most common sales promotion strategies target the three audiences of promotions: consumer, trade, and sales force. In this case, Kraft is targeting the trade, such as wholesalers and retailers. (moderate; p. 455) Mini-Case Question. What audience is Kraft targeting in this case, and what are the two primary roles of this type of promotion? Answer: Kraft is targeting the trade, and the two primary roles for a trade promotion are: (1) Trade Support—To stimulate in-store merchandising or other trade support, such as feature pricing, superior store location, or shelf space. (2) Excitement—To create a high level of excitement about the product among those responsible for its sale. (moderate; p. 462) Mini-Case Question. What type of promotion could Kraft provide to retailers to call their customers’ attentions to Kraft’s products? Discuss different examples of this type of promotion. Answer: One type of promotion Kraft could provide retailers is a manufacturer-designed display to call their customers’ attention to product promotions known as point-of-purchase (POP) displays. There are several different types of POP displays: special racks, display cartons, banner, signs, price cards, mechanical product dispensers, and several others that are listed in Table 16.1. (moderate; p. 461) Mini-Case Question. James was with his mother in the grocery store, and near the cheese section there was a cardboard display filled with little soccer balls. James saw them and grabbed one and immediately started dribbling it down the aisles of the store. His mother looked closer at the display and learned that the soccer ball was free with the purchase of two Kraft cheese products that were on the shelf nearby. What type of promotion is this? Answer: The cardboard structure with the soccer balls is a POP display. The offer for the soccer ball is an example of a direct premium type of consumer promotion. More specifically, this is an example of a type of direct premium known as a store premium, which is given to customers at the retail site. (moderate; pp. 456, 461) 540 541