What are the biggest advantages of trade promotions and why? Compare and contrast trade promotions vs. consumer promotions. Incorporate concepts and examples from this weeks lecture in your post.
Marketing venues used to be so traditional: we had three network channels, outdoor billboards, newspapers, magazines, and a few radio stations located in each market. Not true for today! Today’s marketer has to select from the traditional venues along with dozens of cable channels, satellite radio, and the Internet. The Internet alone adds selections such as smartphones, tablets, and social media. What is a marketer to do? How does a marketer begin to select a venue that has the highest probability of reaching the organization’s potential customers on a limited budget?
Today’s marketers have embraced a new method of communication; along with the traditional venues, marketers now also use alternative marketing tactics such as “buzz marketing, guerrilla marketing, product placements and branded entertainment, and lifestyle marketing” (Clow & Baack, 2012, p. 258). Sometimes this is called “tradigital marketing” because the marketing strategy is a combination of traditional and digital venues. How does a marketer select a venue? Marketers will use the venue believed offers the highest probability of reaching their targeted market segments.
Our text does a very good job of describing buzz marketing, guerrilla marketing, product placements and branded entertainment, and lifestyle marketing. Buzz marketing is just like word-of-mouth marketing, except it has a far greater reach because of the Internet. Get people talking about your product. Get people telling their friends about your product. Finally, get the people to blog via social media about your product. Do you see how such word-of-mouth marketing travels around the globe? And . . . how much does this cost the organization? Nothing. Word-of-mouth marketing continues to be the most influential marketing tool. Erik Qualman (2013) stated we have moved from word-of-mouth to literally “world-of-mouth” marketing all because of the Internet’s reach (p. 1). While guerrilla marketing and the other alternative marketing venues have an excellent chance of reaching the desired targeted market segment, nothing competes with the effectiveness of the “world-of-mouth.” Below is a discussion of consumer promotions, sales promotion strategies, and trade promotions.
Consumer promotions are all around us in the form of “coupons, percent-off discounts, free trials and samples, buy one get one free deals, rebates, premiums, ad specialties, and contests and sweepstakes” (Kokemuller, para. 1). Although they are used to increase the sale of a product, their effectiveness in attracting new, long-term customers is usually the end goal. See this example of a consumer promotion done right with the target market in mind:
Consumer promotions are the incentives directed to the end user (you). The end user could also be a business who consumes the product and does not resell the product. Organizations invest a significant amount of resources into sales promotion strategies that are designed to attract and engage the consumer to buy.
Sales Promotion Strategies
Sales promotions are activities that encourage buying on a short-term basis (Ogden & Ogden, 2014). Given this activity is implemented in hopes of increasing sales, what could possibly go wrong? Who does not enjoy increased sales? Table 6.1 (Ogden & Ogden, 2014) in our text lists the advantages and the disadvantages of sales promotions. Immediate sales are terrific and easy to measure, but those immediate sales are short term. The sales promotion may encourage the consumer to buy, but the company may be teaching their customers to wait for sales before buying. Finally, those sales promotions may dilute the brand equity of a product line and negatively impact its image. The Coach brand has been positioned as a luxury retailer for high-end purses and accessories. Coach products historically were purchased at high-end retailers; however, the company changed its strategy and began selling their products at factory outlets where consumers were given substantial additional discounts from the 50% pricing already in place (Trefis Team, 2014). While Coach was able to bring in customers who do not typically purchase high-end luxury items, the organizations overall project margin decreased as a result of the sales promotional strategy. Coachs core audience has migrated to other high-end competitors such as Michael Kors and Kate Spade. Coach now plans to close 70 stores in North America (Trefis Team).
Unlike consumer promotions, trade promotions are used by the manufacturer or other members of the distribution channel to encourage the sale of an item that will eventually be resold (Clow & Baack, 2012). Trade promotions are business-to-business. A terrific venue for trade promotions would be a trade show. Trade shows are international, national, and local. One trade show is the Oklahoma Restaurant Association. Another local trade show is for the oil and gas industry held in Oklahoma City. Many vendors will set up a booth in hopes of meeting the decision makers of the restaurants. Sometimes this is the only way to get in front of senior managers or owners. The people who attend the trade show are somewhat relaxed because they are away from their business and the day-to-day operations issues. Vendors who sell food will hand out samples, and other vendors will hand out trinkets it can be a very festive, happy environment. Vendors will offer a discount on the purchase of equipment or waive an installation charge. Trade shows are a very effective way to meet decision makers and potential customers!Forbes School of Business Faculty
References: Clow, K. E., & Baack, D. (2012). Integrated advertising, promotion, and marketing communications (5th ed.). Upper Saddle River, NJ: Pearson Education, Inc.
Kokemuller, N. (n.d.). Consumer and trade promotions as marketing strategies. AZ Central. Retrieved from http://yourbusiness.azcentral.com/consumer-trade-promotions-marketing-strategies-2869.htmlOgden, J. R., & Ogden, D. T. (2014). Utilizing a strategic marketing approach to managing marketing communications. San Diego, CA: Bridgepoint Education, Inc.
Qualman, E. (2013). Socialnomics. Hoboken, NJ: John Wiley & Sons.
Trevis Team. (2014, July 1). Can Coach rebuild its brand image with new promotional strategies? Forbes. Retrieved from http://www.forbes.com/sites/greatspeculations/2014/07/01/can-coach-rebuild-its-brand-image-with-new-promotional-strategies/