báo cáo thực tập giữa khóa the reality of sales promotion in supermarket in hanoi and recommendations

1: Supermarket Business Model...16 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com... Kotler and Armstrong, 2012 1 The second concept is the Marketing mix, which is the set of

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Foreign Trade University Department of Economics and International Business

Thesis: The Reality of Sales Promotion in Supermarket in Hanoi

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Table of Contents

1 General understanding of Sales Promotion 4

1.1 Sales Promotion definition 4

1.2 The impacts of Sales Promotion 7

1.3 Sales Promotion objectives 7

1.4 Sales Promotion tools 8

1.4.1 Major Consumer-Promotion Tools 9

1.4.2 Major Trade-Promotion Tools 11

1.4.3 Major Business Promotion Tools 12

1.5 Major Decisions in Sales Promotion 12

5.1.1 Establishing Objectives 13

5.1.2 Selecting Consumer-Promotion Tools 14

5.1.3 Selecting Trade-Promotion Tools 14

5.1.4 Selecting business promotion tools 14

5.1.5 Developing the program 14

5.1.6 Pretesting the program 15

5.1.7 Implementing the program 15

5.1.8 Evaluating results 16

2 General understanding of Supermarket 17

2.1 Definition of Retailing, Retailer and Supermarket 17

2.2 Features of Supermarket 18

LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com

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List of images, diagrams, graphs or tables

Figure 1 1: The Four Ps of the Marketing Mix 5

Figure 1 2: Sales promotion objectives 8

Figure 1 3: Major Decisions in Sales Promotion 13

Figure 2 1: Supermarket Business Model 16

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1 General understanding of Sales Promotion 1.1 Sales Promotion definition

Before defining exactly what Sale Promotion is, meaning of marketing, marketingmix, and promotion Mix are to be clarified briefly as follows:

Firstly, regarding “Marketing”, this concept nowadays must be understood not in

the old sense of making a sale - “telling and selling” - but in the new sense ofsatisfying customer needs If the marketer understands consumer needs; developsproducts that provide superior customer value; and prices, distributes, and promotes

them effectively, these products will sell easily According to Peter Drucker, “The aim

of marketing is to make selling unnecessary” (Kotler and Armstrong, 2012) 1

The second concept is the Marketing mix, which is the set of marketing tools –

often summarized as the ‘four Ps’: the product, its price, promotion and place – that the firm uses to achieve its objectives in its target market (McCarthy, 2001)2 The keyelements in the Marketing Mix are shown in Figure 1.1

1 Kotler, P and Armstrong, G (2012) Principal of Marketing 14th ed USA: Pearson Education, p.5.

2 McCarthy, E J (2001) Basic Marketing: A Managerial Approach 13th ed Irwin: Homewood.

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Figure 1 1: The Four Ps of the Marketing Mix

(Source: The Marketing book, 2003)

The “Promotion” in the ‘Four Ps’ of Marketing Mix is exactly called Promotion

Mix (or Marketing Communications Mix), which consists of the specific blend of

advertising, public relations, personal selling, sales promotion, and direct-marketing tools that the company uses to persuasively communicate customer value and build customer relationships (Kotler, P and Armstrong, G., 2012)3 Therefore, SalesPromotion is only a part of a large “Marketing Mix” Here, three different definitions

of Sales Promotions are to be mentioned as below:

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“Sales promotion consists of short-term incentives to encourage the purchase

or sales of a product or service” (Kotler, 2012) 4

“Sales promotion consists of a diverse collection of incentive tools, mostly

short term, designed to stimulate trial, or quicker or greater purchase, of particular products or services by consumers or the trade.” (Kotler, P and Armstrong, G., 2012) 5

“Sales Promotion is marketing activities usually specific to a time period,

place or customer group, which encourage a direct response from consumers or marketing intermediaries, through the offer of additional benefits.”( J Baker, 2003) 6

The first two definitions are quite the same; the second one can be considered as adetailed of the first definition It can be seen that whereas advertising offers a reason tobuy, sales promotion offers an incentive to buy Regarding the third one, the propose

of Sale Promotion is more extended, which is “encourage a direct response fromconsumers or marketing intermediaries, through the offer of additional benefits”, not

“just encourage the purchase or sales of a product or services” However, theinconsistencies among definitions can be acceptable in the vocabulary of marketing

The third definition are composed of three key elements:

 Non-standard: Promotions are usually temporary, and may be limited to

certain customer groups or specific to a particular distribution channel

 Response orientated: Promotions seek a direct response from customers, or

those who deal with customers on the producer’s behalf

 Benefit orientated: Promotions offer their targets additional benefits, beyond

the ‘standard’ marketing mix The enhanced mix could include extra product, areduced price or an added item, service or opportunity

Sales-promotion tools are used by most organizations, including manufacturers,distributors, retailers, trade associations, and nonprofit organizations Sales-promotionexpenditures have been increasing as a percentage of budget expenditure annually forthe last two decades due to several factors Internal factors include the following:

Promotion is now more accepted by top management as an effective sales tool; more

5 Kotler, P (2002) Marketing Management Millenium Edition 10th ed USA: Pearson Education, p.288.

6 J Baker, M (2003) The Marketing book 5th ed Great Britain: Butterworth-Heinemann, p.458.

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product managers are qualified to use sales-promotion tools; and product managers areunder greater pressure to increase current sales External factors include the following:

The number of brands has increased; competitors use promotions frequently; manybrands are seen as similar; consumers are more price-oriented; the trade has demandedmore deals from manufacturers; and advertising efficiency has declined because of

rising costs, media clutter, and legal restraints Incentive-type promotions attract new

triers, to reward loyal customers, and to increase the repurchase rates of occasionalusers

1.2 The impacts of Sales Promotion

Sales Promotion has many impacts on manufacturers, customers and retailer, whichare both positive impact and negative impacts:

 Sales Promotions attract the brand switchers, who are primarily looking for lowprice, good value, or premiums, so sales promotions are unlikely to turn theminto loyal users

 Sales Promotions used in markets of high brand similarity produce a high salesresponse in the short run but little permanent gain in market share In markets ofhigh brand dissimilarity, however, it can alter market shares permanently

 Using Sales Promotion may decrease brand loyalty, increase consumer pricesensitivity, brand-quality-image dilution, and focus on short-run marketing

planning When a brand is price promoted too often, the consumer begins to

devalue it and buy it mainly when it goes on sale

 Sales Promotion enables manufacturers to adjust to short-term variations insupply and demand, test how high a list price they can charge It permitsmanufacturers to sell more than they would normally sell at the list price Ithelps the manufacturer adapt programs to different consumer segments Small-share competitors find it advantageous to use Sales Promotion

 Sale Promotion induces consumers to try new products instead of neverstraying from current ones It leads to more varied retail formats, such as theeveryday-low-price store and the promotional-pricing store and promote greaterconsumer awareness of prices Consumers themselves enjoy some satisfactionfrom being smart shoppers when taking advantage of price specials

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1.3 Sales Promotion objectives

Sale promotions are targeted toward final buyers (consumer promotions), retailersand wholesalers (trade promotions), business customers (business promotions) as inFigure 1.3.1

Figure 1 2: Sales promotion objectives

(Source: Kotler, 2002)

In general, rather than creating only short-term sales or temporary brand switching,sales promotions should help to reinforce the product’s position and build long-termcustomer relationships If properly designed, every sales promotion tool has thepotential to build both short-term excitement and long-term consumer relation

1.4 Sales Promotion tools

Many tools can be used to accomplish sales promotion objectives The differences

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 Their objectives/target: Customer objectives, business objectives, or trade

objectives

 Type of benefits offered: Value-increasing and value-adding promotions.

Value-increasing promotions alter the product/price equation by increasing theproduct quantity or quality, or decreasing its price Value-adding promotionsleave the basic product and price intact, and offer something different in terms

of premiums, information or opportunities

 Product/market suitability: Sales promotions vary in types of products, in

their popularity and suitability internationally between countries

 Consumer appeal: Different types of promotion appeal to different people.

Age, sex, nationality, socio-economic grouping and ethnic origin can allinfluence which promotions customers prefer

 Marketing capabilities: Free samples are obviously useful for encouraging

product trial, while a prize draw can provide a mailing list for futurepromotions

 Implementation priorities: While printing security is important for game

cards, accurate redemption forecasting is vital for coupons and giveaways, andanticipating competitor reaction is important in price promotions

There are many ways of classifying sales promotion tools In this thesis, theyare classified in term of objectives (customer, trade, business) as follows:

1.4.1 Major Consumer-Promotion Tools

 Samples: are offers of a trial amount of a product or service Sampling is the

most effective but most expensive way to introduce a new product or createnew excitement for an existing one Some samples are free; for others, thecompany charges a small amount to offset its cost The sample might be sent bymail, handed out in a store or at a kiosk, attached to another product, or featured

in an ad or an e-mail Sometimes, samples are combined into sample packs,which can then be used to promote other products and services Sampling can

be a powerful promotional tool

 Coupons are certificates offering a stated saving on the purchase of a specific

product Most consumers love coupons Coupons can promote early trial of a

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new brand or stimulate sales of a mature brand However, as a result of couponclutter, redemption rates have been declining in recent years Thus, most majorconsumer goods companies are issuing fewer coupons and targeting them morecarefully Marketers are also cultivating new outlets for distributing coupons,such as supermarket shelf dispensers, electronic point-of-sale coupon printers,and online and mobile coupon programs

 Cash Refund Offers (or rebates): provide a price reduction after purchase.

Consumer shows a specified “proof of purchase” to the manufacturer who then

“refunds” part of the purchase price Rebates are like coupons except that theprice reduction occurs after the purchase rather than at the retail outlet

 Price Packs (also called cents-off deals): are promoted on the package or label

which offer savings off the product’s regular price Therefore, consumers cansave off the regular price of a product Price packs can be single packages sold

at a reduced price (such as two for the price of one) or two related productsbanded together (such as a toothbrush and toothpaste) Price packs are veryeffective—even more so than coupons—in stimulating short-term sales

 Premiums (gifts) are goods: offered at low or no cost as an incentive to buy a

particular product A premium may come inside the package (in-pack), outsidethe package (on-pack), or through the mail

 Prizes (contests, sweepstakes, games): offer consumers the chance to win cash, trips, or merchandise as a result of purchasing something A contest calls

for consumers to submit an entry - a jingle, guess, suggestion - to be examined

by judges who will select the best entries A sweepstakes asks consumers to submit their names for a drawing A game presents consumers with something

every time they buy—bingo numbers, missing letters—that might help themwin a prize Such promotions can create considerable brand attention andconsumer involvement

 Patronage Awards: Values in cash or points given to reward patronage of a

certain seller

 Free Trials: Inviting prospects to try the product free in the hope that they will

buy the product

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 Product Warranties: Explicit or implicit promises by sellers that the product

will perform as specified or that the seller will fix it or refund the customer’smoney during a specified period

 Tie-in Promotions: Two or more brands or companies team up on coupons,

refunds, and contests to increase pulling power

 Cross-Promotions: Using one brand to advertise another noncompeting brand.

 Point-of-Purchase (POP) includes displays and demonstrations that take place

at the point of purchase or sale Customers trip over aisle displays, promotionalsigns, “shelf talkers,” or demonstrators offering free tastes of featured foodproducts Unfortunately, many retailers do not like to handle the hundreds ofdisplays, signs, and posters they receive from manufacturers each year

Manufacturers have responded by offering better POP materials, offering to setthem up, and tying them in with television, print, or online messages

 Advertising specialties (also called promotional product): are useful articles

imprinted with an advertiser’s name, logo, or message that are given as gifts toconsumers Typical items include T-shirts and other apparel, pens, coffee mugs,calendars, key rings, mouse pads, matches, tote bags, coolers, golf balls, andcaps Such items can be very effective The “best of them stick around formonths, subtly burning a brand name into a user’s brain,” notes a promotionalproducts expert

 Event marketing (or event sponsorships): marketers can create their own

brand-marketing events or serve as sole or participating sponsors of eventscreated by others The events might include anything from mobile brand tours

to festivals, reunions, marathons, concerts, or other sponsored gatherings Eventmarketing is huge, and it may be the fastest-growing area of promotion,especially in tough economic times

1.4.2 Major Trade-Promotion Tools

Many of the tools used for consumer promotions such as contests, premiums,displays can also be used as trade promotions Here are three others of tradepromotion tool:

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