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Sales Promotion

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Outline

What is Sales Promotion Objectives of Sales Promotion Advantages & disadvantages of sales promotions Sales Promotion Strategies Types of Sales Promotions Issues in setting sales promotion budgets

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Sales Promotion

Advertising

Reason to buy

Sales Promotion

Incentive to buy

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Sales Promotion
Definition 01

SalesPromotion Sales Promotion consistsofshortterm incentivesto encouragethe purchaseorsalesofa product.

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Sales Promotion
Definition 02

Ashorttermincentive Sales Promotion offeredtothecustomerin ordertocreatemore excitementaroundthe productorserviceandto boostsales

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Objectives of Sales Promotion

Encourage trial Convert trialist to end users To overcome negative perception Encourage brand switching Acquire more customers Build loyalty Encourage bulk buying Encourage trade to stock product Overcome seasonal dips in sales.

In general, sales promotion should focus on consumer relationship building.

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Advantages & disadvantages of sales promotions

Advantages Helps to boost sales Quickly arranged competitive activity. Ability to gain wider in-store presence Can be creative and forge links with other brandscross promo Acquire customer database Disadvantages If overused consumers will only buy when there is a promotion. Can be oversubscribed and may cause promo fulfillment issues. Lack of brand building brand rely on promotions.

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Types of Sales Promotion

Consumer SalesPromotion

Consumermarket

Goal

Driveimmediatepurchase Influencebehavior

TradeSales Promotions

Marketingchannel

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REVIEW LEARNING OUTCOME

The Objectives of Sales Promotion

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Trends on Sales Promotion

of the marketing budget is allocated to sales promotion Nearly 51% of total ad spend represents trade promotions. 24% on media spending 22% on consumer promotion

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Why the Growth???

Instant results Faster implementation Measurable Relatively easy and inexpensive With more Brands flowing in, pressure to occupy display space in retail outlets is very challenging.

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The Downside of Sales Promotion

Brand Erosion Profitability increase is relatively low Implementation cost and problems Orients marketing managers towards short term results

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Planning Sales Promotion

Who is our target set of consumers? What is the reason for that behavior What is the goal of the program Is there a meaningful economics attached to sales promotion

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Types of Buyers

Loyalist

Buy a particular brand on a more or less consistent basis People who are loyal to the competing brand Purchase of various brands in one category

Competitive loyalist

Switchers

Price buyers Non Users

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Results that are needed .

TypeofBuyer DesiredResults
Reinforcebehavior Increaseconsumption Changepurchasetiming

SalesPromotion Examples Loyaltymarketing Bonuspacks Sampling Sweepstakes, contests,premiums Pricelowering promotion Tradedeals Coupons,priceoff packages,refunds Tradedeals

Loyal Customers Competitors Customers Brand Switchers PriceBuyers

Breakloyalty Persuadetoswitch Persuadetobuyyour brandmoreoften Appealwithlow prices Supplyaddedvalue

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Sales Promotional Strategies

PUSH

Channel

PULL

Distributor/tradeincentives Freesupplies Salesforceincentive Allowances Salescontests POSM

Consumer incentives Free samples Guarantees or extended warranties Loyalty rewards Prize draws Competition

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ToolsforConsumerSales Promotion
Coupons and Rebates Premiums Loyalty Marketing Programs Contests & Sweepstakes Sampling Point-of-Purchase Promotion
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Coupons

Clip and bring to the store to exchange Now it is phone based Induce loyalty Repeat purchase Keeps the consumers locked

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Coupons
Instant redemption coupon
Redeemed immediately

Bounce back coupons

Coupons

To encourage customer retention

Scanner delivered coupons Response offer coupons

Target B2B to stimulate sales

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Main Limitations of Coupons

May trigger price war from competition lower total market value. Tend to loose revenue from existing customers. Can copy by competitors easily. Threat of counterfeiting coupons Miss-redemption of coupons by traders.

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Bonus Packs

Like bundle pricing but this is temporary Adds value

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In Pack, Promotion

It is used to introduce new products / service Dispose of excess inventory Use excess overhead

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Specialty Container

Increases products perceived value Uy tignan mo ito meron libreng pitchel

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Issues with Premiums

Offering gifts with low quality will damage the brand Require alteration in production process Handling of package to consumer may become difficult.

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Continuity Program /Loyalty Cards

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Refund / Rebate Promotion

If the product does not perform, then its money back Or consume X number of products and get Y FREE Increases consumer confidence Loyalty program

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Sweepstakes

Chance game where the consumer has the chance to win something big through purchases The more purchases, the more tickets Creates loyalty

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Sampling

Used when the consumer is unaware of the brand or product Product buying is prone to retail channel based trial Use when the product can be broken down into smaller dimensions

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Price off promotion

Use for slow moving items Excess inventory Off season Dislodge competitors

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Choose the right promotion for the right situation

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Example
Problem
New product Consumers not loyal Competitors are attacking the market with ads Excess inventory Shelf life is critical

Solution
Sampling, on pack promo Rebates, sweepstakes, loyalty cards Price off, free goods, premiums, rebates, etc

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Consumer Promotion

To induce immediate off take from the shelf To induce trial To buy more of your products To buy immediately

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Trade Promotion
Encourages your trade channel to load up Move inventory from the company to the warehouse of the trade

Distributor or Key Accounts

Deals with promotional tools for staff and sales people who are involved with the trade.

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Trade Promotions - Objectives

Obtain initial distribution Penetrate distribution Obtain more shelf space Build relationship with trade Gain more volumes Combat competition Reduce manufacturer stocks.

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TradeSalesPromotion
Trade Allowances Push Money Training Free Merchandise Store Demonstration Conventions & Trade Shows

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TradeAllowance
A price reduction offered by manufacturers to intermediaries, such as wholesalers and retailers.

Trade Allowance

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PushMoney
Money offered to channel intermediaries to encourage them to push products--that is, to encourage other members of the channel to sell the products.

Push Money

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Cooperative Promotion

Co-branding Using another brand to penetrate the market Good if the equity of the other brand is high or parallel

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Issues in setting Sales Promotion budgets

How far does sales promotion achieve our communications budgets? Does our sales force need sales promotion to achieve targets? What are our competitor spending? What history do we have or can we acquire on the effectiveness of the sales promotion in our market?

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Managing Sales Promotion

Select from wide range of techniques, depending on your objectives Select promotional devices based on: Nature of target audience Your promotional objectives: Push vs. Pull. Cost of device-- sampling can get costly. Current economic conditions-- coupons, rebates work best in recessionary period. Evaluating Sales Promotion: Much easier than with advertising. Usually clear start, finish, goal.

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