Promotions can broadly be classified into two types

Consumer promotions and Trade promotions

Both sales as well as marketing are allotted their respective budgets to carry out promotional
activities. While marketing department uses its budget to run ATL and BTL activities, it also utilise it
to run consumer promos targeted on a specific brand. Sales department on the other hand uses its
budget to run trade promotions. Trade promotions may, and in fact should, vary from outlet to
outlet within the same locality but consumer promotions tend to be homogeneous and would at
least cover a region as big as a state.

Consumer promotions are intended to reach the final customer. To ensure this happens there needs
to be some change in packaging or it needs to be supported through ATL and BTL activities so that
the consumers do get the promotion. Hence involvement of brand managers is a must over here.

Trade promotions need to be designed differently for different channels (grocery, consumption
centre, cosmetic store, chemist, bakery etc.). Almost all the companies are moving to a phase where
they would have targeted trade promotions at the outlet level which would vary not just by the
channel but also various factors like purchase history of the outlet, merchandising input provided by
competition, etc.

There a various types of promotions and the number are limited only by ones own imagination.
Each one serves a different purpose. One should try to view it from a product life cycle point of view.

Consumer promotions

New launch - Introductory pricing discounts, Activation, Free complementary products

Growth - Short term rejuvenating promos just to ensure no decline in brand recall. Focus on
developing association with specific occasions or elements. Some categories see promos intended to
encourage repeat purchase

Maturity - Launching new variants or leveraging the brand to help other brands in the portfolio (by
giving them free with the existing brand to ensure trials)

Decline - Try to find new uses to the brand or alter the positioning. Extending it to other categories

Trade promotions

New Launch - Prominent display spaces and merchandising in outlets

Growth - Schemes like 12+1(one pkt free on purchase of dozen pkts etc.) to ensure selling in and
availability

Maturity - Minimal schemes on the base product. Use them occasionally as strategic tools to keep
channel members happy

Decline - Ensuring any changes in the communication of the brand are passed on through visibility
solutions or schemes to ensure availability of any line extensions or category extensions made.
The above mentioned are all strategic schemes. The idea and purpose behind such schemes are
worked out at a brand manager level. Budget would be given to the sales team and the purpose
would be communicated. At RSM - ASM level the details and the targets of trade schemes are
finalised.

Apart from these many trade promotions are run purely because competition is running schemes at
par. Schemes are also used to exhaust inventory, but these are mostly informal in nature. The local
sales officer would get budget from ASM for this purpose, undercut and dump it in selected top
wholesalers or institutional customers and be done with it.

Any scheme can be evaluated based on the extent to which the motive behind it has been served.
This is where data analysis comes in where one needs to finalise on the metrics used to evaluate and
the expected target levels of those metrics before a scheme is run.