21818499 Sales Promotion

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Sales PromotionPrepared by gr. 1408

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Presentation StructurePart 1. Sales Promotion ToolsPart 2. D etermination of objectivesPart 3. SP Objectives

Consumer objectivesTrade objectives

Part 4. SP StrategiesPart 5. SP TechniquesPart 6. J oint-promotions (cross-promotions)Part 7. E valuation of SPPart 8. The use of SP agencies


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SP Tools

consumer promotiontrade promotion

sales-force promotion

Sales promotion tools are used by most

organizations, including manufacturers,distributors, retailers, trade associations,and nonprofit institutions.


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SP Growth FactorsI nternal factors:

1. promotion is now more accepted by top management as an effectivesales tool;

2. more product managers are qualified to use sales promotion tools;3 . product managers are under greater pressure to increase their sales.

Ex ternal factors:1. the number of brands has increased;2. competitors have become more promotion-minded;3 . inflation and recession have made consumers more deal-oriented;4 . the trade has demanded more deals from manufacturers;5. advertising efficiency has declined due to rising costs, media clutter, and

legal restraints.


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SP Tools ClassificationConsumer Franchise BuildingTools*:

coupons;

free samples;

premiums related to the product.

These tool s send a se lli ng m ess a ge

alo ng wit h t he de al.

N ot Consumer FranchiseBuilding Tools:

price-off packs,

consumer premiums not related to a

product,

con-tests and sweepstakes,

consumer refund offers,

trade allowances

* Consumer Franchise Building Tools tools that create producers privileges in minds of consumers.

W hy u se co ns um e r fra n c h i se buil d i ng tool s? Be cau se t hey r e i n forc e t he co ns um e r s' bra nd u nde r s ta nd i ng a nd he lp to formbra nd lo y alt y .


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The determination of sales promotion

objectives.Sales promotion objectives:1) must be defined clearly and succinctly.

2) must be capable of measurement.3 ) must be achievable.4 ) must be realistically budgeted.

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Sales promotions can be designed to

achieve defined consumer objectives,trade objectives, or both.

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Consumer objectives

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E nquiries/list building. A n increasing concern amongmanufacturers is the desire to build accurate lists of actual and potential consumers. Promotions can bedesigned specifically to ensure that consumers providethis information.Product trial and sampling. A properly constructedpromotional offer will have an immediacy of impact whichwill attract the potential consumer.Product re-purchase/loyalty. The generation of repeatpurchase/ and the establishment of consumer loyalty toa product is a major facet of sales promotion activity.


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Increasing rate/frequency of purchase. This may beachieved by the presentation of new usages for theproduct, or the suggestion of new use occasions.Trading up. Often, and particularly at the time of introduction of a new product the manufacturer will makeavailable a smaller size of the product for trial purchases.Subsequently, however they will wish to encourage theconsumer to purchase larger quantities.Introducing a new product. Sales promotionaltechniques, because of the immediacy of their impact,

are conventionally used at the time of a new productintroduction.


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Trade objectives

Traffic building. The consumer will bemotivated to visit the outlet because of thespecific incentive, it is highly likely that he or she

will make other purchases whilst in store.Inventory building. The manufacturer mightseek to encourage the consumer to purchaselarger packages of the product.

Stock reduction. the manufacturer may wish toensure that there is effective pull-through of hisproducts and reduce the level of stock held bythe retailer.


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O ffsetting impact of competitive activity.Sales promotion will often be employed tominimize the impact of competitive activity.Promotional support to trade. Promotions willbe designed to provide either general or specificsupport to the trade. Some of the objectiveswhich can be fulfilled by such activities arefeature pricing; the provision of displays anddisplay incentives; and in-store demonstrations.


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Trade promotion uses a number of techniques:

o A buying allowanceo A merchandise allowance

o A n advertising allowanceo Offering free goods to middlemeno Manufacturers may offer push moneyo Manufacturers may offer free specialty

advertising items that carry the companysname


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BUSINESS CO NVENTI O NS AND TR A DE SH O W S

F irms selling to the particular industrydisplay and demonstrate their products atthe trade show. The participating vendorsexpect several benefits, includinggenerating new sales leads, maintainingcustomer contacts, introducing newproducts, meeting new customers, andselling more to present customers.


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CO NTESTS, S W EE P ST AK ES, AND GAM ES

A co n t es t calls for consumers to submit an entryto be examined by a panel of judges who willselect the best entries. A s w ee p s tak e calls for consumers to submit their names in a drawing.A game presents something to consumers everytime they buybingo numbers, missing letterswhich may or may not help them win a prize.A

sales contest is a contest involving dealers or the sales force to induce them to redouble their sales efforts over a stated period, with prizesgoing to the top performers.


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Sales promotion strategy

Price discrimination.Promotions enablemanufacturers to operatea policy of pricediscrimination, bycharging different pricesto different customers.E

x.: different prices maybe charged for the sameproduct in different retailoutlets.

Consumer behavior.Promotional activity canbe used to create a senseof urgency in consumers,persuading them to stopcomparing alternativesand buy earlier, or ingreater quantities.

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Sales promotiontechniques

Money off - the promotion consists of aprice reduction which is communicated either

on or off the pack.Coupon - is a ticket or document that can

be exchanged for a financial discount or rebate when purchasing a product.

Free gifts - the offering of a free gift item atthe time of purchase.

1.Reduced priceoffers:The pack - theseoffers represent an

alternative expressionof the money-off proposition, byproviding theconsumer withadditional product atno extra charge.

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2 .Free mail-ins

A n alternative to the free gift item offered at point of purchase is to invite the

consumer to send in an appropriate number of proofs of purchase for a giftitem.

3. Self-liquidating offersThe manufacturer uses his bulk-buying power to purchase gift merchandise,

which is then offered to the consumer at cost.

4. Contests and competitionsThe consumer is offered the opportunity to win a prize of sizeable value, If it

takes part in a lottery.

5. In-store samplingVarious samples of the goods which the consumer can directly try on a place. It

helps a sales person to explain the functions of the product and to enablethe consumer to sample it.

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J oint-Promotions(Cross-Promotions)

I t is an increasingly important area of promotional

activity, where two or more participants promote

their brands together to obtain a mutual benefit .

T his form of promotional activity affords a major

opportunity for close co-operation between brand

manufacturers and retailer stockists.


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H ow Does It Work?

For promoter:O pportunity is to gain access to a

group of new consumers, who are

encouraged to associate the

product with another one from a

similar or related category.

For carrier:O pportunity to add value to his

product in the form of a free gift or

other motivation at a significantly

reduced cost .

Bra nd propo s itio n i s a dve rti sed v ia ot he r pro d uct s a nd se r v ic es (Persil +Bref, Zlato + Olive Oil, big companies launching new product/ brands). Suchactivity may offer significant advantages to both of the participants.


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Factors to Consider

1. degree of image match between the participating brands

2. similarity in the target market profiles of the participants

3 . nature of the distribution patterns of the two brands (it is

important that the two brands are available from similar

outlets).

For established brands: the competitors should be of similar

status in the marketplace in order that each

complements the other.


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J oint Promotions Pros & Cons

A dvantages of J P1. co s t s o n es tabli sh i ng promotio n,

gene rati ng publicit y a nd t he

ne c ess ar y a d mi n i s tratio n ca n b e

sh ar ed b e tw een t he participa n t s;

2. he lp s participa n t s fi nd a nd attract

ne w cu s tom e r s;

3. i n cr e a s i ng v i s ibilit y of participa n t s

bra nds;

4. ri s k s i nv ol ved i n t he promotio n ar e

sh ar ed b e tw een t he partici-pa n t s .

Disadvantages of J P1. bra nds ima ges mu s t matc h e ac h

ot he r ;

2. s uc h promotio ns r eq uir e mor e tim e

a nd ar e complicat ed to exe cut e a nd

a d mi n i s t e r ;

3. d a nge r of t he ft a nd pilf e ra ge

( es p e ciall y w hen two pro d uct s ar e

ba nded to ge t he r).


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The volume a brand achieves when on

promotion can be divided into twocomponent parts:

1 . Base sales would have happenedirrespective of the promotional activity.

2 . I ncremental sales are directlyattributable to the promotional activityduring the period.


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Consumer responses

1 . Competitor steal - where the promotionencourages switching from a competitor'sbrand;

2 . Brand cannibalization - where the promotion of a particular brand results in consumersswitching their purchases from another productwithin the company's product portfolio;

3. Category growth - where the additional volumederives from new customers who would nototherwise have purchased either the promotedproduct or one of its competitors.


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Promotion effectiveness: averageuplift

P romotion type P ercentage uplift

Shelf talker 10%

10% temporary pricereduction 27 %

E xtra fill 28%

D isplay 44 %

Multibuy 5 4 %

Special pack 62%


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Important factors in evaluation of apromotional activity

1. D oes the promotional concept fit well with the brand, itsdesired imagery and its target audience?

2. Is the recommended solution the most likely to achieve thedesired objectives?

3 . Is the promotion easy to understand and credible to thetarget audience?

4 . Is it easy to participate in, or does it create a series of unnecessary obstacles for the potential consumer to

overcome?5. Is the promotion likely to satisfy the needs of consumers?

6. Is the promotion dependent on a particular fad or fashion(such as a tie-in with a specific event), or does it provide aconcept which can be repeated over time?


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Breakdown of promotional purchases,by mechanic

Temporary price reduction 34% A dditional quantity 1 3 %

Price-marked pack 11%Multiple purchase discount 1 3 %Send away 7 %F ree item 5%Banded pack 4 %Coupon 3 %Other 2 9 %


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21818499 Sales Promotion

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