SALES PROMOTION

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 WHAT IT IS
•
•
 It is not enough for a business to have
good products sold at attractive prices. To
generate sales and profits, the benefits of
products have to be communicated to
customers. In marketing, this is commonly
known as "promotion".
•

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 Why?
• Internal
• External
•

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 Internal reasons
• Top management is more conducive
to spending on promotions
• Line managers under greater
pressure to achieve targets
• Justification of expenditure is easy

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 External reasons
• Increase in number of brands
• Consumer is more price savvy
• Greater pressure from trade to
liquidate stocks
• Add effectiveness declining owing to
rising costs, media clutter and legal
constraints

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 SP is a push strategy
•
• Since it is at the last point where the
consumer is often at the point of
buying, the additional incentive
makes a last ditch effort to convert
the customer on to the incentivized
brand

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 SP is of two types
• Trade
• Consumer

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 Trade promotion
•
• Liquidating heavy inventories
• Persuade retailers to carry stock,
carry more than usual stock,
promote brand franchise


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 Consumer promotion
• Stimulate purchase
• Induce trial
• Create new users
• Increase repurchase from
occasional customers
• Reward loyal customers

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 Forms of trade promotion
• Bulk discounts
• Free materials
• Display windows
• Shelf hiring
• Lucky draws
• ‘Mystery’ customer
• Redistribution incentives
• Shop salesmen incentives

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 Forms of consumer
promotion
• Free samples
• Free gifts
• Coupons
• In-packs
• Price packs
• Price-offs
• Bundling offers

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 SP spurs action because they
are supposed to run for a
limited time

While the advertising budgets

are controlled by the brand
managers, SP budgets usually
are controlled by the sales
managers

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 The more the product’s quality
and its advertising
persuasiveness fail to meet
competition, the greater is the
need for promotion to improve
the price – value relationship

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 Whereas advertising gives a
reason to buy, SP gives an
incentive to buy

It is part of the Marketing

spend of all companies and
these days SP spends in many
companies exceed that of the
advt. spends

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 Promotion at different stages of
the PLC
• Introduction – wise to use heavy
promotion to induce trials and promote
brand franchise
• Growth – promotion should be limited ,if
any
• Maturity – Higher promotions required
since the brand is under attack from
competitors or product quality or
advertising effectiveness is tapering off
• Decline – Heavy promotions. Used only to
retain a set of loyal customers. Prior to
withdrawal of the product, it could be
used as a one time stock clearance from
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Essential elements for an effective
SP programme
• Significant value before promotion is
effective
• Promotions must be part of an overall plan
• Every brand must have a promotion
objective and a strategy statement
• A written tactical plan – time frame,
costs, evaluation yardsticks
• Factual knowledge must be gathered to
plan
• Specialized professional skill and
knowledge must be applied to every
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promotion operations
 Final considerations
• Don’t promote if the product is not good
•
• Promotions rarely stop a declining sales
curve
•
• It is very easy to lose the promotional gains
made if your promotion has not been
effective in retaining new customers. So
the product has to speak for itself.
•
• The objective of the promotion is to wean
away users from competition and create
new users.
•
• Excessive promotions lead to diminishing
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 Cont’d
• Promotions may be used in conjunction with
advertising and other marketing
communication tools
• It should be novel and attractive
• Ensure supply lines are good and adequate stock
is available right through the promotion
• Cater for contingencies. Have escape routes built
into the plan
• Trade has to be handled tactfully
• Reimburse incentives/ rewards/ gifts promptly
• Must be within the legal boundaries

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 Sales Promotion, Pro and Con

 


 Advantages:
• Motivation method for special efforts
• Short-term sales increase
• Defined target audience
• Defined role/objectives
• Indirect roles (e.g., wider distribution)
 

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 …..Sales Promotion, Pro and Con

 Disadvantages:
• Only short-term
• Hidden costs
• Confusion
• Price cutting -Brand image
• Postponement effect
• Significant government regulation
• Lack of effectiveness sometimes
(learning effect)


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Mix Element Advantages Disadvantages
Advertising Good for building awareness Impersonal - cannot answer all a customer's
Effective at reaching a wide audience questions
Repetition of main brand and product positioning helps Not good at getting customers to make a final
build customer trust purchasing decision

Personal Selling Highly interactive - lots of communication between the
buyer and seller
Excellent for communicating complex / detailed
product information and features
Relationships can be built up - important if closing the
sale make take a long time
Costly - employing a sales force has many hidden
costs in addition to wages
Not suitable if there are thousands of important
buyers

Sales Promotion Can stimulate quick increases in sales by targeting If used over the long-term, customers may get used
promotional incentives on particular products to the effect
Good short term tactical tool Too much promotion may damage the brand image

Public Relations Often seen as more "credible" - since the message Risk of losing control - cannot always control what
seems to be coming from a third party (e.g. magazine, other people write or say about your product
newspaper)
Cheap way of reaching many customers - if the
publicity is achieved through the right media

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Mix Element Advantages Disadvantages
Advertising Good for building awareness Impersonal - cannot answer all a customer's questions
Effective at reaching a wide audience Not good at getting customers to make a final
Repetition of main brand and product positioning helps purchasing decision
build customer trust

Personal Selling Highly interactive - lots of communication between the Costly - employing a sales force has many hidden costs
buyer and seller in addition to wages
Excellent for communicating complex / detailed product Not suitable if there are thousands of important buyers
information and features
Relationships can be built up - important if closing the sale
make take a long time

Sales Promotion Can stimulate quick increases in sales by targeting If used over the long-term, customers may get used to
promotional incentives on particular products the effect
Good short term tactical tool Too much promotion may damage the brand image

Public Relations Often seen as more "credible" - since the message seems to Risk of losing control - cannot always control what
be coming from a third party (e.g. magazine, newspaper) other people write or say about your product
Cheap way of reaching many customers - if the publicity is
achieved through the right media

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 Types of Media vehicles use for
Promotion

• Electronic Media such as TV, Radio, Movie

Hall, Internet
• Print Media: Newspapers, Magazine,
• Out Door media like Hoarding, Glow Sign,
POS, VoW
• Direct Tele Call to Customers
• Sponsorship in Sports


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