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Sales Promotion

Presentation Structure
Part 1. Sales Promotion Tools Part 2. Determination of objectives Part 3. SP Objectives Consumer objectives Trade objectives Part 4. SP Strategies Part 5. SP Techniques Part 6. Joint- romotions !cross- romotions" Part 7. #valuation of SP Part 8. The use of SP agencies

SP Tools
consumer promotion trade promotion sales-force promotion Sales promotion tools are used by most organizations, including manufacturers, distributors, retailers, trade associations, and nonprofit institutions.

SP Growth Factors
Internal factors:
2& $& %& romotion is no' more acce ted b( to management as an effective sales tool) more roduct managers are qualified to use sales romotion tools) roduct managers are under greater ressure to increase their sales&

External factors:
*& +& ,& 1-& 11& the number of brands has increased) com etitors have become more romotion-minded) inflation and recession have made consumers more deal-oriented) the trade has demanded more deals from manufacturers) advertising efficienc( has declined due to rising costs. media clutter. and legal restraints&

SP Tools Classification
Consumer Franchise Building Tools*:
coupons; free samples; premiums related to the product.

Not Consumer Franchise Building Tools:

price off pac!s" consumer premiums not related to a product" con tests and sweepsta!es" consumer refund offers" trade allowances

These tools send a selling message along with the deal.

Why use consumer franchise uilding tools!

"ecause they reinforce the consumers# rand understanding and hel$ to form rand loyalty.
0 Consumer Franchise Building Tools # tools that create producer$s pri%ileges in minds of consumers. /

The determination of sales romotion objectives&

Sales romotion objectives1 1" must be defined clearl( and succinctl(& 2" must be ca able of measurement& $" must be achievable& %" must be realisticall( budgeted&

Sales promotions can be designed to achieve defined consumer objectives, trade objectives, or both.

Consumer objectives
&n'uiries(list )uilding. 3n increasing concern among manufacturers is the desire to build accurate lists of actual and otential consumers& Promotions can be designed s ecificall( to ensure that consumers rovide this information& Product trial and sampling. 3 ro erl( constructed romotional offer 'ill have an immediac( of im act 'hich 'ill attract the otential consumer& Product re purchase(lo*alt*. The generation of re eat urchase4 and the establishment of consumer lo(alt( to a roduct is a major facet of sales romotion activit(&

+ncreasing rate(fre'uenc* of purchase. This ma( be achieved b( the resentation of ne' usages for the roduct. or the suggestion of ne' use occasions& Trading up. Often. and articularl( at the time of introduction of a ne' roduct the manufacturer 'ill ma5e available a smaller si6e of the roduct for trial urchases& Subsequentl(. ho'ever the( 'ill 'ish to encourage the consumer to urchase larger quantities& +ntroducing a new product. Sales romotional techniques. because of the immediac( of their im act. are conventionall( used at the time of a ne' roduct introduction&

Trade objectives
Traffic )uilding. The consumer 'ill be motivated to visit the outlet because of the s ecific incentive. it is highl( li5el( that he or she 'ill ma5e other urchases 'hilst in store& +n%entor* )uilding. The manufacturer might see5 to encourage the consumer to urchase larger ac5ages of the roduct& Stoc! reduction. the manufacturer ma( 'ish to ensure that there is effective ull-through of his roducts and reduce the level of stoc5 held b( the retailer&

,ffsetting impact of competiti%e acti%it*. Sales romotion 'ill often be em lo(ed to minimi6e the im act of com etitive activit(& Promotional support to trade. Promotions 'ill be designed to rovide either general or s ecific su ort to the trade& Some of the objectives 'hich can be fulfilled b( such activities are feature ricing) the rovision of dis la(s and dis la( incentives) and in-store demonstrations&

Trade romotion uses a number of techniques1 o 3 bu(ing allo'ance o 3 merchandise allo'ance o 3n advertising allo'ance o Offering free goods to middlemen o 7anufacturers ma( offer ush mone( o 7anufacturers ma( offer free s ecialt( advertising items that carr( the com an(8s name

"%&'()&& *+(,)(T'+(& -(. T/-.) &0+W&

9irms selling to the articular industr( dis la( and demonstrate their roducts at the trade sho'& The artici ating vendors e: ect several benefits. including generating ne' sales leads. maintaining customer contacts. introducing ne' roducts. meeting ne' customers. and selling more to resent customers&

*+(T)&T&1 &W))P&T-2)&1 -(. 3-4)&

- contest calls for consumers to submit an entr( to be e:amined b( a anel of judges 'ho 'ill select the best entries& - swee$sta5e calls for consumers to submit their names in a dra'ing& - game resents something to consumers ever( time the( bu(;bingo numbers. missing letters; 'hich ma( or ma( not hel them 'in a ri6e& - sales contest is a contest involving dealers or the sales force to induce them to redouble their sales efforts over a stated eriod. 'ith ri6es going to the to erformers&

Sales romotion strateg(

Price discrimination. Promotions enable manufacturers to o erate a olic( of rice discrimination. b( charging different rices to different customers& #:&1 different rices ma( be charged for the same roduct in different retail outlets& Consumer )eha%ior. Promotional activit( can be used to create a sense of urgenc( in consumers. ersuading them to sto com aring alternatives and bu( earlier. or in greater quantities&


Sales promotion techni'ues

/.0educed price offers:
The pac! these
offers re resent an alternative e: ression of the mone(-off ro osition. b( roviding the consumer 'ith additional roduct at no e:tra charge&

< <

< < <

.one* off Coupon

the romotion consists of a rice reduction 'hich is communicated either on or off the ac5& is a tic5et or document that can be e:changed for a financial discount or rebate 'hen urchasing a roduct&

Free gifts - the offering of a free gift item at

the time of urchase&


1.Free mail ins

3n alternative to the free gift item offered at oint of urchase is to invite the consumer to send in an a ro riate number of roofs of urchase for a gift item&

2. Self li'uidating offers

The manufacturer uses his bul5-bu(ing o'er to 'hich is then offered to the consumer at cost& urchase gift merchandise.

3. Contests and competitions

The consumer is offered the o ta5es art in a lotter(& ortunit( to 'in a ri6e of si6eable value. =f it

4. +n store sampling
>arious sam les of the goods 'hich the consumer can directl( tr( on a lace& =t hel s a sales erson to e: lain the functions of the roduct and to enable the consumer to sam le it&


5oint Promotions 6Cross Promotions7

It is an increasingly important area of promotional activity, where two or more participants promote their brands together to obtain a mutual benefit& his form of promotional activity affords a ma!or opportunity for close co-operation between brand manufacturers and retailer stoc"ists.

8ow 9oes +t :or!;

"rand $ro$osition is ad6ertised 6ia other $roducts and ser6ices !Persil ? @ref. Alato ? Olive Oil. big com anies launching ne' roduct4 brands"& Such activit( ma( offer significant advantages to both of the artici ants&

For promoter:
#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:
#pportunity to add value to his product in the form of a free gift or other motivation at a significantly reduced cost.


Factors to Consider
< < < degree of image match bet'een the artici ating brands similarit( in the target mar!et rofiles of the artici ants nature of the distri)ution patterns of the t'o brands !it is im ortant that the t'o brands are available from similar outlets"& For esta)lished )rands: the com etitors should be of similar status in the mar!etplace in order that each com lements the other&

5oint Promotions Pros < Cons

-d%antages of 5P
2. costs on esta lishing $romotion1 generating $u licity and the necessary administration can e shared etween the $artici$ants7 3. hel$s $artici$ants find and attract new customers7 4. increasing 6isi ility of $artici$ants8 rands7 5. ris5s in6ol6ed in the $romotion are shared etween the $artici9$ants.

9isad%antages of 5P
rands images must match each other7 such $romotions re:uire more time and are com$licated to e;ecute and administer7 danger of theft and $ilferage <es$ecially when two $roducts are anded together=.

The %olume a )rand achie%es when on promotion can )e di%ided into two component parts:
l l $ase sales % 'ould have ha ened irres ective of the romotional activit(& Incremental sales % are directl( attributable to the romotional activit( during the eriod&

Consumer responses
l l &ompetitor steal - 'here the romotion encourages s'itching from a com etitorBs brand) $rand cannibalization - 'here the romotion of a articular brand results in consumers s'itching their urchases from another roduct 'ithin the com an(Bs roduct ortfolio) &ategory growth - 'here the additional volume derives from ne' customers 'ho 'ould not other'ise have urchased either the romoted roduct or one of its com etitors&

-.C. Nielsen Stud* on Consumer -ttitudes towards Promotional -cti%it*

Statement D= 'ill bu( a brand = donBt normall( bu( if it is on s ecial offer8 D=f = see a s ecial offer = li5e. 1 'ill bu( more than = need8 D= loo5 out for s ecial rice offers8 D= loo5 out for s ecial dis la(s8 D= cut out cou ons8 C of *--households %$C /*C *%C 22C /2C

Promotion effecti%eness: a%erage uplift

'romotion type Shelf tal5er 1-C tem orar( rice reduction #:tra fill Dis la( 7ultibu( S ecial ac5 'ercentage uplift 1-C 2*C 2+C %%C /%C 22C

+mportant factors in e%aluation of a promotional acti%it*

1& 2& $& %& Does the romotional conce t fit 'ell 'ith the brand. its desired imager( and its target audienceE =s the recommended solution the most li5el( to achieve the desired objectivesE =s the romotion eas( to understand and credible to the target audienceE =s it eas( to artici ate in. or does it create a series of unnecessar( obstacles for the otential consumer to overcomeE =s the romotion li5el( to satisf( the needs of consumersE =s the romotion de endent on a articular fad or fashion !such as a tie-in 'ith a s ecific event". or does it rovide a conce t 'hich can be re eated over timeE

/& 2&

Brea!down of promotional purchases" )* mechanic

Tem orar( rice reduction 3dditional quantit( Price-mar5ed ac5 7ulti le urchase discount Send a'a( 9ree item @anded ac5 Cou on Other 34% 1$C 11C 1$C *C /C %C $C 2,C

The use of sales romotion agencies&

Sales promotion agencies are li!el* to include1 - strategic and advisor( in uts) - the develo ment of consumer and trade romotions) - romotion design and art'or5 roduction) .ore speciali=ed ser%ice ma* include: - co ('riting services) - rint design and bu(ing) - the sourcing of merchandise) - the design and develo ment of sales literature) - romotional administration. im lementation and evaluation& - roject management) - event management) - s onsorshi ) - staff motivation schemes) - co-ordination bet'een su liers) - locating and negotiating 'ith third art( contacts&