sales promotion business

8/12/2019 Sales Promotion business

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Sales Promotion



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Presentation Structure

Part 1. Sales Promotion Tools

Part 2. Determination of objectives

Part 3. SP Objectives

Consumer objectivesTrade 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.



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SP Growth Factors

Internal factors:2& romotion is no' more acceted 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:*& the number of brands has increased)

+& cometitors have become more romotion-minded)

,& inflation and recession have made consumers more deal-oriented)1& the trade has demanded more deals from manufacturers)

11& advertising efficienc( has declined due to rising costs. media clutter. andlegal restraints&



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SP Tools Classification Consumer Franchise Building

Tools*:

coupons;

free samples;

premiums related to the product.

These tools send a selling message

along with the deal.

Not Consumer FranchiseBuilding Tools:

priceoff pac!s"

consumer premiums not related to a

product"

contests and sweepsta!es"

consumer refund offers"

trade allowances

0 Consumer Franchise Building Tools # tools that create producer$s pri%ileges in minds of consumers.

Why use consumer franchise uilding tools!

"ecause they reinforce the consumers# rand understanding and hel$ to form

rand loyalty.



The determination of sales romotion

objectives&

Sales romotion objectives

1" must be defined clearl( and succinctl(&

2" must be caable of measurement&

$" must be achievable&

%" must be realisticall( budgeted&



Sales promotions can bedesigned to achieve defined

consumer objectives, tradeobjectives, or both.

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Consumer objectives

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&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 secificall( to ensure that consumers rovide

this information&

Product trial and sampling. 3 roerl( constructed

romotional offer 'ill have an immediac( of imact 'hich

'ill attract the otential consumer&

Product repurchase(loalt. The generation of reeaturchase4 and the establishment of consumer lo(alt( to

a roduct is a major facet of sales romotion activit(&



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+ncreasing rate(fre'uenc of purchase. This ma( beachieved 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 ma5eavailable 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 romotionaltechniques. because of the immediac( of their imact.

are conventionall( used at the time of a ne' roduct

introduction&



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Trade objectives

Traffic )uilding. The consumer 'ill bemotivated to visit the outlet because of thesecific incentive. it is highl( li5el( that he or she'ill ma5e other urchases 'hilst in store&

+n%entor )uilding. The manufacturer mightsee5 to encourage the consumer to urchaselarger ac5ages of the roduct&

Stoc! reduction. the manufacturer ma( 'ish toensure that there is effective ull-through of hisroducts and reduce the level of stoc5 held b(the retailer&



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,ffsetting impact of competiti%e acti%it.

Sales romotion 'ill often be emlo(ed to

minimi6e the imact of cometitive activit(&

Promotional support to trade. Promotions 'illbe designed to rovide either general or secific

suort to the trade& Some of the objectives

'hich can be fulfilled b( such activities are

feature ricing) the rovision of disla(s anddisla( incentives) and in-store demonstrations&



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Trade romotion uses a number of

techniques

o 3 bu(ing allo'ance

o 3 merchandise allo'ance

o

3n advertising allo'anceo Offering free goods to middlemen

o 7anufacturers ma( offer ush mone(

o 7anufacturers ma( offer free secialt(advertising items that carr( the coman(8s

name



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

&0+W&

9irms selling to the articular industr(

disla( and demonstrate their roducts at

the trade sho'& The articiating vendors

e:ect several benefits. includinggenerating ne' sales leads. maintaining

customer contacts. introducing ne'

roducts. meeting ne' customers. andselling more to resent customers&



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*+(T)&T& &W))P&T-)& -( -)&

- contest calls for consumers to submit an entr(to be e:amined b( a anel of judges 'ho 'illselect the best entries&

- swee$stae 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 orthe sales force to induce them to redouble theirsales efforts over a stated eriod. 'ith ri6esgoing to the to erformers&



Sales romotion strateg(

Price discrimination.

Promotions enable

manufacturers to oerate

a olic( of ricediscrimination. b(

charging different rices

to different customers&

#:& 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

comaring alternatives

and bu( earlier. or in

greater quantities&

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Sales promotion

techni'ues<

<

< one off the romotion consists of a

rice reduction 'hich is communicated either

on or off the ac5&

< Coupon 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&

/.0educed priceoffers:

The pac! these

offers reresent an

alternative e:ression

of the mone(-offroosition. b(

roviding the

consumer 'ith

additional roduct at

no e:tra charge&

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1.Free mailins

3n alternative to the free gift item offered at oint of urchase is to invite the

consumer to send in an aroriate number of roofs of urchase for a gift

item&

2. Selfli'uidating offersThe manufacturer uses his bul5-bu(ing o'er to urchase gift merchandise.

'hich is then offered to the consumer at cost&

3. Contests and competitionsThe consumer is offered the oortunit( to 'in a ri6e of si6eable value. =f it

ta5es art in a lotter(&

4. +nstore sampling>arious samles of the goods 'hich the consumer can directl( tr( on a lace& =t

hels a sales erson to e:lain the functions of the roduct and to enablethe consumer to samle it&

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5ointPromotions

6CrossPromotions7

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.



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8ow 9oes +t or!

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 .

"rand $ro$osition is adertised ia other $roducts and serices !Persil ?

@ref. Alato ? Olive Oil. big comanies launching ne' roduct4 brands"& Such

activit( ma( offer significant advantages to both of the articiants&



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Factors to Consider

< degree of image match bet'een the articiating brands

< similarit( in the target mar!et rofiles of the articiants

< nature of the distri)ution patterns of the t'o brands !it is

imortant that the t'o brands are available from similar

outlets"&

For esta)lished )rands: the cometitors should be of similar

status in the mar!etplace in order that each

comlements the other&



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5oint Promotions Pros < Cons

-d%antages of 5P

2. costs on estalishing $romotion

generating $ulicity and the

necessary administration can e

shared etween the $artici$ants

3. hel$s $artici$ants find and attract

new customers

4. increasing isiility of $artici$ants

rands

5. riss inoled in the $romotion are

shared etween the $artici9$ants.

9isad%antages of 5P

rands images must match each

other

such $romotions re:uire more time

and are com$licated to e;ecute and

administer

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 $ase sales % 'ould have haened

irresective of the romotional activit(&l Incremental sales % are directl(

attributable to the romotional activit(

during the eriod&



Consumer responses

l &ompetitor steal - 'here the romotionencourages s'itching from a cometitorBsbrand)

l $rand cannibalization - 'here the romotion ofa articular brand results in consumerss'itching their urchases from another roduct'ithin the coman(Bs roduct ortfolio)

l &ategory growth - 'here the additional volumederives from ne' customers 'ho 'ould notother'ise have urchased either the romotedroduct or one of its cometitors&



-.C. Nielsen Stud on Consumer -ttitudes

towards Promotional -cti%it

Statement of *

households

= 'ill bu( a brand = donBt normall( bu( if it

is on secial offer8 %$

=f = see a secial offer = li5e. 1 'ill bu(

more than = need8/*

= loo5 out for secial rice offers8 *%

= loo5 out for secial disla(s8

= cut out couons8 /



Promotion effecti%eness: a%erage

uplift

'romotion type 'ercentage uplift

Shelf tal5er 1

1 temorar( ricereduction 2*

#:tra fill 2+

Disla( %%

7ultibu( /%

Secial ac5 2



+mportant factors in e%aluation of a

promotional acti%it

1& Does the romotional concet fit 'ell 'ith the brand. itsdesired imager( and its target audienceE

2& =s the recommended solution the most li5el( to achieve thedesired objectivesE

$& =s the romotion eas( to understand and credible to thetarget audienceE

%& =s it eas( to articiate in. or does it create a series ofunnecessar( obstacles for the otential consumer to

overcomeE/& =s the romotion li5el( to satisf( the needs of consumersE

& =s the romotion deendent on a articular fad or fashion!such as a tie-in 'ith a secific event". or does it rovide a

concet 'hich can be reeated over timeE



Brea!down of promotional purchases"

) mechanic

Temorar( rice reduction 34%

3dditional quantit( 1$

Price-mar5ed ac5 117ultile urchase discount 1$

Send a'a( *

9ree item /

@anded ac5 %

Couon $

Other 2,



The use of sales romotion agencies&

Sales promotion agencies are li!el to include

- strategic and advisor( inuts)

- the develoment 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 develoment of sales literature)

- romotional administration. imlementation and evaluation&

- roject management)

- event management)

- sonsorshi) - staff motivation schemes)

- co-ordination bet'een suliers)

- locating and negotiating 'ith third art( contacts&

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sales promotion business

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