Sales Promotion

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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-promotions (cross-promotions)
 Part 7. Evaluation of SP
 Part 8. The use of SP agencies
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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. promotion is now more accepted by top management as an effective
sales tool;
3. more product managers are qualified to use sales promotion tools;
4. product managers are under greater pressure to increase their sales.

 External factors:
7. the number of brands has increased;
8. competitors have become more promotion-minded;
9. inflation and recession have made consumers more deal-oriented;
10. the trade has demanded more deals from manufacturers;
11. advertising efficiency has declined due to rising costs, media clutter, and
legal restraints.

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 SP Tools Classification
 Consumer Franchise Building  Not Consumer Franchise
Tools*: Building Tools:

 coupons;  price-off packs,

 free samples;  consumer premiums not related to a

 premiums related to the product. product,

 con-tests and sweepstakes,

These tools send a selling message

along with the deal.  consumer refund offers,

 trade allowances

Why use consumer franchise building tools?

Because they reinforce the consumers' brand understanding and help to form
brand loyalty.
* Consumer Franchise Building Tools – tools that create producer’s privileges in minds of consumers. 5
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
 Enquiries/list building. An increasing concern among
manufacturers is the desire to build accurate lists of
actual and potential consumers. Promotions can be
designed specifically to ensure that consumers provide
this information.
 Product trial and sampling. A properly constructed
promotional offer will have an immediacy of impact which
will attract the potential consumer.
 Product re-purchase/loyalty. The generation of repeat
purchase/ and the establishment of consumer loyalty to
a product is a major facet of sales promotion activity.

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 Increasing rate/frequency of purchase. This may be
achieved by the presentation of new usages for the
product, or the suggestion of new use occasions.
 Trading up. Often, and particularly at the time of
introduction of a new product the manufacturer will make
available a smaller size of the product for trial purchases.
Subsequently, however they will wish to encourage the
consumer to purchase larger quantities.
 Introducing a new product. Sales promotional
techniques, because of the immediacy of their impact,
are conventionally used at the time of a new product
introduction.
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 Trade objectives
 Traffic building. The consumer will be
motivated to visit the outlet because of the
specific incentive, it is highly likely that he or she
will make other purchases whilst in store.
 Inventory building. The manufacturer might
seek to encourage the consumer to purchase
larger packages of the product.
 Stock reduction. the manufacturer may wish to
ensure that there is effective pull-through of his
products and reduce the level of stock held by
the retailer.
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 Offsetting impact of competitive activity.
Sales promotion will often be employed to
minimize the impact of competitive activity.
 Promotional support to trade. Promotions will
be designed to provide either general or specific
support to the trade. Some of the objectives
which can be fulfilled by such activities are
feature pricing; the provision of displays and
display incentives; and in-store demonstrations.

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 Trade promotion uses a number of
techniques:
o A buying allowance
o A merchandise allowance
o An advertising allowance
o Offering free goods to middlemen
o Manufacturers may offer push money
o Manufacturers may offer free specialty
advertising items that carry the company’s
name
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BUSINESS CONVENTIONS AND TRADE
SHOWS
Firms selling to the particular industry
display and demonstrate their products at
the trade show. The participating vendors
expect several benefits, including
generating new sales leads, maintaining
customer contacts, introducing new
products, meeting new customers, and
selling more to present customers.

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CONTESTS, SWEEPSTAKES, AND GAMES

A contest calls for consumers to submit an entry

to be examined by a panel of judges who will
select the best entries.
A sweepstake calls for consumers to submit their
names in a drawing.
A game presents something to consumers every
time they buy—bingo numbers, missing letters—
which 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 prizes
going to the top performers.
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 Sales promotion strategy
Price discrimination.
 Promotions enable
manufacturers to operate
a policy of price
discrimination, by
charging different prices
to different customers.
 Ex.: different prices may
be charged for the same
product in different retail
outlets.
Consumer behavior.
 Promotional activity can
be used to create a sense
of urgency in consumers,
persuading them to stop
comparing alternatives
and buy earlier, or in
greater quantities.
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Sales promotion •
techniques •

1.Reduced price
offers:
The pack - these • Money off - the promotion consists of a
offers represent an price reduction which is communicated either
alternative expression on or off the pack.
of the money-off
proposition, by • Coupon - is a ticket or document that can
providing the be exchanged for a financial discount or
consumer with rebate when purchasing a product.
additional product at • Free gifts - the offering of a free gift item at
no extra charge. the time of purchase.

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2.Free mail-ins
An 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 gift
item.
3. Self-liquidating offers
The manufacturer uses his bulk-buying power to purchase gift merchandise,
which is then offered to the consumer at cost.
4. Contests and competitions
The consumer is offered the opportunity to win a prize of sizeable value, If it
takes part in a lottery.
5. In-store sampling
Various 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 enable
the consumer to sample it.

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Joint-Promotions
(Cross-Promotions)
 It is an increasingly important area of promotional
activity, where two or more participants promote
their brands together to obtain a mutual benefit.

 This form of promotional activity affords a major

opportunity for close co-operation between brand
manufacturers and retailer stockists.

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How Does It Work?
Brand proposition is advertised via other products and services (Persil +
Bref, Zlato + Olive Oil, big companies launching new product/ brands). Such
activity may offer significant advantages to both of the participants.

For promoter: For carrier:

Opportunity is to gain access to a Opportunity to add value to his

group of new consumers, who are product in the form of a free gift or

encouraged to associate the other motivation at a significantly

product with another one from a reduced cost.

similar or related category.

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 Factors to Consider

• degree of image match between the participating brands

• similarity in the target market profiles of the participants
• 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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Joint Promotions Pros & Cons
 Advantages of JP  Disadvantages of JP
2. costs on establishing promotion,  brands images must match each
generating publicity and the
other;
necessary administration can be
shared between the participants;  such promotions require more time

3. helps participants find and attract and are complicated to execute and
new customers;
administer;
4. increasing visibility of participants’
 danger of theft and pilferage
brands;
(especially when two products are
5. risks involved in the promotion are
shared between the partici­pants. banded together).

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The volume a brand achieves when on
promotion can be divided into two
component parts:

l Base sales – would have happened

irrespective of the promotional activity.
l Incremental sales – are directly
attributable to the promotional activity
during the period.
Consumer responses
l Competitor steal - where the promotion
encourages switching from a competitor's
brand;
l Brand cannibalization - where the promotion of
a particular brand results in consumers
switching their purchases from another product
within the company's product portfolio;
l Category growth - where the additional volume
derives from new customers who would not
otherwise have purchased either the promoted
product or one of its competitors.
A.C. Nielsen Study on Consumer Attitudes
towards Promotional Activity

% of 7000
Statement
households
‘I will buy a brand I don't normally buy if it
43%
is on special offer’
‘If I see a special offer I like, 1 will buy
57%
more than I need’
‘I look out for special price offers’ 74%
‘I look out for special displays’ 66%
‘I cut out coupons’ 56%
Promotion effectiveness: average
uplift
Promotion type Percentage uplift

Shelf talker 10%

10% temporary price 27%
reduction
Extra fill 28%

Display 44%

Multibuy 54%

Special pack 62%

 Important factors in evaluation of a
promotional activity
1. Does the promotional concept fit well with the brand, its
desired imagery and its target audience?
2. Is the recommended solution the most likely to achieve the
desired objectives?
3. Is the promotion easy to understand and credible to the
target 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 a
concept which can be repeated over time?
Breakdown of promotional purchases,
by mechanic

Temporary price reduction 34%

Additional quantity 13%
Price-marked pack 11%
Multiple purchase discount 13%
Send away 7%
Free item 5%
Banded pack 4%
Coupon 3%
Other 29%
The use of sales promotion agencies.
 Sales promotion agencies are likely to include:
 - strategic and advisory inputs;
 - the development of consumer and trade promotions;
 - promotion design and artwork production;
 More specialized service may include:
 - copywriting services;
 - print design and buying;
 - the sourcing of merchandise;
 - the design and development of sales literature;
 - promotional administration, implementation and evaluation.
 - project management;
 - event management;
 - sponsorship;
 - staff motivation schemes;
 - co-ordination between suppliers;
 - locating and negotiating with third party contacts.
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