The various types of sales promotion objectives are based on the various target groups and each group may have different objectives.

The broader objectives could be to stimulate customers, gain the cooperation of trade people, or motivate the sales force.

The sales promotion objectives can be either reactive or proactive.

Some of the proactive objectives can be • To gain additional market share or revenue.• To expand the target market• To develop the favorable consumer experience with the brand.• To add extra value to the product and develop product franchise.

Some of the Reactive sales promotional objectives can be • In response to competitive move.• When excess inventory gets piled up.• To generate short term cash.• When the decision is to discontinue the product, or to close down the business.

According to Schultz and Robinson the promotion objectives should be • Specific.• measurable.• Clear and concise.• Practical and realistic.• Affordable and attainable.

Before deciding the allocation of funds to sales promotion, the management should evaluate these relevant factors written below• Products or services stage of PLC.• The market situation and the level of competition activity present in the environment.

These are the various methods used for the budgeting.• Percentage to sales method.• Unit of sales method.• Competitive parity methods.• All-you-can-afford method.• Objective and task method.• Theoretically optimal expenditures.

Percentage of sales method

A definite advantage of this system is that the expenditures are directly related to the sales. if the company has sold more in the previous year then it is assumed that the company has got more funds for promotion budget this year. It is a simple method and calculation is easy and understandable.• This method emphasizes on the fact that the promotion is based on sales and not the causes. It also doesn’t consider the fact the sales can decline due to too little promotion or increased competitive activity or that the sales are not taking the advantages of rising potential.

It also arises the case of overspending when the market potential is low and under spending when the market opportunities are high. so in order to make the method effective it is advisable not only to consider the past sales but also the sale forecast for the next year.

In spite of the various limitations this method remains a fairly popular method.

It cannot be used for the new company.

Unit of sales methodThis method is generally used in the high priced products such as consumer durable industry .

Instead of rupee value of the sales ,the base is the physical volume of either the past or the anticipated sales.

The advantages and the limitations of this method is almost same as in percentage of sales method.

It has got same convenience of simplicity as well as the shortcomings.

Competitive parity method

The organizations base their promotion budget on the competitors expenses on the promotion. This method helps in maintaining the industry promotion balance in the market and thus reduces the chances of promotion wars. It is easy to use as it only requires the competitors expenditure budget which can be easily available in industry publications.This method has got certain limitations such as -It assumes that all the firms have got the same promotion objectives and the competitors allocation is correct on the promotions.

-The information regarding the competitor’s spend is only available after money has been spent.- This approach fails to meet the concept of individual marketing needs

All you can afford method

In this method the money for the sales promotion budget is the money left after all the relevant allocations have been made .

-Generally used by low budget small companies and sometimes also by the large companies when they are launching new products.

-In this method it is tough to analyze the effect of sales promotion activities as the budget allocation may be very low.

Objective and task method

After the initial important step of promotion planning the promotion objective is carefully determined .

The promotion objectives decided at these steps are further analyzed for various task required for there accomplishment. The budget is then decided to fulfill these tasks.

Major advantage of this methods include it is the first bottom up method. this method doesn’t depend upon the past or future sales or how much competition has spent. These are very effective in new product launches as every activity has to be started from the scratch and thus more effective.

Theoretically optimal expenditure

The promotional planners use sales response model to determine the budget that will maximize the profits.

The model is solved analytically or by the simulation approach. This is a rare method in application.