Unit V- Topics to be covered • Sales Promotion: Definition, scope- Sales promotion mix –

Anju Wilson• Developing Sales promotion campaign –Suraj.S • Implementation of sales promotion campaign –Gayathri• Sales promotion Budget and Sales promotion evaluation –

Reshma Ramesh• Effect of sales promotion on brand equity –Sarath B• Trends in sales promotions- Naveen Anil• Future of sales promotions-Krishna Priya.S• Future of Marketing Communication -Anu

PROMOTION MIX

ADVERTISING: Any paid form of non personal presentation and promotion of ideas, goods, or services by an identified sponsor.

PERSONAL SELLING: The personal presentation of a product or company to one or more potential buyers

PUBLICITY: Creating demand for a business or product by placing news about it in the media.

DIRECT MARKETING: The business of selling products or services directly to the public, e.g. by mail order or telephone selling, rather than through retailers.

DEFINITION

• SALES PROMOTION is a type of marketing aimed either at the consumer or at the distribution channel (in the form of sales-incentives). It is used to introduce new product, clear out inventories, attract traffic, and to lift sales temporarily.

Examples: coupons, product samples, point-of-purchase displays

Objectives of Sales Promotion

• Building Product Awareness :Helps in exposing customers to products for the first time and can serve as key promotional components in the early stages of new product introduction.

• Creating Interest : creating interest is often considered as the most important use of sales promotion. Sales promotions significantly increase customer traffic to retail outlets.

• Providing Information: some sales promotions do offer customers access to product information. For instance, a promotion may allow customers to try a fee-based online service for free for several days.

• Stimulating Demand :The most important use of sales promotion is to build demand by convincing customers to make a purchase. Special promotions, especially those that lower the cost of ownership to the customer (e.g., price reduction), can be employed to stimulate sales.

• Reinforcing the Brand: Once customers have made a purchase sales promotion can be used to both encourage additional purchasing and also as a reward for purchase loyalty. Eg: Airlines upgrading from economy class to business class.

Sales Promotion

• Provides extra incentive to purchase product

• Way to appeal to price sensitive consumer

• Can generate extra interest in ads

• Easier to measure efforts• Encourage repurchase• Encourage brand loyalty

• Often only has short term impact

• Can be abused• Can lead to promotional wars• Often does not contribute to

brand image

Advantages Disadvantages

Role of Sales promotion

PROMOTIONTO INCREASE TRADE

DURING QUIETER PERIOD

TO BOOST EVENT

TO INCREASE CUSTOMER AWARENESS

FOR PARTICULAR PERIOD

TO PROVIDE A SPECIAL OFFER FOR A LIMITED

PERIOD

Sales Promotion Campaign

What is sales promotion campaign ?

A series of advertisements using various marketing tools that share the same message and ideas to promote a business or event to a target audience. The typical campaign uses different media resources including internet, newspaper, television, radio and print advertising.

Outcomes of a sales promotion campaign

Promotional campaign generally consists of three desired outcomes:• Outcome 1: The promotional message reaches the intended

and targeted audience.

• Outcome 2: The message is understood by the audience.

• Outcome 3: The message stimulates the recipients and they take action.

Approaches in developing a sales promotion campaign

• Calculate sales needs or quotas. Concrete numbers help develop a comprehensive plan.

• Research past successful sales and document what customers bought. Organize the promotion around a product's popularity. Introduce new products to appeal to the existing client base and bring in new customers.

• Define the type of promotion to create. Calculate how much of each item needs to be sold to meet quota so you'll know how much inventory to order. Select a theme and define the time line.

Cont’d

• Entice customers with a themed promotion. Designing around seasons or other well-known themes allows to tie in promotions with shopping holidays. 

• Keep the promotion simple. An elaborate program pushing too many products overwhelms many consumers. 

• Upsell utilizing a loss leader. This technique offers a low-selling product to promote sales of more expensive items, and hopefully create future revenue.

• Launch an employee-incentive contest. 

• Promote and advertise. Calculate the advertising budget. Balance it with the sales quota. 

• Multiply the ad campaign by publishing online flyers and coupons. 

Steps in developing an effective sales promotion campaign

• Step 1: Assess Marketing Communication Opportunities.

 • Step 2: What Communication Channels Will Use? 

• Step 3: Determine Objectives

• Step 4: Determine Promotion Mix.

Cont’d

• Step 5: Develop the Promotional Message

• Step 6: Develop the Promotion Budget

• Step 7: Determine Campaign Effectiveness 

IMPLEMENTATION OF SALES PROMOTION CAMPAIGN

COMPONENTS OF IMPLIMENTATION

• BUDGETThere are different ways for preparing a budget

1. They set the figure at what they spent last year ,plus a little bit more for inflation and any expected market growth

2. They set it as fixed percentage of turnover3. They set it to be the same as or in ratio to , what major

competitors spend4. They set it as the amount needed to achieve the defined

marketing objectives

• TIMING– When?– How long?– How it relates to purchase frequency?– What lead times intermediaries require?– When you need your promotional concepts ready?

• COMMUNICATION– Every promotion is communicated in or on material of

some kind like wrapping of the product, sponsored shows or events etc.

STEPS IN IMPLEMENTING A SALES PROMOTION

• For implementing a promotional campaign we need to go through 3 steps1. Feasibility2. Checking 3. Implement

1. Feasibility1. List possible concepts2. Check the concepts on different bases3. Short list and check against objectives4. Short list concepts

Checking – The shortlisted concepts should be checked – Outline plans should be prepared– Visuals and copy also should be checked– Check back to brief ,evaluate and select– Top concept– Define success

• Implementation– Finalize copy and design– Finalize communication materials– Finalize administration– Finalize offer materials– Establish evaluation– Check all legalities– Make detailed operational plan– Run the promotion– Evaluate

Sales promotion budget and sales promotion evaluation

How are sales affected by sales promotion?

There are four basic mechanisms involved 1. Brand switching: The objective of some sales promotions is to induce brand switching, which is encouraging consumers to purchase the promoted brand instead of the regular brand that would have been purchased had there been no sales promotion. 2. Repeat buying: Sales promotions influence the consumers in a manner that increases the chances of purchasing the same brand again in future. 3. Purchasing more, or accelerating timings: Consumers purchase more quantity than their immediate requirements, or the purchase timings are changed. 4. Increasing category expansion and consumption: Consumption of total product category is increased by the consumers as a result of sales promotion.

Sales promotion budget

The allocation of monetary resources for sales promotion is determined by the promotion strategy of the firm. Most major firms keep a contingency reserve . In most cases, first the total amount of money for promotion is determined then it is budgeted for different activities . Before deciding the budget the management should evaluate relevant factors such as type of product, its stage in PLC,the market condition (of the company) , the economy in with the organization functions, the extent of competitive activities etc. All these factors individually or together might effect the promotion budget to a great extent.

TechniquesThere are basic five techniques that are used to determine/ allocate funds to sales promotion.Percentage of sales methodUnit of sales methodCompetitive parity methodAll you can afford methodObjective end task method

Percentage of sales method

In most cases and by most firms this “percentage of sales method” is used to determine the promotional budget of the company.Budget is determined by taking a fixed percentage of sales. The sales figure taken could pertain to the previous year, the average of several past years or the forecasted sales of the year. This decision is more dependent on the current business scenario and current working of the company. It might be that the company may consider just last years sales figures under consideration as they may have made great salesUnder-spending, market opportunities are high Over-spending, market opportunities are low.

Unit of sales method

This method is commonly used by companies dealing in high-priced products, generally consumer durable goods such as four and two wheeler auto-manufacturers, refrigerators, washing machines, microwave ovens, electronics and many other items.Instead of rupee value of sales, as in the previous method, the base is the physical volume of either the past or anticipated sales. This figure of units is then multiplied by a fixed amount of money to reach the budget amount. For example, the manufacturer might allocate Rs. 2000/- per unit for sales promotion.

Competitive parity method

Many marketers match or base their sales promotion budget to that of the major competitors.The logic attributed to this method is that the collective minds of the companies in the industry probably generate promotion budget that are close to optimal and any departure from the industry norms may lead to promotion war.

All you can afford method

In using this approach to budget allocation, the amount that is leftover after all other relevant allocations have been made, is earmarked for sales promotion. This approach is used, generally, by companies with small budget, or by some other companies, large as well as small, when they are introducing a new product. It is merely an availability oriented budget and quite unsophisticated. Apparently, there is no realization that in a competitive market situation, sales promotion mainframe sales in many ways.

Objective end task method

Driven by strategy. Most popular. Suited for new products as well as existing products Promotion manager set objective. Determining how much money would be necessary for the objective. Bottom-up approach Not dependent on past/future sales or how much the competitor has spent.

SALES PROMOTION EVALUATION

Sales promotions are a common tool for businesses across a range of industries. Sales promotion are undertaken to achieve specific business objectives. The company should evaluate the volume of sales for the sales promotion period plus an equal period before, and at least two equal periods after, the promotion. Eg: If the sales promotion lasts a week, the evaluation period should be at least four weeks, including one week before and two weeks after the promotion.

SALES PROMOTION EVALUATION

There are 3 phases for measuring the evaluation of sales promotion. Before the sales promotion is offered i.e., pre-testing During the time it is in operation i.e., Concurrent testing ( or monitoring and follow up) and After the sales promotion event has ended i.e., post-testing.

PRE-TESTING

 The pre-testing evaluation technique determine the effectiveness of a promotional strategy. The company may choose to use simulation as a pre-testing technique to test consumer appeal, consumer awareness, repeat purchases and the sense of value. Using the pre-testing technique, a company can compare its results against a prior promotional technique's outcome and eliminate promotional techniques that failed.

PRE-TESTING CONT…

 The pre-test can be conducted by using focus groups and consumer panels . Another approach, ballot method , consists of kneeling a ballot paper to a list of consumers. They are requested to evaluate different illustrated promotion is and vote for the most right and return the ballot to the firm. A relatively expensive but more accurate method is a portfolio test . A portfolio of sales promotion is prepared and shown to consumers in person and the responses are noted.

CONCURRENT TESTING

Concurrent testing is applied while a sales promotion is in progress, allowing the sales manager to modify the technique as needed. The assessment is based on weekly or monthly sales data. If the promotion is a consumer contest and the consumer is not required to purchase anything, the response to promotion can be adjusted by the number of entries received at some interval and if need be, the contest period can be extended.  In case of a coupon distribution programme , similar approach can be adopted by keeping track of coupons redeemed

POST-TESTING

Post-testing is done after the promotion period is over. It assesses consumer awareness and attitude. Telephone calls, questionnaire mailed to the consumers and personal interviews are some techniques of post-testing. In these methods, the most expensive is the personal interview method and the least expensive is the mail.

The information sought pertains to the promotion event. To evaluate the sales effect during the post-testing phase, the evaluation takes into consideration the sales figures both before and after the promotion.

POST-TESTING CONT…

EFFECT OF SALES PROMOTION ON BRAND EQUITY

• Sales promotions are an important part of a brand's marketing mix. A

good sales promotion will build brand equity by reinforcing a brand's

marketplace position, and possibly lead to a temporary or permanent lift

in sales. If a sales promotion does not adhere to the brand standards or

appears gimmicky, it can hurt the brand in the long run.

• Objective for sales promotion is to enhance or support the integrated

marketing communications effort for a brand or company.While building

or maintaining brand equity was traditionally viewed as something that

was done through media advertising,it has also become an important goal

for marketers as they develop their sales promotion programs.

BRAND EQUITY

• Brand equity is the positive values associated with the brand which are integral to the brand itself.

• Brand equity provides value to a firm in the form of price premium or competitive advantage.

• A strong brand is an asset to the owner firm & a threat to its competitors.

FEATURES OF BRAND EQUITY

BRAND EQUITY MODEL

Effects of sales promotion on brand equity

• Companies want promotions that require consumers to become more involved with their brands & offer a way of presenting the brand essence in an engaging way.

• Many marketer’s are recognizing that a well designed & executed promotion can be a very effective way to engage consumers & to differentiate their brands.

• Sales promotion helps in building a brand’s equity consists of developing a favourable,memorable & consistent image.

EXAMPLES

Steps to a Successful Sales Promotion

• Understand your brand's current brand image, value and reputation.

• Understand your brand's long-term strategies and adhere to them.

• Know your current consumers and target audience.• Recognize the capabilities of your sales force.• Understand the relationship your brand has with your

wholesalers and retailers.• Research the results of past sales promotions.• Have a clearly defined objective for the promotion.• Make sure there is a benefit to the consumer.• Stay within your budget.• Be creative.

CONCLUSION

Both product quality & advertising have unique roles in building brand equity.

Types of sales promotion

TYPES

Consumer-oriented

promotions

Trade-oriented promotions

Consumer-oriented promotions1.Sampling

2.Couponing

3.Premiums

4.Contests & Sweepstakes

5.Refunds & Rebates

6.Bonus Packs

7.Price-off deals

8.Loyalty programs

9.Event marketing

1.Sampling

A free sample or "freebie" is a portion of food or other product given to consumers in shopping malls, supermarkets, retail stores, or other venues.

Door-to-door sampling Airwick Aqua Mist 2011.mp4

Sampling methods

I. Door to door sampling – direct delivery to prospects’ residence.

II. Sampling through the mail- Small, lightweight non-perishable products.

III. In-store sampling- effective for food productsIV. On-package sampling- Sample attached to

another productV. Event sampling – In concerts, sporting events etc.VI. Internet sampling- Sites providing free samples

2.Couponing

Coupons are given to consumers which provide some benefit to customers although they cannot be converted to cash directly.

Types of coupons

I. Bounce-back coupon – In/on pack coupon that is redeemable for next purchase of the same brand.

• Inducement to repurchase the brand

I. Cross-ruff coupon- Redeemable on purchase of a different product.

II. Instant-coupon- Redeem at the time of purchase immediately.

3.PREMIUMS

A premium is an offer of an item of merchandise or service either free or at a low price that is an extra incentive for purchasers.

Premiums

Free Premiums

Self-liquidating Premiums

I. Free Premiums

Free premiums are usually small gifts or merchandise included in the product package or sent to consumers who mail in request along with proof of purchase.

free premium.mp4freebie.mp4

II. Self-liquidating premiums

Require customer to pay some or all of the cost of the premium plus handling and mailing costs.

4.Contests & Sweepstakes

• ContestsA promotion where people

compete for prizes or money on the basis of skills or ability.

contest.mp4

Sweepstakes

A promotion where winners are determined purely by chance; it cannot require proof of purchase as a condition for entry.

• sweepstakes.mp4

5.Refunds & Rebates

Offers by the manufacturer to return a portion of the product purchase price, usually after the consumer supplies some proof of purchase.

rebate.mp4refund.mp4

6.Bonus Packs

Offer the consumer an extra amount of a product at the regular price by providing large containers or extra units.

7.Price-off deals

Reductions are typically offered right on the package through specially marked price bags.

8.Loyalty programs

Promotions that offer customers a reward, such as price discounts and free products, for frequent purchasing or other activity are called loyalty programs.

9.Event marketing

Event marketing is a promotional strategy that involves face-to-face contact between companies and their customers at special events like concerts, fairs, and sporting events.

Ex: event.mp4

Trade-oriented promotions

1. Cash bonuses

2.Stock return

3. Credit terms

4. Dealer conferences

5. Dealer trophies

6. Push incentives

1.Cash bonuses

It can be in the form of one extra case for every five cases ordered, cash discounts or straight cash payments to encourage volume sales, product display, or in support of a price reduction to customers.

cash bonus.mp4

2.Stock return

Some firms take back partly or wholly the unsold stocks lying with the retailers, and distribute it to other dealers, where there is a demand for such stocks.

3.Credit terms

Special credit terms may provide to encourage bulk orders from retailers or dealers.

4.Dealer conferences

• A firm may organize dealer conferences. The dealers may be given information of the company’s performance, future plans, and so on. The dealers can also provide valuable suggestions to the company at such conferences.

5.Dealer trophies

Some firms may institute a special trophy to the highest-performing dealer in a particular period of time. Along with the trophy, the dealer may get a special gift such as a sponsored tour within or outside the country.

6.Push incentives

It is a special incentive given to the dealer in the form of cash or in kind to push and promote the sale of a product, especially a newly launched product.

Trends in sales promotion

1.MDU Activity

2.Samples on traditional occasions

3.Cinema slides

4.Retailers tie-up

5.Putting canopy at right place

6.Paper insert

7.Demo-van

1.MDU Activity (Multi Dwelling Unit)

• In this Process first contact the Society secretary and convinces them for a promotional activity inside the society in any holiday.

• Promotional activity may be Samples, Free gifts, providing a branding process for car parking for the society.

2.On Traditional Occasions

The religion of belief is the part of promotion; As India people have a big religion of belief in each and every region.

• tradition.mp4

3.Cinema slides

This commonly used Promotional activity by the colleges and institutions most. Because cinema is the best entertaining medium for the youth so they got all the information.

cinema slides.mp4

4.Retailers Tie-Up

Trade based sales promotion in which the manufacturer providing some benefits and margin to the retailers to sell their product and merchandising their retail according to the manufacturer instruction for quick and effective sale.

5. Putting Canopy at Right Place

• Canopy Operation is a combination of advertisement and personal selling process.

• Provides the right information to the potential customers tie up with the big shopping centres like BIG BAZAR, PANTALOONS, SHOPPER STOP etc

• Putting Canopy at those points where people awaiting in a queue area.

6.Paper insert

The most low cost promotional activity which is used for local area frequency.

7.Demo-Van Operation

This is generally used by the Bike companies Like BAJAJ, HERO HONDA to show the demonstration and all the information regarding the product of that particular company.

Future Of Sales Promotion

•The future of sales promotion merely depends on the factors like creativity of promotion strategy, consumer expectation and the medias. All this will change very dramatically in coming years. •The major challenge of the future is likely to be the ability to meet competitive threats from varieties of competitions.

•The Internet is changing how customers obtain promotions. In addition to websites that offer access to coupons, there are a large number of community forum sites where members share details about how to obtain good deals which often include information on how or where to find a sales promotion. •Monitoring these sites may offer marketers insight into how customers feel about certain promotions and may even suggest ideas for future sales promotions. 

•Switching over to tablet from smart phones for sales promotion.

FUTURE OF MARKETING COMMUNICATION

• Marketing communications are messages and related media used to communicate with a market.

• Marketing communications is the "promotion" part of the "marketing mix" or the "four Ps": price, place, promotion, and product.

• It can also refer to the strategy used by a company or individual to reach their target market through various types of communication.

• 1. Market is now having a rural-urban mix shape

• 2. Occupational diversity (Agriculture to other skills)

• 3. Awareness is spreading fast

• 4. Indian consumer is being more smart

CURRENT SCENARIO

• 5. Heterogeneous Demographic Traits

• 6. Diversity in economic conditions

• 7. Media advertising is shifting to multiple forms of communication focusing at target centred niche media.

• Lack of strategic consistency

• Lack of needed skill sets among marketing staff

• Scarcity of creativity and innovation

• Insufficient marketing budget

• Lack of a standard measurement process

• Lack of technology advancement support.

• Ambiguity on the issue

• Complex cultural and social values

KEY CHALLENGES

• Knowledgeable Consumers

• Immediacy of transactions and how the Profile wants to transact

• Decentralisation of where people live and more reliance on Screen-based technologies.

• Consumers creating their own marketing opportunities

• Consumers as Advertisers of their own content

What will happen ?

• 3D printing conceptual information and holography

• Consumers will want to ‘Find’ an answer on demand, not ‘Search’,

• Consumers lives will be more chaotic, so will need to convenience providers to help them trade ‘time’ for money or favours

• Big Data will be transparent, but Big Information will be the focus for Consumers.

• Attention span will be less, but there will be a rapid Judge and Execution

• Consumer profiles will be Real-time, but only if they want you to see it (intense Privacy laws)

• Consumers will demand/expect very high Content quality and highly intuitive.

• Specialized Experts

• Gather the right data

• Put your recipients in control

• Centralize your content, use it everywhere

• Operate in real-time

Ways to plan for future marketing communications