SALES PROMOTION

RAHULFANTASIA

AN OVERVIEW

• SALES PROMOTION• DIFFERENT KINDS AND

TOOLS• TO DETERMINE SP

OBJECTIVES & FIX BUDGETS• STEPS IN DESIGNING A SP

CAMPAIGN• EVALUATE THE

EFFECTIVENESS OF SP CAMPAIGN RAHULFANTASIA

Sales promotion

• Sales promotion is one of the four aspects of promotional mix. (The other three parts of the promotional mix are advertising, personal selling, and publicity/public relations.)

• Media and non-media marketing communication are employed for a pre-determined, limited time to increase consumer demand, stimulate market demand or improve product availability. Examples include:

• contests

• point of purchase displays

• rebate (marketing)

• free travel, such as free flights

« Sales promotion consists of a diverse collection of incentive

tools, mostly short term, designed to stimulate quicker and/or greater purchase of a

product/service by consumers or the trade »

RAHULFANTASIA

PHILIP KOTLER

SP IN THE INDIAN CONTEXT• Indian market place has seen a sea change

over the last two decades.• Consumer is truly the king. • Most marketers are interested in short-term

results.• Ads becoming less effective comparing with

sp.

Title

• content

Advantages and Disadvantages of SPAdvantages

•Produces results.

•Pruduces immediate results.

•Prevent competitor entry or offset

competitor promotions and thus help

maintain the brand’s current market share.

•Rupee-for-rupee immediate and measurable

results can be produced.

•Gain channel support.

•Easy to design and implement.

•Relatively inexpensive.

•Help build database.(mail-in-coupons or

contest forms).

Disadvantages

•Excessive use can shift the focus on

Short term marketing planning.•Excessive use can erode the brand

equity.•Increasing sales promotion activity

has led to clutter.•In mature markets sp doesn’t do

much in attracting new customers but

only switchers•Both consumers and trade can

engage in forward buying, ie stocking

up.•Some sp techniques can be abused

by the trade as well as consumers.

SP and Consumer behaviour:

• Sales promotion can be targeted to:-

1. consumers of the product

2. Trade of the product

3. Sales force which promote the product

push and pull strategies:

• Pull strategy:

In this the attempt is to get the consumer to the retail outlet to ask for and buy the product.

• Push strategy:

In this the attempt is to get the trader to stock sufficient product through the sales force intervention and also to induce the consumer to buy at the retail level.

Types of sales promotions:• Consumer promotions:1. Sampling: giving samples of products especially when a

product is being introduced for the first time.

2. Price-off: less than MRP.

3. Quantity deals: eg: 30% extra on same MRP.

4. Banded offers: mixing of 2 products and giving it for less price. Mainly this can be one fast moving and one slow moving products.

5. In-product gift: teaspoon in a detergent pouch, etc.

6. Out-product gift: bowl with cerelac,etc.

7. Coupons: AVT containing cash coupons inside used for next purchase reduced price.

8. Trading stamps: a stamp for this much purchase etc(in large retail shops)

9. Consumer contests: completion of sentences etc.

Trade promotions:1. On consignment sales: pay only when the product

moves.

2. Dealer contests:

3. Dealer gifts:

4. Display contests: ITC

5. Point-of-sale material: cadbury gives attractive dispensers.

6. Shop board painting: ITC, chandrika soap, Tide etc.

7. Dealer discounts: buy 10 get one free, etc.

8. Trade fair participation:

9. Dealer meets:

10. Cooperative ads.: sharing the ad. Cost.

Sales force promotions:1. Incentive schemes: bonuses, etc.

2. Star awards: as in insurance field f.cs are given attractive awards like visiting abroad, etc.

3. Sales meets: in some attractive places for their sales force.

4. Local ad budgets: sales staff will be given the budget and will negotiate with ad agencies and release ads.

5. Promotional aids: leather bags, T-shirts, caps, etc.

Sales promotion objectives and budget allocations:

• Defining the sales promotion objectives:

Examples: • To increase the sales by 30% during the last

quarter at the retail level.

or• To generate trial among a million consumers, who

have not tried the product so far.

Understanding the sales promotion audiences:

This is a very important objective to understand the audiences of our product.

Eg: A baby food company wants to run a consumer offer of a bowl free with a tin of product. Assume that the competitor has a similar offer running and the marketing manager of the company believes that if he offers a better bowl , say stainless steel as opposed to acrylic, the offer is likely to be a hit and achieve the objective of having mothers switch from the competing product or get new mothers adopt the product right from the beginning.

Methods of Determining sp budgets • Determining the marketing budget is an important job of any

marketing manager.

Some common methods are:1. Affordability method:

2. % of sales method: Allocate money based on what sales they expect to achieve during an year.

3. Unit of sales method: Allocate a certain propotion of the cost of product to promotion. Eg: if the cost of a product is Rs.100, the company will allot Rs.10 towards promotion cost.

4. Zero budgeting: The company determines what needs to be achieved in terms of sales and then reworks backwards in terms of what money will need to be allocated to deliver those customers.

Designing the sp programme

This essentially involves 3 steps:• Planning

2. Implementation and monitoring

3. Evaluation

• Selection of the SP toolsEg: Rasna spiderman campaign

• Advertising the SPEg: Rasna ‘spiderman’ ads.

• Organisational issues in running a SP campaign

The marketing chief of a company normally takes all decisions regarding the running of a SP campaign. The design of the SP campaign is done either by the brand mgt team or a SP agency retained by the company or both. They are responsible for determining the kind of SP that is required, the budget thereof and the implementation issues.

• Evaluating the SP campaign

• In running any SP campaign, it is imp. to evaluate at 3 basic stages: before the commencement, during and after the campaign.

• The objectives must be SMART(specific, measurable, achievable, realistic and time bound) so that they can be better evaluated.

In a nutshell……• SP is the process of engaging with the

consumer on a one to one to one basis with the objective of stimulating sales.

• SP is of 2: consumer & trade promotions.

• Consumer promotion is a pull strategy as it tries to get the consumer buy certain products with attractive offers.

• Trade promotion is a push strategy where the trade attempts to push the products to the consumer.