E2BAIS3 GROUP ‘C’ STUDENTS

ADDIS ABABA UNIVERSITY SCHOOL OF COMMERCE

DEC,29/2013

ALL YOU NEED TO KNOW ABOUT

SALES PROMOTION

Principles of Marketing

WHAT IS SALES PROMOTION?

Set of marketing activities undertaken to boost sales of the product or service.

It describes incentives and rewards to get customers to buy now rather than later. . Means to give short term incentives to encourage purchase or sale of a product or service (AMA)

Purpose of Sales Promotion

Yield faster, more measurable results in salesStimulate consumer trialAttract new triers or brand switchersReward loyal customersIncrease repurchase rate of occasional usersEnhance Brand Image

Sales Promotion Vs Other Promotional tools

In order to understand the basic role and function of sales promotion, one must differentiate between sales promotion and other components of the marketing mix.

Sales promotion usually operates on: a short timeline (temporarily), uses a more rational appeal, returns a tangible or real value, fosters an immediate sale, and contributes highly to profitability. The reasonable, practical and functional desirability

of a product or service to a potential consumer

Main objectives of Sales Promotion

To introduce new products or services:To attract new customersTo induce existing customers to buy moreHelps the firm to remain competitiveTo increase sales in off-seasonsTo add to the stock of the dealers

Advantages of Sales Promotion

Can be viewed from two point of views

Manufacturers helps to increase sales in a competitive market

and thus, increases profits;helps to introduce new products in the market by

drawing the attention of potential customers; When a new product is introduced or there is a

change of fashion or taste of consumers, existing stocks can be quickly disposed off;

It stabilizes sales volume by keeping its customers with them

Advantages…Con’tconsumers

the consumer gets the product at a cheaper rate;

It gives financial benefit to the customers by way of providing prizes and sending them to visit different places;

The consumer gets all information about the quality, features and uses of different products;

Certain schemes like money back offer creates confidence in the mind of customers about the quality of goods

Disadvantages of Sales Promotion

Increased price sensitivityQuality image may become discolored

Dealers forward buy and divert stocks

Merchandising support from dealers is doubtful

Short-term orientation

Major tools of Sales Promotion

•To increase the sales of a product, the producers or manufacturers use various tools of sales promotion.

MAJOR TOOLS ……CON’T

Consumer Sales Promotion

Directed to consumers of goods and service

Trade Sales

Promotion Directed to distributors and retailers

Consumer Sales Promotion

Trade Sales Promotion

Objectives, Merits & Demerits of TSP

MAJOR DECISIONS IN SALES PROMOTION

Establish ObjectivesSelecting the Appropriate ToolsDeveloping the ProgramPretesting, Implementing and Controlling the ProgramEvaluate Results

1. Establishing Objectives

Objectives for Consumers• Purchase larger size units• Lead nonusers to trial• Attract switchers from competing brands

Objectives for the Sales Force• Encourage support of new products• Encouraging more prospecting• Stimulate off-season sales

Establishing ….Con’t

Objectives for Retailers

•Carry new items in stock•Carry a higher level of inventory

•Off-season buying•Stock related items•Offset competitive promotions•Build brand loyalty•Enter new retail outlets

2. Selecting the Appropriate Tools

Consumer Promotion Tools

•Manufacturer Promotions•Retailer Promotions•Consumer-Franchise Building Promotions

•Non-Consumer-Franchise Building Promotions

3. Developing the Program

• Integration of various tools• Factors:

• Size of Incentive• Conditions for Participation• Duration• Distribution • Timing• Total Sales-promotion Budget

4. Pretesting, Implementation & Control

•Pretesting is important to ensure efficacy of promotion tools

•Implementation • Lead time: preparation prior to launch

• Sell-in time: begins with promotional launch and ends when 95% of merchandise is distributed to consumers

5. Evaluation of Sales Promotion

•Brand switching•Repeat purchasing•Purchase acceleration

•Category expansion

Some local Examples on Promotional tools

1) Consumer Oriented Promotion COMPANY/ORGANIZATION NAME

PRICE DEAL Local Boutiques

CONTESTS/SWEEPSTAKES

SPECIAL EVENTS

PREMIUMS

CONTINUITYPROGRAM

SAMPLING

2) TRADE ORIENTED PROMOTIONS

POINT-OF-PURCHASE (POP) DISPLAYS

TRADE SHOWS

PUSH MONEY

DEAL LOADERS

TRADE DEALS

BUYING ALLOWANCES

ADVERTISING ALLOWANCES

THANK YOU!

Any Questions?