Sales

SALES PROMOTION
Sales promotion includes several communication activities that attempt to provide added value or incentive to consumer, wholesalers, retailers or sales force to stimulate the sales. Sales promotion describe promotional methods using special short term techniques

TYPES OF SALES PROMOTION

Consumer promotion Trade promotion Sales force promotion

OBJECTIVE OF SALES PROMOTION

Building product awareness Creating interest To increase sales volume in short term Attract more customer

INFLUENCES
Push Strategy calls for using the sales force and trade promotion.

Pull Strategy calls for spending on advertising and sales promotion to build consumer demand.

OBJECTIVE OF TRADE PROMOTION

Buy more Building relationships Stock during off season Display of new product launch Competition

OBJECTIVE OF SALES FORCE PROMOTION

Increase the level of motivation Getting market information Encourage selling a new product

MAJOR CONSUMER PROMOTION TOOL

Free Samples : Company provide samples of the product in the mail ,by retail store, attached in the magazine Coupons: Company provide coupons to their consumers inside the pack of products or inserted in the magazine or newspaper ads.

E.g Mr. white provides coupons inside the pack. Returned empty pack and get 5rs. Off on next purchase

MAJOR CONSUMER PROMOTION TOOL

Discounts: Company provides discount offer to their customer when they buy the products Buy 1 get 1 free: Lux provide buy 3 get 1 free
offer

e.g Globus provide 50% discount

Combo offer: two related products banded together.

Eg Colgate offers combo offer for paste and brush together

MAJOR TRADE PROMOTION TOOLS

Price Off : Straight discount of the list price on each case purchased during the stated period.
e.g. Nokia offer to their retailers price off facility

Allowance : An amount offer in the return of the retailers agreeing to feature the manufacturers product. An advertising allowance and display allowance compensates retailers for advertising the manufacturs product.
e.g. Samsung and LG provides allowance to their retailers in the season of Diwali.

MAJOR TRADE PROMOTION TOOLS

Free Goods : Offers of extra cases of merchandise to intermediaries who buy the quantity or who feature a certain flavor or size. e.g. Nestle Eclairs provides free goods offers to their retailers. POP Displays : This is extra tool of sales promotion given by the company to retailers to boots the sales. e.g. Outside signs, window displays, counter pieces, product displays.

MAJOR TRADE PROMOTION TOOLS

Push money : An extra comission paid to retailers to push the product.

e.g. Nokia provides their retailers sales 5 pack of mobiles and get extra 2 % margin.

ADVANTAGE OF SALES PROMOTION

Increased buying confidence customer Increased retention. Increased repeat purchase Increased short term sales. Increased Brand switching. Good short term promotion tool. Provides quicker result.

DISADVANTAGE OF SALES PROMOTION

Dangerous in long term basis. Damage the image in consumers mind. Reduced the effect over there. Risk Factor getting high. Less Profit margin.

DESIGN & EVALUATION

SALES PROMOTION DESIGN

There are a number of internal and external factors that influence sales promotions design. These factors include

(1) place of sales promotion in marketing strategy

(2) allocation of budget (3) present and expected competitive moves and (4) significant external macro environmental factors. The starting point in developing the promotional design is to specify the sales promotion objectives. The range of sales promotion objective is fairly large because the target groups involved can be consumers, trade and sales force.

STEPS

1.

Promotion Choice
There are different types of promotions that can be used, singly, or in combination: Consumer promotion Trade promotion, and Sales force promotion.

a. b. c.

2.

Product Choice
This step focuses on choosing the products for sales promotion, their pack sizes, or models, and different variations of the product, etc. Sales promotion planners have to decide whether to run promotions on the entire product-line, or only selected items in the line? Should the promotions be run on higher priced or lowerpriced products, the products that contribute more to the sales or those that contribute less? In case of consumer non-durable products, would it be advantageous to come out with special promotion packs, or the promotion should be run on regular packs ?

3.

Choice of Market Areas

Promotion planners have the option to select national or regional markets. When promotion programmes are developed for regional markets, they provide some degree of protection from competitive moves. However, developing different regional promotional deals can complicate sales forecasting, production scheduling and physical distribution; this may also lead to cost escalation. Higher inventory risk would require that promotions be developed for separate markets. Excess product stocks from one market can be shifted to another market where the sales potential is more.

4.

Promotion Timing, Duration and Frequency

When the product or brand inventories are less than normal in trade channels, the objective of the promotion would be to build inventories, but when the inventories with the traders are high then the objective would be to clear the inventories. It is inadvisable for the producer to announce a promotion when the retailer shelves are full with the competitive brand because the promotion is quite likely to prove unprofitable. Ideally, some manufacturers plan their promotions when annual marketing plans are developed. However, sometimes marketers face compulsions like unexpected moves by competitors The duration of consumer promotion should be such that a larger percentage of customers get exposed to the promotion offer. Frequency of promotion depends on competitive situation, deal sensitivity of customers, the interest of the trade, and the complexity of the promotion offer.

Promotion Planning Process

Marketing objectives Combined promotion and advertising budget Marketing strategy Promotion objectives and performance criteria

Company policy

Review of past performance

Advertising objectives

Promotion strategy

Advertising strategy

Prepare detailed sales promotion budgets

Decision on promotion tactics, generate and screen alternatives, design the schedules Review performance criteria (pretest if needed)

Design advertising

Implement promotion
Evaluate performance (concurrent & post-promotion evaluation)

GUIDELINES TO PLANNING SALES PROMOTION

i. ii.

First step in promotion planning is situation analysis. Allocation of budget to sales promotion, out of the combined total budget for advertising and sales promotion. Considering the objectives and the budget allocation, each promotion event must be carefully created.

iii.

iv.

There is vast choice of promotion tools, and the combinations of these tools seem to be endless.
A clear understanding of various tools and techniques is essential for the planners to make the winning choice from among alternatives. Next step relate to sales promotion design issues.

v.

vi.