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Sales Promotion Notes

Sales promotion consists of short-term incentives to encourage purchasing or sales. It offers reasons to buy now rather than just reasons to buy. Sales promotion includes tools like sampling, premiums, and price discounts targeted at consumers, retailers, wholesalers, businesses, and salespeople. It accounts for 60% of marketing budgets on average. Sales promotion objectives vary and tools include consumer promotions like sampling, trade promotions like discounts to retailers, and business promotions like conventions. Developing an effective program requires selecting objectives, tools, incentives, promotion length, and evaluation.

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Lebbe Putha
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154 views

Sales Promotion Notes

Sales promotion consists of short-term incentives to encourage purchasing or sales. It offers reasons to buy now rather than just reasons to buy. Sales promotion includes tools like sampling, premiums, and price discounts targeted at consumers, retailers, wholesalers, businesses, and salespeople. It accounts for 60% of marketing budgets on average. Sales promotion objectives vary and tools include consumer promotions like sampling, trade promotions like discounts to retailers, and business promotions like conventions. Developing an effective program requires selecting objectives, tools, incentives, promotion length, and evaluation.

Uploaded by

Lebbe Putha
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Sales promotion

Personal selling and advertising often work closely with another promotion tool:
sales
promotion. Sales promotion consists of short-term incentives to encourage the
purchase
or sales of a product or service. Whereas advertising offers reasons to buy a product
or service,sales promotion offers reasons to buy now.

Examples>>>>Sales promotion includes a wide variety of promotion tools designed


to stimulate earlier or stronger market response.

Sales promotion tools are used by most organizations, including manufacturers,


distributors, retailers, and not-for-profit institutions. They are targeted toward final
buyers
(consumer promotions), retailers and wholesalers (trade promotions), business
customers(business promotions), and members of the sales force (sales force
promotions). Today, in the average consumer packaged-goods company, sales
promotion accounts for 60 percent of all marketing budgets. Several factors have
contributed to the rapid growth of sales promotion, particularly in consumer
markets. First, inside the company, product managers face greater pressures to
increase current sales, and they view promotion as an effective short-run sales tool.
Second, externally, the company faces more competition, and competing brands are
less differentiated. Increasingly, competitors are using sales promotion to help
differentiate their offers. Third, advertising efficiency has declined because of rising
costs, media clutter, and legal restraints. Finally, consumers have become more deal
oriented. In the current economy, consumers are demanding lower prices and better
deals. Sales promotions can help attract today’s more thrift-oriented consumers.

The growing use of sales promotion has resulted in promotion clutter, which is
similar to advertising clutter. With so many products being sold on deal these days, a
given promotion runs the risk of being lost in a sea of other promotions, weakening
its ability to trigger an immediate purchase. Manufacturers are now searching for
ways to rise above the clutter, such as offering larger coupon values, creating more
dramatic point-of-purchase displays, or delivering promotions through new digital
media—such as the internet or mobile phones. According to one study, 90 percent of
the top 100 retailers use digital promotions—such as mobile coupons. Digital
promotions can help drive both in-store and online sales.
In developing a sales promotion program, a company must first set sales promotion
objectives and then select the best tools for accomplishing these objectives.
Sales promotion objectives vary widely. Sellers may use consumer promotions to
urge short-term customer buying or boost customer−brand engagement. Objectives
for trade promotions include getting retailers to carry new items and more inventory,
buy ahead, or promote the company’s products and give them more shelf space.
Business promotions are used to generate business leads, stimulate purchases,
reward customers, and motivate salespeople. For the sales force, objectives include
getting more sales force support for current or new products and getting salespeople
to sign up new accounts. Sales promotions are usually used together with
advertising, personal selling, direct and digital marketing, or other promotion mix
tools.
Consumer promotions must usually be advertised and can add excitement and
pulling power to ads and other marketing content. Trade and business sales
promotions support the firm’s personal selling
process. When the economy tightens and sales lag, it’s tempting to offer deep
promotional discounts to spur consumer spending. In general, however, rather than
creating only short term sales or temporary brand switching, sales promotions
should help to reinforce the product’s position and build long-term customer
relationships. If properly designed, every sales promotion tool has the potential to
build both short-term excitement and long-term consumer engagement and
relationships. Marketers should avoid “quick fix,” price-only
promotions in favor of promotions that are designed to build brand equity. Examples
include the various frequency marketing programs and loyalty cards. Most hotels,
supermarkets, and airlines offer frequent-guest/buyer/flier programs that give
rewards to regular customers to keep them coming back. Such promotional
programs can build loyalty through added value rather than discounted prices.

Many tools can be used to accomplish sales promotion objectives, we are gonna see
3 main tools….No1 consumer promotion…..it consists of sampling…. …..
 Sampling is the most effective—but most expensive—way to introduce a new
product or to create new excitement for an existing one.
• Advertising specialties, also called promotional products, are useful articles
imprinted with an advertiser’s name, logo, or message that are given as gifts
to consumers.
• Premiums are goods offered either free or at low cost as an incentive to buy a
product.
• Price packs (also called cents-off deals) offer consumers savings off the
regular price of a product.

Trade Promotions
Manufacturers direct more sales promotion toward retailers and wholesalers
than to final consumers .Trade
promotions can persuade resellers to carry a brand, give it shelf space, promote it in
advertising, and push it to consumers. Shelf space is so scarce these days that manufacturers
often have to offer price-offs, allowances, buy-back guarantees, or free goods to
retailers and wholesalers to get products on the shelf and, once there, to keep them on it.

Manufacturers use several trade promotion tools. Many of the tools used for consumer
promotions—contests, premiums, displays—can also be used as trade promotions. Or the
manufacturer may offer a straight discount off the list price on each case purchased during
a stated period of time .Manufacturers also use an allowance in return for the retailer’s
agreement to feature the manufacturer’s products in some way. For example, an advertising
allowance compensates retailers for advertising the product, whereas a display allowance
compensates them for using special displays.
Manufacturers may offer free goods, which are extra cases of merchandise, to resellers
who buy a certain quantity or who feature a certain flavor or size. They may also offer push
money—cash or gifts to dealers or their sales forces to “push” the manufacturer’s goods.
Manufacturers may give retailers free specialty advertising items that carry the company’s
name, such as pens, calendars, memo pads, flashlights, and tote bags.

Companies spend billions of dollars each year on promotion geared toward industrial
customers. Business promotions are used to generate business leads, stimulate
purchases, reward customers, and motivate salespeople. Business promotions
include many of the same tools used for consumer or trade promotions. Here, we
focus on a major business promotion tools: which is coventions and trade shows

Many companies and trade associations organize conventions and trade


shows to promote their products. Firms selling to the industry show their products
at the trade show. Vendors at these shows receive many benefits, such
as opportunities to find new sales leads, contact customers, introduce new
products, meet new customers, sell more to present customers, and educate
customers with publications and audiovisual materials. Trade shows also help
companies reach many prospects that are not reached through their sales forces.

Finally lets see how to develop a sales promotion program

Beyond selecting the types of promotions to use, marketers must make


several other decisions in designing the full sales promotion program. First,
they must determine the size of the incentive. A certain minimum incentive
is necessary if the promotion is to succeed; a larger incentive will produce more
sales response.
 The marketer also must set conditions for participation. Incentives might be
offered
to everyone or only to select groups.
 Marketers must determine how to promote and distribute the promotion
program itself.
For example, a $2-off coupon could be given out in a package, in an advertisement,
at the
store, via the internet, or in a mobile download. Each distribution method involves a
different
level of reach and cost. Increasingly, marketers are blending several media into a
total campaign concept.
 The length of the promotion is also important. If the sales promotion
period is too short, many prospects (who may not be buying during that time) will
miss it.
If the promotion runs too long,.
 Evaluation is also very important. Marketers should work to measure the
returns on
their sales promotion investments, just as they should seek to assess the returns on
other
marketing activities. The most common evaluation method is to compare sales
before, during,
and after a promotion. Marketers should ask: Did the promotion attract new
customers or more purchasing from current customers? Can we hold onto these new
customers and purchases? Will the long-run customer relationship and sales gains
from the promotion justify its costs?
Clearly, sales promotion plays an important role in the total promotion mix. To use it
well, the marketer must define the sales promotion objectives, select the best tools,
design the sales promotion program, implement the program, and evaluate the
results. Moreover, sales promotion must be coordinated carefully with other
promotion mix elements within the overall company

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