Unit IV

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Sales Promotion

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 Sales Promotion
“Any activity or material used as a
direct inducement to purchase”

• Involves the use of media and non-

media marketing pressure applied for a
predetermined, limited period of time as
the level of consumer, retailer, or
wholesaler in order to stimulate trial,
increase consumer demand, or improve
product availability.
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 Targeted toward

Sales force
Wholesalers and retailers
Consumers

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 Objectives
Increase sales volume
Speed up the sales of slow moving
products
To check the fluctuations in sales
Attract new customers
Launch new product and increase trial
Encourage repeat purchase
Clearance of excessive inventories
Motivate dealers
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Encourage dealers to participate in display
and sales contests.
To gain advantageous shelf space
Improve relationship with dealers
To block competitors move.
Motivate sales force.
To supplement advertising and personal
selling efforts.
Deflect customers attention from price.

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How sales are affected by sales
Promotion
Brand Switching
Repeat buying
Purchasing more or accelerating timings
Increasing category expansion and
consumption.

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Sales Promotion Planning Process
Marketing Objectives

Marketing Strategy

Promotion Objectives and performance

Promotion Strategy

Decision on promotion tactics, generate and

screen alternatives, design the schedules

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Review performance criteria

Implement promotion

Evaluate performance

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 Sales Promotion, Pro and Con
Advantages:
Motivation method for special efforts
Short-term sales increase
Defined target audience
Defined role/objectives
Indirect roles (e.g., wider distribution)

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Disadvantages:
Only short-term
Hidden costs
Confusion
Price cutting -Brand image
Postponement effect
Significant government regulation
Lack of effectiveness sometimes
(learning effect)
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SAMPLES

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Gifts

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Product sampling

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Coupons, Refunds

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Rebates, Cents-off-

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Contests, Games & Sweepstakes

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Bonus Packs

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Exchange Offer

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P-O-P material

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Product placements/tie-ins

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Price Off , Pack

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Multiple purchase offers

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Frequent-user incentives

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Premiums

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Bundle offer

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ADVERTISING SPECIALIES

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Techniques for Trade Promotion
Bulk discounts

Free materials

Display windows

Shelf hiring

Lucky draws
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Shop salesmen incentives

Advertising/display allowance

Buy-back allowance

Trade coupons

Buying allowance

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What Sales Promotion Can’t Do

Change negative attitudes

Reverse a declining sales trend
Create a brand image
Make up for insufficient advertising

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 Role of The Promotion Mix
Promotion is an organization’s unique set of
communications (stimuli) designed to
influence (inform, persuade & remind)
selected target audiences into desirable
responses.
Who says what to whom, in what setting , by
which channels, with what purposes.
Promotion facilitates (efficient) exchange

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Promotion at different stages of the PLC
Introduction – wise to use heavy promotion to
induce trials and promote brand franchise
Growth – promotion should be limited ,if any
Maturity – Higher promotions required since
the brand is under attack from competitors or
product quality or advertising effectiveness is
tapering off
Decline – Heavy promotions. Used only to
retain a set of loyal customers. Prior to
withdrawal of the product, it could be used as
a one time stock clearance from the trade
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Developing the Sales Promotion
Program

Decide on the Size of the Incentive

Set Conditions for Participation
Decide How to Promote and Distribute
the Promotion Program
Decide the Length of the Program
Evaluate the Program

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Essential elements for an effective
SP programme
Significant value before promotion is effective
Promotions must be part of an overall plan
Every brand must have a promotion objective and
a strategy statement
A written tactical plan – time frame, costs,
evaluation yardsticks
Factual knowledge must be gathered to plan
Specialized professional skill and knowledge
must be applied to every promotion operations
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 Planning Promotional Campaign
Imagine that you are the product manager
responsible for launching food product in
your organisation’s in a sales territory.
It is a new, vegetable-based, high-protein
food that is being positioned as an attractive
alternative to meat.
Steps to develop an advertising campaign,
as the product moves from the development
stage to its initial launch in this market are :
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 Planning Promotional
Campaign
1. Marketing research
e.g. (1) Who buys food for the household?
(2) What are the existing alternatives to
meat, and how are they perceived by both
consumers and non-consumers?
(3) What do people already know and think
of Vegetale and the company’s other
products?

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Planning Promotional Campaign

2. Identifying target market(s)

e.g. In the Vegetale example, your research
suggests that the demographic profile is
likely to comprise females aged 20 to 35
who are professionals and skilled workers
(socio-economic groups).

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 Market Segmentation
•Region
Geographic •Density

•Age
•Gender
Demographic •Occupation
•Education

•Social class
Psychographic •Lifestyle

•Occasions
Behavioral •Loyalty status

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Mass Marketing
Versus

Target Marketing

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Planning Promotional Campaign

3. Developing campaign objectives

 25% unprompted recall of Vegetale in your target
market, by the end of a 3-month media campaign

4. Planning and budgeting

 the channels to be used (e.g. newspaper
and television adverts, in-store promotions);
 the timescale of the campaign;

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Planning Promotional Campaign

5. Drafting material – key messages

e.g. your key messages might be that Vegetale
is a new, nutritious, low-fat product, derived
entirely from natural vegetable ingredients,
which can be prepared much like meat and
which has a similar texture to veal.

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 Final considerations
Don’t promote if the product is not good
Promotions rarely stop a declining sales
curve
It is very easy to lose the promotional gains
made if your promotion has not been effective
in retaining new customers. So the product
has to speak for itself.
The objective of the promotion is to wean
away users from competition and create new
users.
Excessive promotions lead to diminishing
returns and may devalue the brand
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 Cont’d
Promotions may be used in conjunction with
advertising and other marketing communication tools
It should be novel and attractive
Ensure supply lines are good and adequate stock is
available right through the promotion
Cater for contingencies. Have escape routes built into
the plan
Trade has to be handled tactfully
Reimburse incentives/ rewards/ gifts promptly
Must be within the legal boundaries

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 Global Sales Promotion
Marketing activities that stimulate
consumer purchases and improve
retailer or middlemen effectiveness and
cooperation.
Short-term efforts directed to the
consumer or retailer to achieve specific
objectives
Product sampling
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Global Promotion Strategies
Can use a standardized theme globally,
but may have to make adjustments for
language or cultural differences.
Communication Adaptation:
 Fully adapting an advertising message for
local markets.
Changes may have to be made due to
media availability.
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 Methods
Foreign Catalogue
Company Published Magazine
Samples
Trade Fairs and Exhibitions
Coupons
Cents-off
In-Store Demonstrations
Gifts
Product Tie-Ins
Contests
Sweepstakes
Sponsorship of Special Events,
Point-Of-Purchase Displays
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 Integrated Marketing
Communication Strategy

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 Definition
Marketing Communications Mix
 The specific mix of advertising, personal
selling, sales promotion, and public
relations a company uses to pursue its
advertising and marketing objectives.

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Integrated Marketing Communications
The Marketing Communications Environment is
Changing:
 Mass markets have fragmented, causing marketers to
shift away from mass marketing
 Media fragmentation is increasing as well
 Improvements in information technology are facilitating
segmentation

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Integrated Marketing Communications
The Need for Integrated Marketing
Communications
 Conflicting messages from different sources or
promotional approaches can confuse company or brand
images
 The problem is particularly prevalent when
functional specialists handle individual forms of marketing
communications independently

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Integrated Marketing Communications
The Need for Integrated Marketing
Communications
 The Web alone cannot be used to build brands; brand
awareness potential is limited
 Best bet is to wed traditional branding efforts with the
interactivity and service capabilities of online
communications
 Web efforts can enhance relationships

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Integrated Marketing communications
Integrated Marketing Communications

 The concept under which a company carefully

integrates and coordinates its many
communications channels to deliver a clear,
consistent, and compelling message about the
organization and its products.
 IMC implementation often requires the hiring of
a manager.

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Developing Effective Communication
Step 1: Identifying the Target Audience
 Affects decisions related to what, how, when, and where
message will be said,
as well as who will say it
Step 2: Determining Communication
Objectives
 Six buyer readiness stages

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 Developing Effective
Communication

Buyer-Readiness Stages

Awareness Preference
Knowledge Conviction
Liking Purchase

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Developing Effective Communication

Step 3: Designing a Message

 AIDA framework guides message design
 Message content contains appeals or themes
designed to produce desired results
 Rational appeals
 Emotional appeals
 Love, pride, joy, humor, fear, guilt, shame
 Moral appeals

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Developing Effective Communication

Step 3: Designing a Message

 Message Structure: Key decisions are required with respect to
three message structure issues:
 Whether or not to draw a conclusion
 One-sided vs. two-sided argument
 Order of argument presentation
 Message Format: Design, layout, copy, color, shape,
movement, words, sounds, voice, body language, dress, etc.

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Developing Effective Communication
Step 4: Choosing Media
 Personal communication channels
 Includes face-to-face, phone, mail, and Internet chat
communications
 Word-of-mouth influence is often critical
 Buzz marketing cultivates opinion leaders
 Nonpersonal communication channels
 Includes media, atmosphere, and events

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Developing Effective Communication
Step 5: Selecting the Message Source
 Highly credible sources are more persuasive
 A poor spokesperson can tarnish a brand

Step 6: Collecting Feedback

 Recognition, recall, and behavioral measures
are assessed
 May suggest changes in product/promotion

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Setting the Promotional Budget and Mix
Setting the Total Promotional Budget

 Affordability Method
 Budget is set at a level that a company can afford
 Percentage-of-Sales Method
 Past or forecasted sales may be used
 Competitive-Parity Method
 Budget matches competitors’ outlays

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Setting the Promotional Budget and Mix
Objective-and-Task Method
 Specific objectives are defined

 Tasks required to achieve objectives are

determined
 Costs of performing tasks are estimated, then
summed to create the promotional budget

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Setting the Promotional Budget and Mix

Setting the Overall Promotion Mix

 Determined by the nature of each
promotion tool and the selected
promotion mix strategy

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Setting the Promotional Budget and Mix
Reaches large, geographically
dispersed audiences, often
with high frequency
Promotion Low cost per exposure,
though overall costs are high
Tools Consumers perceive
Advertising advertised goods as more
legitimate
Personal Selling Dramatizes company/brand
Sales Promotion Builds brand image; may
stimulate short-term sales
Public Relations
Impersonal; one-way
Direct Marketing communication

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Setting the Promotional Budget and Mix
Most effective tool for building
buyers’ preferences,
Promotion convictions, and actions
Personal interaction allows for
Tools feedback and adjustments
Advertising Relationship-oriented
Personal Selling Buyers are more attentive
Sales force represents a long-
Sales Promotion term commitment
Public Relations Most expensive of the
promotional tools
Direct Marketing

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Setting the Promotional Budget and Mix
May be targeted at the trade
or ultimate consumer
Makes use of a variety of
formats: premiums,
Promotion coupons, contests, etc.
Tools Attracts attention, offers
strong purchase incentives,
Advertising dramatizes offers, boosts
Personal Selling sagging sales
Stimulates quick response
Sales Promotion Short-lived
Public Relations Not effective at building
long-term brand
Direct Marketing preferences

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Setting the Promotional Budget and Mix
Highly credible
Many forms: news stories,
news features, events and
sponsorships, etc.
Promotion Reaches many prospects
Tools missed via other forms of
Advertising promotion
Dramatizes company or
Personal Selling benefits
Sales Promotion Often the most underused
Public Relations element in the promotional
mix
Direct Marketing

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Setting the Promotional Budget and Mix

Many forms: Telephone

marketing, direct mail,
Promotion online marketing, etc.
Four distinctive
Tools characteristics:
Advertising  Nonpublic

Personal Selling  Immediate

 Customized
Sales Promotion
 Interactive
Public Relations Well-suited to highly
Direct Marketing targeted marketing efforts

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Setting the Promotional Budget and Mix
Promotion Mix Strategies
 Push strategy: trade promotions and personal selling
efforts push the product through the distribution
channels.
 Pull strategy: producers use advertising and
consumer sales promotions to generate strong
consumer demand for products.

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Setting the Promotional Budget and Mix

Checklist: Integrating the Promotion Mix

 Analyze trends (internal and external)
 Audit communications spending
 Identify all points of contact
 Team up in communications planning
 Make all communication elements compatible
 Create performance measures
 Appoint an IMC manager

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Socially Responsible Communications

Advertising and Sales Promotion

 Avoid false and deceptive advertising
 Bait and switch advertising
 Trade promotions can not favor certain
customers over others
 Use advertising to promote socially responsible
programs and actions

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Socially Responsible Communications
Personal Selling
 Salespeople must follow the rules of “fair
competition”
 Three day cooling-off rule protects ultimate
consumers from high pressure tactics
 Business-to-business selling
 Bribery, industrial espionage, and making false and
disparaging statements about a competitor are forbidden

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Challenges in International Promotion
CHARACTERISTICES OF THE PRODUCT
Product Prevalence & Use
As Competitive Environment
Becomes More Complex, Advertising
Designed to Differentiate Brands will
Become More Predominant
Products Moving into Growth Stage
will Need to be Differentiated

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LEVEL OF ECONOMIC DEVELOPMENT
All Forms of Production & Direct Marketing
are Applicable in Highly Industrialized
Markets
In Less Developed Countries - Lack of
Wide Range of Consumer Goods & Low
Income Make Promotion a Non Issue
 Few Competitors Serve these Markets

 Low Literacy Make Communication Difficult w/Print

Media
 Without TV, Radio & Newspaper, Direct marketing is
Undermined
 Unsophisticated Mail Systems
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Newly Industrialized Markets – Better
Environment for Promotional Tools –
Must be Managed Carefully
 Consumer Income Rises – More
Consumer Goods are Introduced and
Succeed
 As Media Proliferate, Sales Promotions
and Direct Marketing can be Introduced
Based on Market-by-Market Assessment

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STRUCTURE OF TRADE CHANNELS
Highly Developed Distribution & Retailing Systems –
Trade Channel Members Demand Support or Carry
Marketers Brand
 Trade Allowances, Incentives, Point-of-Purchase Displays &
Sampling
 Must Have the Means to Handle Coupon Redemption or
Premium Distributions
Less Developed Trade Channels – May Not be Able
to Use Traditional Promotional Techniques
 Fragmentation of Trade Channels
 Retailers - No Way of Handling Coupons
 Some Countries So Small May Not be able to Handle Point-of-
Purchase
 Trade Show

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REGULATIONS

 Most Sales Promotion Tools are Legal

Across Europe
 Sweepstakes are Either Heavily Banned or
Regulated in All European
Global
Markets
 In Japan – Value of Premium Offered with a
Product is Limited to 10% of the Value of
the Original Price

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 Online Sales Promotion
Online sales promotions have expanded dramatically in recent
years.
Marketers are now spending billions of dollars annually on
such promotions.
Sales promotions online have proved effective and cost-efficient,
generating response rates three to five times higher than those
of their offline counterparts.
The most effective types of online sales promotions are free
merchandise, sweepstakes, free shipping with purchases, and
coupons.
Online sales promotion is quickly becoming a pervasive mode
of communication with prospective consumers.
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 Online Sales Promotion

Effective Types of Online Sales Promotion

 Free merchandise

 Sweepstakes

 Free shipping with purchases

 Coupons
LO2 79
 ONLINE SALES PROMOTION
Encourage impulse buys
Offer online-only specials
Ship larger orders for free
Be honest about pricing
Provide great customer service
Create compelling Web site copy
Have complete product information and photos
Informational pages
Create thumbnail images
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