Sales Promotions

Sales promotion spurs action and

complements advertising
Purpose of Sales Promotions
Sales promotions can be sponsored by -
1. Manufacturer’s promotions
 Consumer promotion – moves consumer to take action
 To try a new brand
 Repurchase brands
 Build brand loyalty
Brand can cheapen if SP does not reinforce the positioning

 Trade promotions – financial incentive for traders to -

 Stock and buy more stocks
 Move goods from warehouse to shelf
 ‘Push’ the brand
 Display the brand - prominently in the shop, and advertising
Can erode brand franchise and image if ad spends are reduced
Purpose of Sales Promotions
Sales promotions can be sponsored by -
2. Retailer’s promotion’s to clear
• out-of-style inventory
• slow moving goods
• shelf-unstable inventory
Tools and Techniques
Consumer Promotions
 Coupons
 Sampling
 Price packs
 Premiums and gifts
 Sweepstakes
 Subsidised financing
Tools and Techniques
Consumer Promotions
Coupons –
 For repeat purchase and loyalty – placed in /on pack
 To attract new customers - on other products Cross-ruff
 DM coupons are more targeted, have higher redemption
 Scanner dispensed coupons attract other brand users
 Cash rebates on durables (on proof of purchase)
Coupon ads should
 Reinforce the positioning - highlight brand strength and key
benefits emphasized in the ad
 Be convenient to clip, show package prominently and have
the mandatory legal copy
Tools and Techniques
Consumer Promotions
Sampling – free samples / trial packs
 Excellent way to induce product trial
 Distributed door-to-door, by mail, in magazines, at

retail point
 There must be enough quantity for the consumer to try

the product, but keep packaging and mailing expenses

down
Sampling is more effective after an introductory set of ads
giving a toll free number to call for samples
Tools and Techniques
Consumer Promotions
 Price packs – offer lower price than usual or
greater quantity than usual
 Induces switching and reinforces loyalty
 For value enhancing items – ‘more quantity’ packs are
better than price-offs promotions
 Premiums and gifts – free product in pack /
mailed on proof of purchase at no cost. Or…
Self liquidating premiums sold below retail price
 Reinforces brand image
 Builds repeat purchase / brand loyalty
Tools and Techniques
Consumer Promotions
 Sweepstakes – contests
 Can reinforce brand’s advertising platform if
designed properly
 Subsidised financing / Reduced EMI
 incentive for durables
Tools and Techniques
Trade Promotions
 Off-invoice / buying allowance
 Count-recount allowances
 Billback allowances
 Display allowances in-ad grocer coupon
 Slotting and facing allowances
 Trade inventory financing and delayed billing
 Sweepstakes, contests, etc for retail sales people
Tools and Techniques
Trade Promotions
 Off-invoice or buying allowance - % price-cut for
volume purchased (free goods may be offered instead)
 Applies ‘Push’ pressure to sell stocks picked-up
 Count-recount allowances – for shifting the stocks
from the warehouse to the shelf
 Pressure to pass the price cut to the consumer
 Billback allowances – allowance paid if certain
performance criteria is met
 For Displays Ads in retailer publications etc
 Display allowances - to display products prominently
 Time pressed customers pick up brands made salient this way
Tools and Techniques
Trade Promotions
 In-ad grocer coupon in the retailer’s circular.
Payment for coupon face-value and handling costs
 Slotting and facing allowances – one time fee paid
to place new brands on the shelf – to cover risk, and
the cost of space and administration
 Trade inventory financing and delayed billing - for
durables – reduced rate financing / delayed billing
 Sweepstakes, contests – for retail sales people.
Timed to run along with sales promos
Evaluation and Risks
Consumer Promotions
 Advtg. and SP play a complementary role and

when run in tandem they yield powerful

synergies
 Delivers additional brand value
 Induces trial and repeat purchase
 Breaks through clutter
 SP can hurt the image of the brand equity
 if run in isolation of advertising
 if poorly designed
 if protracted - particularly true for high involvement,
image and feeling products
Evaluation-Risks

Trade Promotions
 Advtg. Campaign, Consumer SP and TP if
run in tandem yield powerful synergies

 TP erode brand franchise and image leading

to less leverage with the trade
 Because of less ad spends
 If promos are not brand enhancing