Sales Promotion

Whereas advertising gives a reason

to buy, SP gives an incentive to buy
It is part of the Marketing spend of all
companies and these days SP spends in
many companies exceed that of the
adspends

Why?
Internal
External

Internal reasons
Top management is more conducive to
spending on promotions
Line managers under greater pressure to
achieve targets
Justification of expenditure is easy

External reasons
Increase in number of brands
Consumer is more price savvy
Greater pressure from trade to liquidate
stocks
Add effectiveness declining owing to rising
costs, media clutter and legal constraints

SP is a push strategy
Since it is at the last point where the
consumer is often at the point of buying, the
additional incentive makes a last ditch effort
to convert the customer on to the
incentivised brand

SP is of two types
Trade
Consumer

Trade promotion
Liquidating heavy inventories
Persuade retailers to carry stock, carry more
than usual stock, promote brand franchise

Consumer promotion

Stimulate purchase
Induce trial
Create new users
Increase repurchase from occasional
customers
Reward loyal customers

Forms of trade promotion

Bulk discounts
Free materials
Display windows
Shelf hiring
Lucky draws
Mystery customer
Redistribution incentives
Shop salesmen incentives

Forms of consumer promotion

Free samples
Free gifts
Coupons
In-packs
Price packs
Price-offs
Sweepstakes
Bundling offers

SP spurs action because they are

supposed to run for a limited time
While the advertising budgets are
controlled by the brand managers, SP
budgets usually are controlled by the
sales managers

The more the products quality and

its advertising persuasiveness fail to
meet competition, the greater is the
need for promotion to improve the
price value relationship

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

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
Specialised professional skill and knowledge must
be applied to every promotion operations

Final considerations
Dont 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

Contd
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