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 product’s 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
• 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
 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