Sales Promotion

Sales promotion
• By definition, sales promotion (or simply promotion) refers to any
incentive manufacturers, retailers, and even not-for-profit
organizations use that serve to change a brand’s perceived price or
value temporarily.
• Manufacturers use promotions to induce the trade (wholesalers and
retailers) or consumers to buy a brand and to encourage the
manufacturer’s sales force to sell it aggressively
Advertising
Franchise Building
Brand Benefit Emphasis
High Marketer Control
End Consumer is primary target
Pull Strategy
Long Term Impact
Investment Financing
Long Planning Lead Time
Consumer Promotion Trade Promotion
Nonfranchise Building
Price Emphasis
Lower Control
Trade is primary target
Push Strategy
Short Term Impact
Pay as you go Financing
Short Planning Lead Time
Customer Oriented Sales Promotion
Pros Cons
Contest/Sweepstakes Builds excitement and interest, stimulate Can lead to sales drop following event and
short-term sales legal/regulatory issues
Coupons Provides incentive to price sensitive Can lead to price sensitivity, potential fraud
customers, encourages brand switching, issue
redemption can be easily measured
Loyalty Programs Encourage repeat purchase Costs of administration and redemption
may be high
Trail/Sampling Offers Reduces risk Program may be costly
Premiums Builds goodwill, consumers like getting Consumers may be more interested in
bonus premium
Rebates Stimulates short term sales Can lead to price sensitivity
Discount/Price Encourages brand switching, incentive Can lead to price sensitivity, may create
Promotion to price sensitive customer inventory problem
 Pros
Sales Contest/Incentives Builds retailer excitement and interest
Promotion Stimulates short term sales
Allowances/volume rebates
Cooperative Advertising Builds brand awareness
Slotting Allowances Increase shelf space and new product
acceptance
Trade Shows Fosters trade relationships and builds
brand image
Point-of-Purchase Displays Highlights brand/product, conveys
information
Cons
Costs/time for program
administration
No guarantee that promotion is
passed on to consumer
Full control is not there
Program can be costly
Difficult to negotiate favourable
placing
Why increased emphasis on trade promotions
• Shift in manufacturer versus retailer balance of power
• Increased brand parity and price sensitivity
• Reduced brand loyalty
• Mass market and reduced media effectiveness
• Emphasis on short-term results in corporate reward structures
• Responsive consumers
Sales Promotions Can
• Stimulate sales force enthusiasm
• Renew sales of a mature brand
• Facilitate the introduction of new products to the trade
• Increase on- and off-shelf merchandising space
• Neutralize competitive advertising and sales promotion
• Obtain trial purchases from consumers
• Hold current users by encouraging repeat purchases
• Increase product usage by loading consumers
• Preempt competition by loading consumers
• Reinforce advertising
Sales Promotions Cannot
• Compensate for a poorly trained sales force or for a lack of
advertising
• Give the trade or consumers any compelling long-term reason to
continue purchasing a brand
• Permanently stop an established brand’ s declining sales trend or
change the basic non acceptance of an undesired product
Major form of trade allowance

• Off-invoice allowances,
• Bill-back allowances, and
• Slotting allowances
Problem :

• Forward Buying/bridge buying

• Diverting
• Undercutting
Trade versus consumer promotion
 Sales Promotion
Key Decision Areas:
• Type
Product Scope
• Scope
Market Scope
• Tactics Timing When to promote
When to announce
Durations
Frequency
• Discount Rate
• Terms & Conditions