SALES PROMOTION BUDGET AND SALES PROMOTION EVALATION

SALES BUBGET PROMOTION
• The allocation of monetary resources to sale promotion is determined by the promotion strategy of the firm most major firm keep a contingency reserve. • Before deciding the budget for sale promotion the management should evaluate relevant factor such as

.• Type of product its stage in PLC • Market situation • Level of competitive activities All these factor along or in combination can significantly affect the promotion budget .

1. the budget is determined by taking a fixed percentage of sales .In this approch. Percentage of sales method The percentage of sales method to allocate the fund is probably most popular among companies .• There are five important techniques which are commonly used to allocate funds to sales promotion.

entertainment electronics and many other items.wheeler .auto. .2. washing machines. generally consumer durable goods such as four and two. Unit of sales method this method is commonly used by companies dealing in high priced products. refrigerators. microwave ovens.

The logic attributed to this method is that the collective minds of the companies in the industry probably generate promotion budgets that are close to optimal and any departure from the industry norms may lead to promotion war.3. . Competitive parity method Many marketers feel comfortable in matching or basing their sales promotion budget to that of the major competitors .

s . is earmarked for sales promotion. the amount that is left over after all relevant allocations have been made. large as well as small. generally by companies. This approach is . when they are introducing a new product .used.4. All –you-can-afford method In using this approach to budget allocation.

stimulate trial. Objective –end-task method Objective-end-task approach is one which is driven by strategy. competition and consumer behaviour in order to set appropriate promotion objectives.. increasing distribution. This is also the most popular technique to decide the sales promotion budget. . The promotion manager starts by making a thorough study of the market. These objectives may relate to increasing short-term sales introducing a new product. the product.5. with in a specified period of time. etc.

Sales promotion evaluation • Sales promotion are undertaken to achieve specific business objectives. To be effective. they must offer real extra benefit and that normally costs money. So it is absolutely critical to ensure the promotions are thoroughly research and evaluate to ensure that they are effective . They are undertaken in preference to other forms of marketing expenditure because they are thought to be the most effective way to achieve the task in hand.

There are three main area of promotional research: . -Pre-testing research to identify the particular promotional concepts that will meet the objectives .Planning research to segment the market into particular groups that will be suspectible to particular types of promotional activity.Research objectives • sales promotions research is subject to the same rules as any other marketing research research.

direct marketing and publicity. and the formation of strategic plan for sales promotional activity over a number of years. field research and market testing. sales promotion. Each of these areas can be addressed by the three methods of desk research. .  Planning research Planning research is an input into strategic questions such as the split of marketing budget between advertising.-Evaluative research to measure the effect and impact of promotions and to feed into the planning of future promotions.

there are a number of questions which research can be used to answer. .Pre-testing research this research comes in when you have clearly established objectives for a particular promotion.and a series of alternative promotional concepts that meet those objectives.and which can have a vital bearing on the selection of the promotional concept: -The level of respose you can expect from a particular element in the promotion.

-The level of spontaneous interest in. and therefore the attractive of. -The effect on the image and value of product or services made by a particular promotional offer. . different promotional concepts.-The clarity of communication in the particular way the offer is themed and expressed.

Field research Field research involves collecting information directly from the market by way of a sample designed to be representative of your target market. sales patterns.• Evaluative research involves collecting together all the factual data on response rates. at your desk and at nil or low cost. consumer complaints and other readily measurable variables • Desk research it has the advantage that it can be done by yourself. .

• Market testing overcome the gap between what people say they do and what they actually do:itr measures actual behavior in the market place Market testing .

Sales Promotion Design Issues • There are a number of internal and external factors that influence sales promotions design. .  The starting point in developing the promotional design is to specify the sales promotion objectives. trade and sales force. These factors include (1) place of sales promotion in marketing strategy (2) allocation of budget (3) present and expected competitive moves and (4) significant external macro environmental factors. The range of sales promotion objective is fairly large because the target groups involved can be consumers.

and c. in a sequential manner. 1. and b. More for the same c. Sales force promotion.• Confusion often may arise in determining what type of promotion will best produce the desired result. . • There are two major approaches for consumer and trade promotions: a. Consumer promotion b. Trade promotion. The type of promotions for consumers and the trade can be usefully put under two headings— immediate value offer vs delayed value offer. or in combination: a. and this is a key decision area concerning the promotion design that must be taken up one after the other. and price-cut vs extra value offer. Same for less. Promotion Choice • There are different types of promotions that can be used. singly.

2. Product Choice  This step focuses on choosing the products for sales promotion. the products that contribute more to the sales or those that contribute less?  In case of consumer non-durable products. their pack sizes. would it be advantageous to come out with special promotion packs. competitive situation and coordination with advertising and personal selling. or the promotion should be run on regular packs ?  Answers to these questions are likely to be significantly influenced by taking into account consumer and trade behaviour. or models. etc. .  Sales promotion planners have to decide whether to run promotions on the entire product-line. and different variations of the product. or only selected items in the line?  Should the promotions be run on higher priced or lowerpriced products.

developing different regional promotional deals can complicate sales forecasting. . production scheduling and physical distribution. When promotion programmes are developed for regional markets. this may also lead to cost escalation. Choice of Market Areas  Promotion planners have the option to select national or regional markets. Excess product stocks from one market can be shifted to another market where the sales potential is more. However.3.  Higher inventory risk would require that promotions be developed for separate markets. they provide some degree of protection from competitive moves.

and the complexity of the promotion offer. the interest of the trade. but when the inventories with the traders are high then the objective would be to clear the inventories.  Ideally. Duration and Frequency • When the product or brand inventories are less than normal in trade channels. the objective of the promotion would be to build inventories. deal sensitivity of customers. Promotion Timing.4. sometimes marketers face compulsions like unexpected moves by competitors  The duration of consumer promotion should be such that a larger percentage of customers get exposed to the promotion offer. . some manufacturers plan their promotions when annual marketing plans are developed.  Frequency of promotion depends on competitive situation. However. It is inadvisable for the producer to announce a promotion when the retailer shelves are full with the competitive brand because the promotion is quite likely to prove unprofitable.

This may prove to be quite favourable in case the support of re-sellers is considered to be of paramount importance for promotion results. etc. such as trial purchase.  It is often quite helpful to evaluate the response of re-sellers before implementing the promotions programme. All other factors remain the same. or repeat purchase. The simplest way is to visit several important retailers and wholesalers and discuss the programme and seek their opinion and suggestions. . only the sales promotion device being tested in the variable is manipulated..• Testing the Sales Promotion • Pre-testing  How sales promotion is to be communicated and what would be communicated to the target groups is important and can be pretested. pre-testing consists of experimenting in certain markets or individual stores in a market.  To test consumers behavioural response.

questionnaires mailed to consumers and personal interviews can be used. and one month after the promotion ends. Concurrent testing may permit the promotion manager to modify the sales promotion. sales figures before the promotion period can be compared with figures at the end of the promotion.• Concurrent Testing • This testing is done when the sales promotion is in progress. • Post-testing  Post-testing is done after the promotion period is over. if needed.  To measure the sales effect. This type of testing is conducted in terms of sales data. To assess the change in consumer awareness and attitude. which can be obtained on a weekly or monthly basis. telephone calls. .

They are complementary to each other and should be integrated with your profit. . promotion mix. printing.. costs and paybacks. and customers relations. direct mail and electronic devices advertising that offer many advantages. of audience about your product or service. persuade and remind the target large no. The similar message may be evaluated based on the source of the message in terms of reliability.• Types of Promotion • Promotion stands for personal selling. All of these methods try to inform. advertising. disadvantages. There are some other different forms of these types of promotion such as broadcasting.

pull or push-pull . and Public Relations) for all situations.  Push. Sales Promotion. Pull or Push-Pull Strategy? There are three basic promotional strategies or philosophies push. Advertising.Promotion Mix Decision: There is no any unique promotion mix (between Personal Selling. The promotion mix for your company should be designed to fulfil your overall objectives.

Next step relate to sales promotion design issues. vi. A clear understanding of various tools and techniques is essential for the planners to make the winning choice from among alternatives. each promotion event must be carefully created. First step in promotion planning is situation analysis. ii. Allocation of budget to sales promotion. Considering the objectives and the budget allocation. out of the combined total budget for advertising and sales promotion. and the combinations of these tools seem to be endless. . There is vast choice of promotion tools. iv. iii. v.Guidelines to Planning Sales Promotion i.

Choice of Market Areas D. Promotion timing. Rate of discount. terms and conditions F.• Pertinent Points to Considered for Effective Promotion A. Promotion Choice B. Product Choice C. Protection from Competition . duration and frequency E.

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