Sales promotion and on line communications


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Sales promotion and on line communications

  1. 1. Sales promotion and on-line communications Presentation By Ben Mugerwa
  2. 2. introduction• Sales promotion seeks to offer buyers additional value as an inducement to generate an immediate sale• These inducements can be targeted at consumers, distributors,agents and members of the sales force• Sales promotions can form an important part of communication mix
  3. 3. • Sales promotion is big business, in some countries it is bigger than advertising• Its growth has been fuelled by several factors including the movement towards relationship marketing[and rewarding loyal customers• The growth of direct mail [and incentives]• The emergence of promotion-literate customers who expect promotions with certain product types
  4. 4. • During recession,price conscious customers search for value for money promotions• Powerful retailers favour suppliers whose products sell quickly[either because of heavy advertising or exciting promotions or both]• High television advertising costs force marketing managers to look for more cost-effective, below the line tools such as sales promotions• Isolating and calculating the exact industry figures is difficult as some companies categorise some promotions as part of PR and figures on price promotions[discounts] are not normally included.
  5. 5. • The main task of sales promotion is to encourage the target audience to behave in a particular way, usually to buy a product• Advertising and sales promotion tools both accomplish tasks at each end of the attitudinal spectrum: the cognitive and conative elements• Advertising seeks to work over the long term and sales promotion can achieve short term upward shifts in sales• Sales promotion seeks to offer buyers additional value, as inducement to generate an immediate sale
  6. 6. • These inducement can be targeted at consumers, distributors, agents and members of the sales force• A whole range of network members can benefit from the use of sales promotion• This promotional tool is traditionally referred to as below- the line expenditure• Unlike advertising there are no commission payments from media owners with this form of communication
  7. 7. • The promotional costs are borne directly by the organisation initiating the activity, which in most cases is a manufacturer or producer• There are many sales promotion techniques,they all offer direct inducement or incentive to encourage receivers of the promotional messages to buy a product sooner rather than later
  8. 8. • These inducement can be in three categories:• Customer promotions[price offs, coupons, gifts, prizes and competitions eg on back of breakfast cereals and are intended to encourage buyers to act now rather than later• Trade promotions[special terms, point of sale materials and free pens, diaries, competition prizes, etc]• Salesforce promotion [incentive and motivation schemes – Sales promotion is used principally as a means to accelerate sales
  9. 9. • The accelaration represents the shortened period of time in which the transaction is completed relative to the time that would have elapsed had there not been a promotion• This action does not mean that an extra sale has been achieved• Sales promotion can be targeted with considerable precision, at particular audiences ie consumers, members of the distribution or channel network and the salesforces of both manufacturers and resellers
  10. 10. Reasons for the use of sales promotion• Reach new customers:useful in securing trials for new products and in defending shelf space against anticipated and existing competition• Reduced distribution risk: the funds that manufacturers dedicate to lower the distributor`s risk in stocking new brands• Reward behavior: reward for previous purchase behavior
  11. 11. • Retention: provide interest and attract potential customers in• Add value:can encourage sampling and repeat purchase behavior by providing extra value and a reason to purchase• Induce action: instill a sense of urgency among consumers to buy while a deal is available
  12. 12. • Preserve cash flow:since sales promotion costs are incurred on a pay as you go basis, they can spell survival for smaller, regional brands that cannot afford big advertising programmes• Improve efficiency: sales promotion allow manufacturers to use idle capacity and to adjust to demand and supply imbalances• Integration: provide a means of linking together other tools of the promotional mix• Assist segmentation: allow manufacturers to price discriminate among consumer segments that vary in price sensitivity
  13. 13. • Many companies these days have allowed sales promotion to dominate marketing communication budget• This is partly due to the fact that many consumer markets are mature. Have reached a level of stagnation and where price and promotion work are the few ways of inducing brand switching behavior
  14. 14. Short termism• Many companies focus on short term performance and evaluation, over periods as short as 12 weeks• To accomplish that, communication tools are required that work quickly and directly impact upon sales
  15. 15. Managerial accountability• The results of sales promotion activities are more easily justified and understood than those associated with advertising• The number of coupons returned for redemption• The number of bonus packs purchased can be calculated quickly and easily• Advertising cannot easily be measured in either the short or the long term
  16. 16. • The impact of this is that managers can relate the promotional expenditure to the bottom line much more comfortably with sales promotion than with advertising• Brand performance:technological advances enabled retailers to track brand performance more effectively• In store promotional activity are now common instead of traditional forms of mass media promotion• Brand expansion: as brand quality continues to improve and as brand proliferate on the shelves of supermarkets, consumer has to make a number of decisions
  17. 17. Ineffective sales promotion• Despite the phenomenal size of the sales promotions industry and the data available for analysis in some countries, there are a frightening number of sales promotions that are relatively ineffective• Some are actually damaging in terms of branding, sales and cashflow• Take price discount to boost sales, one may discount the brand down to a point where it loses its brand values and competes solely on price
  18. 18. • Many sales promotions damage the core values,the image and the positioning of the brand• Other promotions only attract promiscuous consumers who switch back to another brand as soon as the promotion is over• Other promotions create temporary “ boost in sales followed by an immediate drop in sales
  19. 19. Sales promotion plan: the objectives• The objectives of using this tool are sales oriented and are geared to stimulating buyers either to use a product for the first time or to encourage use on a routine basis• a promotion is a limited period offer• Sales promotions tend to have short term tactical objectives
  20. 20. Some typical sales promotion objectives or goals• Increase sales[although it may be only a temporary increase] – Rewarding loyal customers – Locking customers into loyalty programmes – Increasing repurchase rates of occasional users – Generating trial among new customers[by triggering an impulse purchase] – Demonstrating new features/modifications or introducing a new product/service
  21. 21. – Developing new uses– Image development [awareness or repositioning]– Deseasonizing seasonal sales
  22. 22. • Develop new sales leads• Satisfy retailers with a complete package-gain trade acceptance• Move excess stock• Block a competitor [by offering incentives to customers to stock up]• Match competitor• Build database• Generate publicity
  23. 23. a sales promotion objectives grid low high Use sales promotionNew product Withhold To stimulate trialOr market Sales promotion Non-loyal-use for switching Non-loyals-use sales Promotion to attract for trial Loyals-use carefully Loyals-use sales promotion To reward for increased usage
  24. 24. Loyalty and retention programme• Using an example you are similar with illustrate how an organisation can develop loyalty and retention programme.• To be submitted as individual course work• Read on promotion wars• Sales promotion strategy and or tactics• Creative promotions• Problem promotions• Managing a sales promotion• Sales promotion techniques