Provides insight on how 2 develop a sales promotion plan

1. Developing the sales
promotion plan
Presentation
By
Ben Mugerwa

2. introduction
• An important aspect of developing sales
promotion activities is the plan itself
• There are several important factors to be
considered and no plan can work
effectively unless it results from
comprehensive analysis of the situation in
which the brand finds itself

3. Session objectives
• To consider the dimensions of the sales
promotion plan process
• To examine methods of determining the
sales promotion budget
• To consider the use of sales promotion
agencies
• To identify the methods used for selecting
a promotional agency

4. Developing the plan
• Since the sales promotion plan is an integral part
of the overall marketing plan, it is important that
the marketing plan forms the basis of all sales
promotion planning
• In most instances the marketing plan will be
developed independently of the sales promotion
plan but the imperative is that all sales
promotion activity seeks to fulfill the overall
objectives contained in the marketing plan

5. • as with all forms of marketing
communication, the development of a
sales promotion plan is a sequential
process and all aspects must be
considered before it becomes possible to
identify an appropriate promotion solution
• There are several stages to the overall
planning process:

6. Stages in planning process
• Environmental analysis
• Internal analysis
• Consideration of the marketing strategy
• Identification of the target audience[s]
• Determination of promotional objectives
• Budget determination
• Identifying the promotional objective
• Developing the programme
• Implementing the programme
• Contigency plan
• Evaluation and feedback

7. Environmental analysis
• It is important to understand the broad context in which
promotional planning is to take place
• It must be recognized that the market itself is somewhat
fluid
• Changes in factors such as consumer attitudes,
competitive activity, retail changes etc may all impact on
the brand position
• We need to understand the position we occupy in the
market, we also need to consider how we wish to be
perceived by consumers
• Sales promotion can contribute to strengthening or
changing that position and can also be used to modify
consumer perceptions

8. • There is a need to develop our understanding of
the consumer dynamics: who are our customers,
what characteristics do they possess and what
are their specific needs from our product
category?
• How can sales promotions contribute to an
improvement in our position?
• A significant factor will be the nature of the
purchasing profile: why do consumers buy the
products they do, why do they purchase our
products or those of our competitors?

9. • Understanding considerations such as the frequency of
purchase will impact on our ability to run particular forms
of promotional activity
• a product that is purchased on regular basis is best
suited to promotions that reward high frequency
• Setting redemption requirements for a free mail in, for
example will be affected by the regularity of purchase
• If the product is purchased only infrequently, the amount
of time taken to collect proofs of purchase may be so
long as to be impractical from the consumer`s
perspective

10. • Equally, given the ability of promotions to target
marginal consumers[those who are less likely to
be exposed, for example,to media advertising] it
is important to recognise that sales promotion
may be the perfect vehicle for attracting such
consumers to the brand
• These consumers are potentially very profitable
to the brand
• There is need to consider competitor dynamics.
Not only do we need to understand who are the
competitors, but also their promotional policies

11. • What sort of promotions do they offer to consumers?
• How effective are they and how can we utilize sales
promotion to achieve a greater level of impact on the
target market?
• What we don`t want to do ,in an ideal is to run a
promotion that is very similar to those run by
competitors
• This will only serve to blur the differences between our
product and theirs
• We can identify a promotion that is different and this will
help us to establish a distinctive edge in the market
place

12. • We need to look at the distribution channels.
• What channels do we need to consider and within those
channels, who do we need to motivate?
• Markets differ significantly between particular product
categories
• Understanding the nature of the channels of distribution
and our relationships with them will be an important
guiding factor in promotional development
• Eg do we need or have to establish better relationships
with the major chains?
• What is the role of wholesalers and do we need to
motivate their staff to give greater support to our brands?

13. Internal analysis
• According to Ailawadi et al[2001] a
company`s promotional policy influences
its ability to attract and retain customers
by inducing more of them to:
• Switch to the firm`s brand
• Repeat purchase it more often or
• Consume larger quantities

14. • There will be a number of internal factors that
affect our ability to implement promotional
activity effectively
• There is need to consider for example, where
our product is in the product life cycle
• Products at different stages of the product life
cycle react differently to the various promotional
executions
• This will affect the objectives that we establish
for promotional activity

15. • The stage of the product life cycle for brand captures
consumer demand and competitive intensity in the
market place
• In the two early stages of a product`s life cycle
[introduction and growth], advertising is used to inform
consumers about features and benefits, to strategically
position a brand and to build awareness
• During mature phase of the product life cycle, intense
competition can also lead managers to shift funds away
from advertising and into promotions as they attempt to
take market share from competition
• As brands progress through the product life cycle,
managers plan to allocate proportionately less of their
marketing communication budget to advertising

16. • and more to consumer and trade
promotions
• In addition, lower relative price brands
and family brands typically receive an
allocation that emphasizes sales
promotion relative to advertising
• These product/market factors appear to be
commonly used guidelines that managers
rely on in making their allocation decisions

17. • There is a need to consider the various
production issues involved in the implementation
of a sales promotion eg are there specific
production factors that need to be taken into
account?
• In many instances, the primary vehicle used to
communicate promotional offers will be
packaging
• Does this impose limitation on what we can do?
• Is the surface area of the product label capable
of carrying sufficient detail to communicate
effectively to the target audience?

18. • Can we for instance,brand several products
together or do we require to order in special
packaging in order to offer the consumer an
increased volume of product for the same price?
• What impact will this have on the ability to
maintain current production levels?
• Such promotions can only be mounted at
significant cost to output
• What time factors involved in designing new
labelling or obtaining alternative packaging?

19. • Can we insert a free gift item inside the
packaging?
• Do we have machinery that can cope or will we
need to make special arrangement?
• Are there restrictions on what we can
do,imposed by the regulatory bodies for our
specific sector?
• Some professional bodies preclude specific
forms of promotional offer.

20. • According to Davidson and Connolly[1996]
packing design is important in consumer
motivation
• Pack design offers the opportunity to set the
brand apart from the normal design codes that
have been adopted for the category
• There is a need to consider the way in which the
promotion will be sold in to the trade
• What is the nature of our salesforce and what is
their role?

21. • Consideration of marketing strategy:
• Sales promotion activities must be consistent with overall
marketing strategy
• Not only do we need to understand what the marketing
strategy is designed to achieve, we must consider the
roles of sales promotion within the overall strategy
• It is likely that there will advertising support running
behind the brand
• Can we develop promotions that reinforce the advertising
message and that are consistent with over all brand
platform?

22. • The target audience: turning to the target audience, there is a need
to identify clearly which customers we intend to motivate
• We may choose to target all consumers for the brand or
alternatively, we can select a smaller segment of those consumers
• These alternative targets will require different promotional
executions and different methods of distributing the promotion to
ensure that it reaches the right people
• We need to identify the underlying reasons for the behavior of the
chosen target audience in order to ensure that the promotional
execution is appropriate
• We need to define what we intend to achieve with the promotion
• What is the desired outcome and how will the chosen execution
deliver it?

23. • Objectives: as with other forms of marketing
communications, it is important to set precise
objectives for the activity
• Is the promotion expected to increase trial and
sampling or reward loyal users? Objectives
should be specific and measurable
• What level of trail is to be generated: 10,20 or
30% or higher?
• If no value is given to the objective,it will be
extremely difficult to determine whether the goal
has been achieved on its completion

24. • Walters[1989] suggests that priority should
be given to promoting products that have
received little promotion for some time, as
this increases the likelihood of both retailer
support and consumer participation
• Krishna[1991]argues that the consumer`s
perception of the frequency of deals is an
important factor in determining the impact
of those deals

25. Budget determination
• It is important to identify the scale of the budget
[appropriation] that will be allocated to the activity
• Promotions broadly fall into three distinct categories:
• Fixed budget promotions: where the total cost of the
promotional activity is known in advance
• Partially fixed cost promotions
• Promotions with totally variable costs:some promotions
such as those involving coupon distribution will be totally
dependent upon the number of consumers redeeming
the coupons. Estimates may be made.

26. Identifying the promotional strategy
• The detailed planning should be developed with the aid
of a database of past results for the brand and the
company
• Manufacturers use many different kinds of consumer
promotions[coupons, direct mail, free-standing
inserts,peel-off,in-pack premiums, rebates, contests and
price packs] to attract customers to the brand
• In planning promotion campaigns, brand managers in
major consumer packaged goods firms face decisions
about which promotional vehicle to use in a particular
product category
• There is a need to design the campaign
elements,creativity and timing are important dimensions
of the plan

27. • Research and pre-testing: to determine the likely take-up
of the promotional offer
• Control mechanism must be established at the outset to
ensure the smooth implementation of the promotion
• Briefing sales force and trade is important for the smooth
implementation
• Delivery of items to ensure adequate stock are available
• Contigency plan:it is rare that a plan will be implemented
without changes. Bear in mind that the plan itself is
determined in isolation of the market conditions that
obtain at the time of implementation

28. • Evaluation and feedback is necessary for
the plan

29. Budgeting for sales promotion
• Marginal analysis
• Percentage of sales
• Percentage of product gross margin
• Residue of previous year`s surplus
• Percentage of anticipated turn over
• Competitive expenditure
• Objective and task method
• Experimentation
• What we can afford

30. exercise
• Outline the steps you should follow when
selecting a sales promotion agencies