This document discusses sales promotion strategies. It defines sales promotion as providing incentives to buy, as opposed to advertising which gives reasons to buy. Sales promotion budgets often exceed advertising budgets. Reasons for this include management being more open to promotional spending and pressure on managers to achieve targets. Promotions are used to spur short-term buying by offering incentives for a limited time. Promotions come in two forms: trade promotions that incentivize retailers and consumer promotions that directly incentivize customers. Effective promotions provide significant customer value and are part of an overall marketing plan with clear objectives and strategies.

1. Sales Promotion
Vinod Kaul
01 April 2014

2. 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

3. Why?
• Internal
• External

4. Internal reasons
• Top management is more conducive to
spending on promotions
• Line managers under greater pressure to
achieve targets
• Justification of expenditure is easy

5. 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

6. 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

7. SP is of two types
• Trade
• Consumer

8. Trade promotion
• Liquidating heavy
inventories
• Persuade retailers to carry
stock, carry more than
usual stock, promote brand
franchise

9. Consumer promotion
• Stimulate purchase
• Induce trial
• Create new users
• Increase repurchase from
occasional customers
• Reward loyal customers

10. Forms of trade promotion
• Bulk discounts
• Free materials
• Display windows
– Live windows
• Shelf hiring
• Lucky draws
• ‘Mystery’ customer
• Redistribution incentives
• Shop salesmen incentives

11. Forms of consumer promotion
• Free samples
• Free gifts
• Coupons
• In-packs
• Price packs
• Price-offs
• Cross Offers
• Sweepstakes
• Bundling offers

12. 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

13. The 365 Day Sales Promotion

14. 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

15. 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

16. Essential elements for an effective
SP programme
• Significant value before promotion is
effective (Bata Ambassador)
• Promotions must be part of an overall
plan (annual budget)
• 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

17. 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

18. Cont’d
• Promotions may be used in conjunction with
advertising and other marketing communication
tools
• It should be novel and attractive (Red Dot sale)
• Ensure supply lines are good and adequate stock
is available right through the promotion
• Cater for contingencies. Have escape routes built
into the plan (limited quantities)
• Trade has to be handled tactfully
• Reimburse incentives/ rewards/ gifts promptly
• Must be within the legal boundaries
– Rain cheques