Sales Promotions 2


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Sales Promotions 2

  1. 1. Implementation, accountability, control, evaluation - and the legal framework of sales promotion campaigns
  2. 2. <ul><li>At the end of this session you should be able to: </li></ul><ul><li>Estimate a budget for a campaign (esp. calculate OTA, estimate redemption) </li></ul><ul><li>Know about a structured approach to implement a campaign </li></ul><ul><li>Know about ASA & possible pitfalls of a campaign </li></ul><ul><li>Know about the key legal aspects of SPCs outside the UK </li></ul>
  3. 3. <ul><li>Whatever was spent last year + inflation </li></ul><ul><li>% of turnover </li></ul><ul><li>same as competitor </li></ul><ul><li>amount required to meet objective </li></ul><ul><li>same as last year - savings for cost cutting! </li></ul>The Budget
  4. 4. WKS Survey <ul><li>Most spent the same as last year (real term cut) </li></ul><ul><li>Spending is on the same media/tools (not optimal, ignoring new ops) </li></ul><ul><li>Value for money not a major target in ongoing campaign (but suddenly important when “change” looms) </li></ul>
  5. 5. Budgeting <ul><li>The basic factors: </li></ul><ul><li>Packs (per period) </li></ul><ul><li>Proofs of purchase </li></ul><ul><li>Opportunities to Apply (OTA) </li></ul><ul><li>Redemption Rate </li></ul><ul><li>Cost </li></ul><ul><li>Getting it wrong is a risky business! </li></ul>
  6. 6. Packs/period x <ul><li>The number of packs usually sold over the period of time that the campaign will last + adjustment for impact of campaign </li></ul><ul><li>Campaign for 1 month 220.000 monthly volume + roughly 10% impact = roughly 250.000 packs required </li></ul>
  7. 7. Proofs of Purchase <ul><li>How many will you ask for? </li></ul><ul><li>Too low = regular customers have no incentive to buy more Too high = less regular customers will not participate (may be disappointed) </li></ul><ul><li>Good rule: average level of purchase of the category (N.B.: NOT your brand!) </li></ul>
  8. 8. OTA (Opportunity to Apply) <ul><li>Promotional Packs / Number of proofs, e.g. equal to a 100% redemption rate </li></ul><ul><li>highest possible risk factor (for the insurance, you know...) </li></ul><ul><li>OTA = 250.000 / 5 = 50.000 </li></ul>
  9. 9. Redemption Level <ul><li>A bit tricky: Attractiveness of premium Ratio proof/purchase frequency Support given to promotion (e.g. other MC) Strength of your brand </li></ul><ul><li>Redemption Rate * OTA = Redemption Level </li></ul><ul><li>50,000 OTA x 0.06 (6%) RR = 3,000 RL </li></ul>
  10. 10. Cost everything.... Cost of Gift 1.10 Handling 0.90 Total Cost for Gift: 2.00 x RL (3,000) 6,000 + Art work, printing, support 6,000 Total for campaign: 12,000
  11. 11. Cost/pack <ul><li>Total cost per pack sold: </li></ul><ul><li>£12,000 / 250,000 packs = 4.8p/pack </li></ul><ul><li>Is 4.8p enough to warrant the 10% increase in turn over (provided you get there!?) </li></ul><ul><li>How many extra packs do you need to sell to break even? </li></ul>
  12. 12. NB <ul><li>Same principle applies for all promotions: </li></ul><ul><li>Coupons are simply calculated as PP = 1 </li></ul><ul><li>N.B.: for newspapers OTA = circulation (not readership!) however, higher readership = increased RL </li></ul>
  13. 13. Timing <ul><li>When is impact needed? </li></ul><ul><li>How long will promotion last? </li></ul><ul><li>What is the relation to the purchase frequency of your product/service </li></ul><ul><li>intermediary lead times required </li></ul><ul><li>print/merchandise delivery </li></ul>
  14. 14. Communication <ul><li>On pack (e.g.: wrapping) </li></ul><ul><li>Leaflet in/with the product </li></ul><ul><li>Separate leaflet </li></ul><ul><li>Adverts to support campaign </li></ul><ul><li>Sponsored shows / events </li></ul><ul><li>Posters, stickers, other support material </li></ul><ul><li>Sales aids </li></ul><ul><li>Mailshots </li></ul>
  15. 15. KISS! <ul><li>Keep concepts simple and convincing: Win a free meal! Itsu salmon in a rushdie spectacular! </li></ul><ul><li>Use help: ISP/DMA website for wordings etc, Royal Mail for mailing etc. </li></ul>
  16. 16. Logistics <ul><li>Often underestimated,.... but it’s problematic to carry 45 “dealer loaders” in the form of a deck chair in a normal car! </li></ul>
  17. 17. Planning <ul><li>Planning is important!!!! </li></ul><ul><li>Usually structured (SOSTAC helps) </li></ul>
  18. 18. <ul><li>Read the brief </li></ul><ul><li>Set KPIs / Define success </li></ul><ul><li>Think how you will get there/ Possible solutions </li></ul><ul><li>Write outline of the campaign </li></ul><ul><li>Write operational plan </li></ul>
  19. 19. <ul><li>Three stages to your plan: </li></ul><ul><li>Feasibility </li></ul><ul><li>Checking </li></ul><ul><li>Implementation </li></ul>
  20. 20. Brief Possible Concepts Budget Timing Communication Logistics Legal check against shortlist and check against objectives Stage 1 : Feasibility
  21. 21. Shortl. Concepts Budget Timing Communication Logistics Legal Outline Plans (visual and copy) check back which is best (vs. brief/objectives) Top Plan Define Success (KPI) Stage 2 : Checking
  22. 22. Shortl. Concepts Copy & Design Final admin Final Communication Final material Evaluat. Criteria Recheck Legalities ! detailed Operational Plan Run the Promotion Evaluate (KPI, brief)
  23. 23. Legal aspects <ul><li>Code of Advertising Practice (CAP) </li></ul><ul><li>Advertising Standards Authority (ASA) </li></ul><ul><li>Codes available from ISP, ASA, CAP, DMA </li></ul>
  24. 24. Fundamentals <ul><li>legal, decent, honest and truthful </li></ul><ul><li>conducted equitably, promptly and efficiently </li></ul><ul><li>seen to deal fairly and honorably with consumers </li></ul><ul><li>in line with accepted principles of fair competition </li></ul><ul><li>in line with the spirit as well as the letter of the rules </li></ul><ul><li>not bringing the industry in disrepute </li></ul>
  25. 25. Subject to availability <ul><li>Nice sentence.... but... </li></ul><ul><li>Demand should be estimated in advance </li></ul><ul><li>You must have plans to meet unexpected demand </li></ul><ul><li>You must offer an item of equivalent value if all fails </li></ul><ul><li>All limitations and cost must be clearly stated </li></ul><ul><li>You must dispatch goods in 30 days </li></ul>
  26. 26. Children <ul><li>no unfair advantage </li></ul><ul><li>not encourage purchase of too expensive items </li></ul><ul><li>not cause conflict between children and parents </li></ul><ul><li>Parental permission often required! </li></ul>
  27. 27. Free means FREE! <ul><li>Anything else than actual postage is NOT allowed </li></ul><ul><li>no premium telephone lines </li></ul><ul><li>no purchase can be required </li></ul>
  28. 28. beyond the UK <ul><li>In the EU: massive restrictions </li></ul><ul><li>Currently some deadlock on legislation in the EU </li></ul><ul><li>Roughly: Greece, Spain, Italy fairly liberal, Germany and BeNeLux very restrictive </li></ul>