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    2. 2. Sales Promotion Importance <ul><li>Growth in India </li></ul><ul><li>Increasing percentage of promotional expenditure </li></ul><ul><li>Consumer goods companies spend more on sales promotions than advertising </li></ul>
    3. 3. Sales Promotion <ul><li>Short-term incentive to motivate consumers/distribution channel to buy goods/services immediately </li></ul><ul><li>Affects behavior, not attitudes </li></ul><ul><li>Incentives in addition to the product’s basic benefits. </li></ul><ul><li>objective: Bolster/complement other promotional mix elements during a specific time period </li></ul><ul><li>Targeted toward: </li></ul><ul><li>Sales force </li></ul><ul><li>Wholesalers and retailers </li></ul><ul><li>Consumers </li></ul>Definition: any activity or material used as a direct inducement to purchase
    4. 4. <ul><li>An activity designed to boost the sales of a product or service. It may include an advertising campaign, increased PR activity, a free-sample campaign, offering free gifts or trading stamps, arranging demonstrations or exhibitions, setting up competitions with attractive prizes, temporary price reductions, door-to-door calling, telemarketing, personal letters on other methods&quot;. </li></ul><ul><li>More than any other element of the promotional mix, sales promotion is about &quot;action&quot;. It is about stimulating customers to buy a product. It is not designed to be informative - a role which advertising is much better suited to. </li></ul>
    5. 5. <ul><li>Sales promotion is commonly referred to as &quot;Below the Line&quot; promotion. Sales promotion can be directed at: . The ultimate consumer (a &quot;pull strategy&quot; encouraging purchase) </li></ul><ul><li>. The distribution channel (a &quot;push strategy&quot; encouraging the channels to stock the product). This is usually known as &quot;selling into the trade&quot; </li></ul>
    6. 6. Sales Promotion Objectives <ul><li>Increase short-term sales or help build long-term market share. </li></ul><ul><li>Get retailers to: </li></ul><ul><ul><li>carry new items and more inventory, </li></ul></ul><ul><ul><li>advertise products, </li></ul></ul><ul><ul><li>give products more shelf space, and </li></ul></ul><ul><ul><li>buy product ahead. </li></ul></ul><ul><li>In general, sales promotion should focus on consumer relationship building . </li></ul>
    7. 7. Reasons for Rapid Growth of Sales Promotion <ul><li>Rapid growth in the industry has been achieved because: </li></ul><ul><ul><li>Retailers </li></ul></ul><ul><ul><li>Consumers : more responsive to promotions, price sensitivity, brand similarity, less loyalty, fragmented markets </li></ul></ul><ul><ul><li>Media : less effective </li></ul></ul><ul><ul><li>Brand managers : short term orientation </li></ul></ul>
    8. 8. Major Consumer Sales Promotion Tools Sample &Demonstration Coupons Cash Refunds Price Packs Premiums Advertising Specialties Trial amount of a product Savings when purchasing specified products Refund of part of the purchase price Reduced prices marked on the label or package Goods offered free or low cost as an incentive to buy a product Articles imprinted with an advertiser’s name given as gifts
    9. 9. Major Consumer Sales Promotion Tools Patronage Rewards Point-of-Purchase Contests Sweepstakes Game Cash or other rewards for the use of a certain product Displays and demonstrations that take place at the point of sale Consumers submit an entry to be judged Consumers submit their names for a drawing Presents consumers with something every time they buy
    10. 10. Sales Promotion Methods for Consumers Multiple purchase offers, Frequent-user incentives Product placements/tie-ins
    11. 11. Classifying Types of Sales Promotion Promotional pricing Non-price promotions Sampling <ul><li>Price reductions </li></ul><ul><li>Free goods </li></ul><ul><li>Tied offers </li></ul><ul><li>Money off next purchase </li></ul><ul><li>Loss leader pricing </li></ul><ul><li>Cheap credit </li></ul><ul><li>Contests </li></ul><ul><li>Free gifts </li></ul><ul><li>Self-supporting offers </li></ul><ul><li>Multi-brand promos s </li></ul><ul><li>Guarantees and added services </li></ul><ul><li>Most effective in the early stages of a new product launch (#1 use for coupons) </li></ul><ul><li>Important for food products </li></ul><ul><li>Very expensive </li></ul>
    12. 12. Rebates: A Consumer Information Source <ul><li>Buyers fill out rebate forms with names, addresses and household data about customers </li></ul><ul><li>- directly targets price cuts to customers </li></ul><ul><li>- 5-10% are redeemed </li></ul>
    13. 13. Rebates are often effective at changing purchase probabilities, even for big-ticket items
    14. 14. Coupons, too, can be effective at getting consumers to purchase specific products
    15. 15. <ul><li>Trade shows </li></ul><ul><li>Contests, free merchandise </li></ul><ul><li>Display equipment, P-O-P materials </li></ul><ul><li>Cooperative advertising & promotions </li></ul><ul><ul><li>Vertical - channel members </li></ul></ul><ul><ul><li>Horizontal - group of retailers </li></ul></ul><ul><li>Allowances (buying vol., buy-back, </li></ul><ul><li>Premium or push money, slotting allowances </li></ul>Sales Promotion Methods for the Trade
    16. 16. Major Salesforce sales promotion tools <ul><li>Push money is an incentive that gives retail salespeople cash rewards for every unit of a product they sell </li></ul><ul><li>Awards </li></ul><ul><li>Exhibitions, Conventions etc </li></ul><ul><li>Incentive </li></ul>
    17. 17. Sales Promotion, Pro and Con <ul><li>Advantages: </li></ul><ul><li>Motivation method for special efforts </li></ul><ul><li>Short-term sales increase </li></ul><ul><li>Defined target audience </li></ul><ul><li>Defined role/objectives </li></ul><ul><li>Indirect roles (e.g., wider distribution) </li></ul><ul><li>Disadvantages: </li></ul><ul><li>Only short-term </li></ul><ul><li>Hidden costs </li></ul><ul><li>Confusion </li></ul><ul><li>Price cutting -Brand image </li></ul><ul><li>Postponement effect </li></ul><ul><li>Significant government regulation </li></ul><ul><li>Lack of effectiveness sometimes (learning effect) </li></ul>
    18. 18. A Benefit Congruency Framework of Sales Promotion Effectiveness Are monetary savings the only explanation for consumer response to sales promotions? If not, how do the different consumer benefits of sales promotion influence its effectiveness? Savings Quality Convenience Value expression Exploration Entertainment Six Benefits
    19. 19. Role of The Promotion Mix <ul><li>Promotion is an organization’s unique set of communications (stimuli) designed to influence (inform, persuade & remind) selected target audiences into desirable responses. </li></ul><ul><li>Who says what to whom, in what setting , by which channels, with what purposes. </li></ul><ul><li>Promotion facilitates (efficient) exchange </li></ul>
    20. 20. Developing the Sales Promotion Program Decide on the Size of the Incentive Set Conditions for Participation Evaluate the Program Determine How to Promote and Distribute the Promotion Program Determine the Length of the Program
    21. 21. Measuring Sales Promotion Effectiveness <ul><ul><li>Since many sales promotions result in direct consumer responses, marketers can relatively easily track their effectiveness </li></ul></ul><ul><ul><li>As with other methods, marketers must weigh the cost against the benefits </li></ul></ul>
    22. 22. Ethics in Sales Promotion <ul><ul><li>Sales promotions provide opportunities for unscrupulous companies to take advantage of consumers </li></ul></ul><ul><ul><li>Trade allowances, particularly slotting allowances, have been criticized for years as a form of bribery </li></ul></ul>