Sales Promotion The Promotional Mix

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• ‘those promotional activities (other thanadvertising, personal selling, publicrelations and publicity) that are intended tostimulate customer demand and improvethe marketing performance of sellers’

• sales promotion comprises a range oftactical sales and marketing techniquesdesigned within a strategic marketing andsales framework to add value to a product or service in order to achieve specific sales and marketing objectives

• ultimate objective:

to influence therecipient’s feelings,beliefs or behaviour

                            

targets are:

middlemen

end-users

organisation’s own

sales force

                          

designed to supplement advertising and co-ordinatepersonal selling; it includes the following:

• contests for sales people and consumers

• trade shows and exhibitions

• in-house displays and demonstrations

• samples, free trials

• premiums (gifts)

• coupons

• cash rebates

Consumer sales promotion tools

• demonstrations, • competitions, • sweepstakes, games• premiums: free with pack, free on-pack, free mail-in• events, club for repeat buyers, money-back guarantees• joint promotion - complimentary product with charity• reduced value packs, extra value packs, coupons

vouchers with cash value, cash refunds• collector series, • point of purchase displays• loyalty rewards

samples

• most effective but most expensive way tointroduce a new product

• offer a trial amount of a product

• some samples are free

• may be delivered door to door, sent by mail,

• attached to another product,featured in an ad

• couponsvoucher giving buyers a saving when purchase specifiedproduct;

• can be mailed, in ads or included with other products• can stimulate sales of a mature brand or early trial of a

new brandprice packs

• reduced prices offering savings off regular price of product

• reduced prices directly on label or pack (e.g. two for one)• two related products banded together

are very effective in stimulating short-term sales

• premiums• goods offered either free or at low cost as an incentive

tobuy a product

• may come inside the package (in-pack) or outside thepackage (on-pack)

• if reusable, the package itself may serve as a premium (e.g. a decorative tin)

• sometimes mailed to consumers who have sent proof ofpurchase (e.g. a box top)

loyalty rewardscash or other awards offered for regular users advertising specialitiesuseful articles imprinted with an advertiser’s name givenas gifts (e.g. pens, mugs, calendars, key rings, matches, T-shirts, caps, etc)

• point of purchase promotions:• includes displays and demonstrations often tied in with TV

advertising• competitions call for submission of an entry - a suggestion,

completion of a sentence, jingle etc to be judged by a panel

• sweepstakes call for consumers to submit their name andaddress for a draw

• lotteries - buying tickets to enter names in a draw• games - bingos, fill in missing letters, answer simple

questions

trade sales promotion tools

• credit/extended credit, free services, training

• club for special customers, competitions

• free samples, discount on bulk purchases

• discount for early payment

• trade-in offers, sale or return

• loyalty bonuses

Sales force promotion tools

• coupons, vouchers, commissions

• competitions, incentive programmes, free samples, free gifts

• bonus scheme

• points system with gift catalogue

• club for high achievers

Purpose of Sales Promotion 1

• attracts consumer attention and provides information thatmay lead to a purchase but short-lived effects

• offers strong incentives to purchase by providing gifts or bargain e.g. magazines

• invite and reward quick response (incentive to ‘buy itnow’) e.g. first edition of expensive magazine is cheap

• dramatises product in order to boost sagging sales but not effective in building long-run brand preference

• a free ‘sample’ stimulates consumer trial• a free advisory service cements a long-term

relationship with shop• sales promotions used to attract new buyers, reward

loyalcustomers and increase repeat purchase rates of occasional users particularly in markets where brands differ greatly

• new buyers include users of another brand and frequent brand switchers(looking mostly for low price or good value but switchersunlikely to become loyal brand users)

Purpose of Sales Promotion 2

• to gain a trial for a new/improved product (e.g. free sample through the mail)

• to disrupt existing buying habits (e.g. a coupon offering a large discount)

• to attract new customers (e.g. rail card or £50 free when opening student bank account)

Purpose of Sales Promotion 3

• to encourage greater use by existing customers (e.g. frequent flyer programmes and frequent guestprogrammes)

• counter attack a competitor’s promotional campaign

• to increase impulse buying (e.g. end of aisle displays)

Why target shops on promotional campaign?

• motivating retailers to carry new items and more stock

• tempting retailers to advertise your product and give it more shelf space

• persuading retailers to buy and stock in advance e.g. Christmas

Why is this good for the shop?

• builds goodwill and working relationship between shop and supplier

• moves old stock

• prolongs the sellingseason (especiallywhere seasonality)

• adds a bit ofexcitement andinterest!

Promotion-Effect on business• short-run orientation - coupons and trade discounts

produce quicker sales results but can be expensive

• Builds brand loyalty

• competitive pressure - if competitors offer pricereductions/coupons etc, your business may feel forced to followstate of economy – interest rates makes consumers more priceconscious

• retail selling quality - as many retailers are self-service,product displays and information booklets often onlyeffective promotional tools available at point of sale

Strategic Planning forSales Promotion:

• set goals for current salespromotion programme

• identify target markets

• select appropriatestrategies

• monitor and evaluate

                       

Problems for Business

• often difficult to generate truly new and creative ideas

• often easy for competitors to copy ideas

• need care to ensure the promotion does genuinely offer extra value and incentives, is not misleading and discounts will be honoured

Issues for a business to consider

• the sales promotion must be carefully costed when deciding the size of the incentive

• a minimum incentive is necessary for success• a larger incentive will produce more sales but a balance

is needed to induce consumers to experiment and temptlapsed users to buy

• while too large an incentive could lead to regularconsumers heavily stocking up during the promotion(causing profitability to decline in the medium term assales drop after the promotion period)e.g. Buy 1 3 litre Coke get 1 Free

Issues for a business to consider

• proof of purchase, closing dateof offer etc)

• need to decide how to promote and distribute thepromotion programme itself (e.g. media to be used,money-off coupon given out in a package, at the store, by mail or in an advert)

• each distribution method involves a different level of costand reach-who / where do you want to target

• duration of the promotion (if too long it loses some of its ‘act now’ force)

• the easier it is for the consumer to respond to an offer, the higher the response ratee.g. Pepsi/walkers-text

• immediate gratification (e.g. a free gift attached to theproduct or a price reduction) often gives a higher response

• incentives requiring further action (e.g. to make anotherpurchase or collect required number of tokens and thenpost off to claim gift or free product) often reduces theredemption rate e.g. cereal boxes, newspapers DVD offers etc.

Evaluating Sales Promotion

• Why? to judge whether the activity met the set objectives

• to discover how cost effective it was e.g. Hoover• to identify whether there are any lessons for the

future• compare sales before, during and after a

promotion• surveys (how many consumers recall the

promotion, what they thought of it, how many took advantage of it and didit affect their buying?, Do they still buy it?)