2. introduction
• Sales promotion seeks to offer buyers
additional value as an inducement to
generate an immediate sale
• These inducements can be targeted at
consumers, distributors,agents and
members of the sales force
• Sales promotions can form an important
part of communication mix
3. • Sales promotion is big business, in some
countries it is bigger than advertising
• Its growth has been fuelled by several factors
including the movement towards relationship
marketing[and rewarding loyal customers
• The growth of direct mail [and incentives]
• The emergence of promotion-literate customers
who expect promotions with certain product
types
4. • During recession,price conscious customers search for
value for money promotions
• Powerful retailers favour suppliers whose products sell
quickly[either because of heavy advertising or exciting
promotions or both]
• High television advertising costs force marketing
managers to look for more cost-effective, below the line
tools such as sales promotions
• Isolating and calculating the exact industry figures is
difficult as some companies categorise some promotions
as part of PR and figures on price promotions[discounts]
are not normally included.
5. • The main task of sales promotion is to
encourage the target audience to behave in a
particular way, usually to buy a product
• Advertising and sales promotion tools both
accomplish tasks at each end of the attitudinal
spectrum: the cognitive and conative elements
• Advertising seeks to work over the long term and
sales promotion can achieve short term upward
shifts in sales
• Sales promotion seeks to offer buyers additional
value, as inducement to generate an immediate
sale
6. • These inducement can be targeted at
consumers, distributors, agents and members of
the sales force
• A whole range of network members can benefit
from the use of sales promotion
• This promotional tool is traditionally referred to
as below- the line expenditure
• Unlike advertising there are no commission
payments from media owners with this form of
communication
7. • The promotional costs are borne directly
by the organisation initiating the activity,
which in most cases is a manufacturer or
producer
• There are many sales promotion
techniques,they all offer direct inducement
or incentive to encourage receivers of the
promotional messages to buy a product
sooner rather than later
8. • These inducement can be in three categories:
• Customer promotions[price offs, coupons, gifts,
prizes and competitions eg on back of breakfast
cereals and are intended to encourage buyers to
act now rather than later
• Trade promotions[special terms, point of sale
materials and free pens, diaries, competition
prizes, etc]
• Salesforce promotion [incentive and motivation
schemes
– Sales promotion is used principally as a means to
accelerate sales
9. • The accelaration represents the shortened
period of time in which the transaction is
completed relative to the time that would have
elapsed had there not been a promotion
• This action does not mean that an extra sale has
been achieved
• Sales promotion can be targeted with
considerable precision, at particular audiences
ie consumers, members of the distribution or
channel network and the salesforces of both
manufacturers and resellers
10. Reasons for the use of sales
promotion
• Reach new customers:useful in securing
trials for new products and in defending
shelf space against anticipated and
existing competition
• Reduced distribution risk: the funds that
manufacturers dedicate to lower the
distributor`s risk in stocking new brands
• Reward behavior: reward for previous
purchase behavior
11. • Retention: provide interest and attract
potential customers in
• Add value:can encourage sampling and
repeat purchase behavior by providing
extra value and a reason to purchase
• Induce action: instill a sense of urgency
among consumers to buy while a deal is
available
12. • Preserve cash flow:since sales promotion costs
are incurred on a pay as you go basis, they can
spell survival for smaller, regional brands that
cannot afford big advertising programmes
• Improve efficiency: sales promotion allow
manufacturers to use idle capacity and to adjust
to demand and supply imbalances
• Integration: provide a means of linking together
other tools of the promotional mix
• Assist segmentation: allow manufacturers to
price discriminate among consumer segments
that vary in price sensitivity
13. • Many companies these days have allowed
sales promotion to dominate marketing
communication budget
• This is partly due to the fact that many
consumer markets are mature. Have
reached a level of stagnation and where
price and promotion work are the few
ways of inducing brand switching behavior
14. Short termism
• Many companies focus on short term
performance and evaluation, over periods
as short as 12 weeks
• To accomplish that, communication tools
are required that work quickly and directly
impact upon sales
15. Managerial accountability
• The results of sales promotion activities
are more easily justified and understood
than those associated with advertising
• The number of coupons returned for
redemption
• The number of bonus packs purchased
can be calculated quickly and easily
• Advertising cannot easily be measured in
either the short or the long term
16. • The impact of this is that managers can relate the
promotional expenditure to the bottom line much more
comfortably with sales promotion than with advertising
• Brand performance:technological advances enabled
retailers to track brand performance more effectively
• In store promotional activity are now common instead
of traditional forms of mass media promotion
• Brand expansion: as brand quality continues to improve
and as brand proliferate on the shelves of supermarkets,
consumer has to make a number of decisions
17. Ineffective sales promotion
• Despite the phenomenal size of the sales
promotions industry and the data available for
analysis in some countries, there are a
frightening number of sales promotions that are
relatively ineffective
• Some are actually damaging in terms of
branding, sales and cashflow
• Take price discount to boost sales, one may
discount the brand down to a point where it
loses its brand values and competes solely on
price
18. • Many sales promotions damage the core
values,the image and the positioning of
the brand
• Other promotions only attract promiscuous
consumers who switch back to another
brand as soon as the promotion is over
• Other promotions create temporary “ boost
in sales followed by an immediate drop in
sales
19. Sales promotion plan: the
objectives
• The objectives of using this tool are sales
oriented and are geared to stimulating
buyers either to use a product for the first
time or to encourage use on a routine
basis
• a promotion is a limited period offer
• Sales promotions tend to have short term
tactical objectives
20. Some typical sales promotion
objectives or goals
• Increase sales[although it may be only a
temporary increase]
– Rewarding loyal customers
– Locking customers into loyalty programmes
– Increasing repurchase rates of occasional
users
– Generating trial among new customers[by
triggering an impulse purchase]
– Demonstrating new features/modifications or
introducing a new product/service
21. – Developing new uses
– Image development [awareness or
repositioning]
– Deseasonizing seasonal sales
22. • Develop new sales leads
• Satisfy retailers with a complete package-gain
trade acceptance
• Move excess stock
• Block a competitor [by offering incentives to
customers to stock up]
• Match competitor
• Build database
• Generate publicity
23. a sales promotion objectives grid
low
high
Use sales promotion
New product Withhold To stimulate trial
Or market Sales promotion
Non-loyal-use for switching Non-loyals-use sales
Promotion to attract for trial
Loyals-use carefully
Loyals-use sales promotion
To reward for increased
usage
24. Loyalty and retention programme
• Using an example you are similar with illustrate
how an organisation can develop loyalty and
retention programme.
• To be submitted as individual course work
• Read on promotion wars
• Sales promotion strategy and or tactics
• Creative promotions
• Problem promotions
• Managing a sales promotion
• Sales promotion techniques
