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
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
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 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
14. 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
15. Essential elements for an effective
SP programme
• Significant value before promotion is effective
• Promotions must be part of an overall plan
• 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
16. 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
17. Cont’d
• Promotions may be used in conjunction with advertising
and other marketing communication tools
• It should be novel and attractive
• Ensure supply lines are good and adequate stock is
available right through the promotion
• Cater for contingencies. Have escape routes built into the
plan
• Trade has to be handled tactfully
• Reimburse incentives/ rewards/ gifts promptly
• Must be within the legal boundaries
