for marketing course

1. 1
Sales promotion
Presentation by
Sempungu Godfrey
Sempungu Godfrey
Introduction
 Sales promotion is the process of persuading a
potential customer to buy the product. It can be part
of the personal selling process.
 Sales promotion is one of the four aspects of
promotional mix. (The other three parts of the
promotional mix are advertising, personal selling,
and publicity/public relations.) Media and non-media
marketing communication are employed for a pre-
determined, limited time to increase consumer
demand, stimulate market demand or improve
product availability.
Sempungu Godfrey
Cont--
 Sales promotion is the use of short term incentives
to encourage the purchase or sale of a product or
service.
 Sales promotion is any initiative undertaken by an
organisation to promote an increase in sales, usage
or trial of a product or service (i.e. initiatives that
are not covered by the other elements of the
marketing communications or promotions mix).
Sales promotions are varied. Often they are
original and creative.
Sempungu Godfrey
Types of sales promotion
Sales promotions can be directed at either the customer,
sales staff, or distribution channel members (such as
retailers).
 Sales promotions targeted at the consumer are called
consumer sales promotions.
 Sales promotions targeted at retailers and wholesale are
called trade sales promotions. Some sale promotions,
particularly ones with unusual methods, are considered
gimmick by many.
Sempungu Godfrey
Cont--
 If the promotion is targeted at business customers
it is business promotions.
 If it is directed at members of the sales force it is
sales force promotion.
In general sales promotion should be consumer
relationship building rather than creating only
short term sales or temporary brand switching,
they should help to reinforce the products position
and build long-term relationships with consumers.
Sempungu Godfrey
Reasons for sales promotion
 Increasing competition: The air of change is
gaining momentum after the introduction of
economic liberalization. Due to increase in
competition, companies are finding it increasingly
difficult to compete on quality. They are therefore
resorting to more innovative methods of sales
promotion. In order to have a competitive
advantage over its competitors like mobile phone
companies in Uganda.

2. 2
Sempungu Godfrey
 Customers Have Become More Price Sensitive:
This increased price sensitivity is a direct result of
rampant inflation. Economic recession is likely to
fuel this trend further, as consumers and dealers
become more sensitive towards prices. If the
customers get branded jeans at half the actual price,
then they are definitely going to make huge
purchases of Spykar Jeans because they want value
for their money, as they are price sensitive.
Sempungu Godfrey
 Sales Promotions Generally Create An
Immediate Positive Impact On Sales:
Advertising, personal selling and other methods
of promotion produce slower sales response
compared to sales promotion. Sales promotions
are mostly for short duration, for a specified
period, leading to a sense of urgency in
consumers to buy now. This creates an immediate
positive impact on sales.
Sempungu Godfrey
 Products have become more standardized:In many
product categories, there is a proliferation of brands;
many of them are line extensions and me-too brands.
Most brands are being perceived by consumers to be
more or less similar within a given price range because
of the inability of manufacturers to develop truly
differentiated products. Under these circumstances,
advertising messages are unable to strongly influence
the consumers’ perceptions and create brand franchise.
Sempungu Godfrey
Cont---
As a result of these perceptions of similarity among
brands, marketers have no way but to compete on
the basis of extra benefit offered through sales
promotion. Competing companies struggle to
capture market share by using every tool likely to
bring sales success.
 Consumer Acceptance: As competition intensifies
and promotions proliferate, consumers have learnt
to earn the rewards of being smart shoppers. Over a
period of time, they have also learnt that brands on
promotion are not necessarily of lower quality.
Sempungu Godfrey
 Advertising Has Become More Expensive And Less
Effective: All the advertising media have become quite
expensive. Audio-visual medium, which is considered as
the most effective for short-duration ads, may cost millions.
In many cases, consumers have reached a point of boredom
due to excessive advertising on TV. Some consumers even
consider advertising as an intrusion into their privacy,
leading to zapping (surfing channels). Firms with small
budgets cannot compete with big companies, which spend
huge sums of money on advertising. For these small budget
firms, sales promotion is a more cost-effective promotion
method to produce sales results.
Sempungu Godfrey
 Trade Has Become More Powerful: Retailers and
wholesalers have become powerful and find
themselves in a position to demand extra facilities
from the companies. They Channel members demand
more incentives to get the desired results.
Manufacturers do not seem to have any alternatives but
to concede to their demands, keeping in view the
competitive market conditions. In shopping malls like
Uchumi & shoprite, decent margins have to be paid to
them in order to have shelf visibility for your brand.

3. 3
Sempungu Godfrey
 Emphasis On Sales Volumes: Towards achieving
the long-term profit goals, manufacturers try to
attain high sales volume. Brand managers and
product managers find themselves under pressure
to achieve short-term sales results for the sake of
their careers. Compared to any other promotional
method, sales promotion is a more effective
method to generate short-term sales volume.
Sempungu Godfrey
 Sales Promotions Maximizes Profits: A number
of economic theories conclude that a company
can maximise profits by using sales promotion.
Such promotions can permit price discrimination
by allowing the brand to compete in 2 or more
different market segments. Sales promotion may
allow a premium brand to compete with a lower
tier brand among price sensitive consumers. For
example, a premium brand of toilet soap may be
on promotion in some price sensitive markets,
while in the remaining markets it is sold at its
normal price.
Sempungu Godfrey
 Impulse Buying Is Increasing: The number of
marginal customers is increasing. Displays at the
point of purchases lead to impulse buying by
consumers, more so if the items on display are not
expensive. Impulse Buying Is Increasing.
 Sales Promotion Specialists Are Available:
number of marginal customers is increasing.
Displays at the point of purchases lead to impulse
buying by consumers, more so if the items on
display are not expensive.
Sempungu Godfrey
 Excess stocks: Because of increasing number
of brands, it is difficult for manufacturers and
dealers to anticipate future sales. This, at times,
leads to excessive inventories, and the quickest
way to clear that is to go for sales promotion.
Sempungu Godfrey
 Introducing An Element Of Interest: There are a
number of promotions, which are often called
interest promotions. Some of the more popular
interest promotion techniques are samples, contests,
and sweepstakes, free premiums and mail-in
premiums. These promotions create an element of
interest and excitement, and consumers enjoy these
and respond enthusiastically to such contests and
sweepstakes, etc.
Sempungu Godfrey
Tools of sales promotion
 Buy-One-Get-One-Free (BOGOF) - which is an
example of a self-liquidating promotion. For
example if a loaf of bread is priced at $1, and cost
10 cents to manufacture, if you sell two for $1, you
are still in profit - especially if there is a
corresponding increase in sales. This is known as a
PREMIUM sales promotion tactic.law
 Customer Relationship Management (CRM)
incentives such as bonus points or money off
coupons. There are many examples of CRM, from
banks to supermarkets.

4. 4
Sempungu Godfrey
 Free samples (sampling) e.g. tasting of food and
drink at sampling points in supermarkets. For
example Red Bull (a caffeinated fizzy drink) was
given away to potential consumers at supermarkets, in
high streets and at petrol stations (by a promotions
team) and coca cola’ Burn energy drink.
 Vouchers and coupons, often seen in newspapers
and magazines, on packs. These are certificates that
are given to buyers. They can stimulate the sales of a
mature brand or promote early trial of a new brand.
Sempungu Godfrey
 Cash refund offers or rebates, are like coupons
except that the price reduction occurs after the purchase
rather than at a retail outlet. The consumer gives the
proof of purchase to the manufacturer. E.g. “Bifunilawo
ku shell”.
 Price packs (cents off deal) offer consumers savings
off the regular price of a product. The reduced prices
may be marked directly by the producer on the label or
package. The packs can be single packages sold at
reduced price (such as two for the price of one) or two
banded products. E.g. toothbrush and tooth paste
Sempungu Godfrey
 Premiums are goods offered either free or at a
low cost as an incentive to buy a product, ranging
from toys included with kids products to phone
cards, compact disks e.t.c. A premium may come
inside the package (in pack), outside the package
(on pack) or through the mail.
 Free gifts e.g. Subway gave away a card with six
spaces for stickers with each sandwich purchase.
Once the card was full the consumer was given a
free sandwich.
Sempungu Godfrey
 Advertising specialties are useful articles
imprinted with an advertiser’s name and they are
given as gifts to consumers. They could include
pens, T-shirts, caps, coffee mugs, calendars, key
rings, shopping bags e.t.c.
 Patronage rewards are cash or other awards
offered for the regular use of a certain company’s
products or services. E.g. Airlines offer frequent
flier plans, awarding points for miles traveled that
can be turned in for free airline trips.
Sempungu Godfrey
 Point-of-purchase (POP) or point of sale (POS)
promotions include displays and demonstrations
that take place at the point of purchase or sale.
They could include signs and posters of
manufacturers and the products that they offer.
 Sponsorships that could be in various fields such
as education sports, e.t.c can be used. Companies
will sponsor programs such as health programs.
E.g. MTN marathon, football leagues, Madhivani
scholarship e.t.c
Sempungu Godfrey
 Contests, sweepstakes and games give consumers
the chance to win something, such as cash, trips, or
goods, by luck or through extra effort. A contest calls
for a consumer to submit an entry, a guess, suggestion
to be judged by a panel that will select the best entries.
A sweepstakes calls for consumers to submit their
names for drawing. A game presents consumers with
something -bingo numbers, missing letters every time
they buy, which may or may not help them win a
prize. A sales contest urges dealers or the sales force
to increase their efforts, with prizes going to the top
performers.

5. 5
Sempungu Godfrey
 Joint promotions between brands owned by a
company, or with another company's brands. For
example fast food restaurants often run sales
promotions where toys, relating to a specific
movie release, are given away with promoted
meals. E.g Uchumi super market and Unilever
promotions.
 Loyalty cards have recently become an important
form of sales promotion. They encourage the
customer to return to the retailer by giving them
discounts based on the spending from a previous
visit. Sempungu Godfrey
 Advertising allowance that manufactures may give
retailer s for advertising their products.
 Manufactures may also offer free goods to retailers
and whole sellers. And these are extra cases of
merchandise to resellers who buy buy a certain
quantity.
 Manufacturers may also offer push money in form
of cash or gifts to dealers or their sales forces to
push the manufacturers goods.
Sempungu Godfrey
End