1. Sales Promotion

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

3. Why?
Internal
External

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

7. SP is of two types
Trade
Consumer

8. Trade promotion Liquidating heavy inventories
Persuade retailers to carry stock, carry more than usual stock, promote brand franchise

9. Consumer promotion Stimulate purchase Induce trial Create new users
Increase repurchase from occasional customers
Reward loyal customers

10. Forms of trade promotion
Bulk discounts
Free materials
Display windows
Shelf hiring
Lucky draws
‘Mystery’ customer
Redistribution incentives
Shop salesmen incentives

11. Forms of consumer promotion
Free samples
Free gifts
Coupons
In-packs
Price packs
Price-offs
Sweepstakes
Bundling offers

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