![• 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](https://image.slidesharecdn.com/salespromotionandon-linecommunications-120723172424-phpapp01/85/Sales-promotion-and-on-line-communications-3-320.jpg)
![• 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.](https://image.slidesharecdn.com/salespromotionandon-linecommunications-120723172424-phpapp01/85/Sales-promotion-and-on-line-communications-4-320.jpg)
![• 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](https://image.slidesharecdn.com/salespromotionandon-linecommunications-120723172424-phpapp01/85/Sales-promotion-and-on-line-communications-8-320.jpg)
![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](https://image.slidesharecdn.com/salespromotionandon-linecommunications-120723172424-phpapp01/85/Sales-promotion-and-on-line-communications-20-320.jpg)
![– Developing new uses
– Image development [awareness or
repositioning]
– Deseasonizing seasonal sales](https://image.slidesharecdn.com/salespromotionandon-linecommunications-120723172424-phpapp01/85/Sales-promotion-and-on-line-communications-21-320.jpg)
![• 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](https://image.slidesharecdn.com/salespromotionandon-linecommunications-120723172424-phpapp01/85/Sales-promotion-and-on-line-communications-22-320.jpg)
Sales promotion and on line communications
- 1. Sales promotion and on-line communications Presentation By Ben Mugerwa
- 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