2. Overview
Introduction
1. Sales promotion
Sales promotion techniques
Purposes
2. Benefits and limitations of sales promotions
3. Sales promotion effects
4. Evaluation of sales promotion
Theory
Practice
Examples of promotional activities
Conclusion
3. Introduction
Important for most business enterprises
Especially so with increasing market competition
Sales promotion can help achieve every business’
ultimate goal of having greater sales
Sales promotion can also promote greater usage and
trialability
Marketers often use sales promotion to alter the
price-value relationship of their products or services,
as part of the overall marketing strategy
6. Techniques
1. Money off
Provides consumers additional products with little or no extra charge
Most widely used today
Example: price pack, buy 2 get 1 free
Size of price reduction depends on brand requirements and the
competitive environment
Disadvantages
All consumers (including non-loyals) receives the same incentive
Can be easily matched by competitors
Frequent use of this technique may result in lower price expectation
Advantages
Can be implemented quickly
Able to forecast outcomes with relatively high accuracy
Well-liked by consumers and traders
No need for economies for scale to implement, useful for small co.s
7. Techniques
2. Coupons
Many different variations
Give coupon for product A upon purchase of
product A
Give coupon for product A upon purchase of
product B, also known as cross-couponing
Distributed online, or door-to-door
Similar visual impact as that of money off,
but has a lower real cost, since the level of
redemption is often low
8. Techniques
3. Free gifts
Advantage of immediacy
4 main types
On-pack free gift
In-pack free gift
With-pack free gift
Pack itself
9. Techniques
4. Free mail-ins
Send in several proofs of purchase to redeem gift item
The gift item may help in the brand differentiation
Helps in building loyalty
Potential problems
Difficulty in choosing the right merchandise to offer
This technique lacks immediacy
Generally low appeal to consumers
10. Techniques
In-store sampling
Provides a direct interface between product and potential
customers
Especially useful for complex or new products
11. Purposes
Increase market share
For both new and existing company
in the market: encourage trials and
hopefully a switch in loyalty to their
brand
To clear stocks
When the company is introducing a
new product, as a improved version
of the old product
Not enough inventory space in the
warehouse or retail outlets
Shelf-life
12. Benefits
To adjust to variations in supply and demand
without changing list prices
Small firms can use this as a marketing strategy to
compete with big firms
Firms with niche market products can use this
marketing tool
Useful for first-time entry into the market
Induce trials
14. Outcomes
Increased market share
Unchanged market share
Attracted “cherry pickers”, who did not buy the product after
the promotion
Existing customers continue to buy the company’s products
Decreased market share
15. Evaluation - Theory
Obtain the actual volume of sales: before the
promotion and after the promotion
Three consumer responses
Competitor steal
Brand cannibalization
Category growth
Customer survey to evaluate brand awareness
Calculate total costs of the promotion
Main cost = Volume sold * Reduced price per pack
Other costs like dealer incentives
16. Evaluation - Practice
Seek help from marketing agencies
Use panel data gathering to determine how successful the
promotion was
Loyal customers
Cherry pickers
Brand-switchers
Consumption per person in the short
and long run
The extent to which the promotion was
made known to target group
17. Evaluation - Practice
Retailer to evaluate sales
Before
During
After
Using ad hoc research like
surveys
18. Example 1: Coca-Cola
Targeted at the loyal
customers
Aims to increase the
volume per buyer
Note that the
campaign is held
during the festive
season
We expect an increase
in sales will come from
loyal customers,
switches, and not
cherry pickers
19. Example 2: Auchan Maslenitsa
Maslenitsa lasts for only
one week every year
Auchan offers them at a
low price even though
there is high demand
Strengthen its brand
image as a discount store
and attract more sales in
its other areas
20. Example 3: Domestos
Example of never ending
promo campaign
Offers extra mililitres free
Bundles with other products
from the same company
Difficult to evaluate the
sales effectiveness of this
product
21. Conclusion
Short term sales promotions may result in greater sales,
so retailers should prepare more stocks to prevent
shortage
Promotions can excite shoppers
Promotions can also encourage trials and raise brand
awareness
Frequent price promotions are harmful
Promotions should be used together with advertising for
best outcomes
Ensure consistency between promotional tool and the
product position
Price-pack deal: The packaging offers a consumer a certain percentage more of the product for the same price (for example, 25 percent extra).
Put “the pack” under money-off