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Sales Promotion 1

The document discusses sales promotion, which is defined as short-term incentives to encourage the purchase or sale of a product. Sales promotion seeks to create an immediate sale and represents supplementary marketing efforts conducted for a limited time. The major types of sales promotion are trade promotion, consumer promotion, and retailer promotion. Trade promotion is offered to distributors and retailers, consumer promotion directly to consumers, and retailer promotion by manufacturers to retailers. Common forms of promotion include coupons, discounts, and bonus packs. The use of sales promotions has been trending upward in recent decades due to factors like increased price sensitivity and retailer power.

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74 views9 pages

Sales Promotion 1

The document discusses sales promotion, which is defined as short-term incentives to encourage the purchase or sale of a product. Sales promotion seeks to create an immediate sale and represents supplementary marketing efforts conducted for a limited time. The major types of sales promotion are trade promotion, consumer promotion, and retailer promotion. Trade promotion is offered to distributors and retailers, consumer promotion directly to consumers, and retailer promotion by manufacturers to retailers. Common forms of promotion include coupons, discounts, and bonus packs. The use of sales promotions has been trending upward in recent decades due to factors like increased price sensitivity and retailer power.

Uploaded by

ALI
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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SALES PROMOTION

January 31, 2005


ADVERTISING SALES PROMOTION

All activities involved in Demand stimulating devices


presenting to an audience a designed to supplement advertising
nonpersonal, sponsor-identified, and facilitate personal selling.
paid for message about a
product or organization

Any form of paid or public Short term incentives to


service presentation and encourage the purchase
promotion of ideas, goods, or sale of a product or
or services by a sponsor. service

Sales Promotion is the direct inducement or incentive


to the sales force, the distributor or the consumer with
the primary objective of creating an immediate sale.

Sales promotion represents those marketing efforts that


are supplementary in nature, are conducted for a
limited period of time and seek to induce buying.
MAJOR TYPES OF SALES PROMOTION

Manufacturer Trade Trade


Promotion

Consumer Consumer Retailers


Promotion Promotion
TRADE PROMOTION

TRADE : Warehouses, distributors, wholesalers, retailers


Trade promotion is a part of “push” strategy

Is offered by manufacturer to the trade channels

Trade promotion is extended to marketing intermediaries


to push sale of a certain product or brand

Trade Promotions are generally in the form of


a: Case allowance
b: Trade coupons
c: Display allowance
d: “Spiffs”
e: Contest
f: Advertising allowance

Must be coordinated with sales activity.


RETAILER PROMOTIONS

Promotions offered by manufacturer to retailers are known as


“Trade Promotions” whereas promotions offered by retailers to
consumer are known as “Retailer promotions”

Part of push strategy

Generally in the form of


a: Price cuts
b: Display
c: Free goods
d: Retailer coupons
e: Contest premiums
f: Discounts
In some categories sales increases by more than 50%
CONSUMER PROMOTIONS

Consumer is the ultimate target of all sales promotion activities.

The manufacturer offers promotions directly to the consumers.

Part of pull theory

Generally in the form of


Value pack (x% more)
Price Pack (“bachat scheme”)
Coupons (discount on next purchase or on a specific variant
Sampling (T-party by Nestle+Lipton+Lu)
Bonus pack
Sweepstakes
Refunds

Deal-Prone Consumers
Cherry Pickers
SALES PROMOTION EXPENDITURES

Figures not available for Pakistani market.

American market - sales promotion expenses as a %age of


total advertising and promotion expenses.
1984 – 66% for consumer durables and 58% for nondurables
1985 – 76% major appliances purchased on deal.
1986 – boom in sales promotion agencies

1986 – 19.3% of total sales in departmental stores and


15% of total sales in specialty stores on deals
1987 – 64.8% of combined advertising/promotion budget
spent on promotions.
1988 – Packaged goods manufacturers distributed 221.7
billion coupons.
Generally more deals on packaged goods – long history
associated with packaged goods, specially food items.
**
TRENDS IN SALE PROMOTIONS

Combined consumer and trade promotion as %age of


advertising/promotion budgets
1976 = 58%
1987 = 65%

Distribution of coupons 1977 = 75 billion


1988 = 221.7 billion

Markdown as a %age of total sales 1963 = 6%


1986 = 19.3%

Advertising expenditures increased at a rate of 10% over


previous year while sales promotion expenditures increased
at a rate of 12%.

Upward trends in promotions and deals.


REASONS OF UPWARD TREND IN SALES PROMOTIONS

1: Advertising has become less effective – clutter – cable - VCR

2: Consumers are more price sensitive


3: Many product categories are mature – (not for Pakistani market)
4: Retailers are more powerful
5: Undifferentiated commodity products.

6: More and more businesses emphasize volume

7: In store sales support has declined.

8: Trends in retailer ordering policies result in excess inventory


9: Managers increasingly have a short-term orientation.
Quick results for quick personal gains – next year may not be there.

10: “Prisoner’s dilemma” spiral – competition – has to follow the


trend.
It seems that spiral will keep on extending/stretching …….
E

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