SALES PROMOTION:Consumer Oriented Promotion, HOW TO USE TRADE PROMOTION, Dealing with the Trade

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Advertising and Promotion (MKT621)

Lesson 25

SALES PROMOTION

OVERVIEW

This lecture will review the features of sales promotion as described in the last lecture.

Moreover the types of sales promotion activities its growing importance and the way to use

consumer promotion and the trade promotion, the push pull strategy of trade promotion will be

explained with its primary goals. The tools of trade promotions and how to deal with it and

other promotional techniques besides loyalty programs and their mandates will be addressed.

FEATURES OF SALES PROMOTION:

Following the feature of sales promotion:

· Involves inducement to provide incentive to buy.

· Incentive is the key element in a promotional program.

· Attempts to add value to the product or service by appealing to "value" (pocket).

· Acts as an acceleration tool. Designed to speed up sales.

· Targeted at different parties with different types & levels of incentives.

TYPES OF SALES PROMOTION ACTIVITIES:

There are different types of sales promotion activities and the two main categories in this

regard are explained below, while the consumer oriented promotion is known as Pull strategy

and the Trade oriented promotion is known as Push strategy:

Consumer Oriented Promotion:

Also known as PULL strategy. Targeted to Consumers, e.g. samples, coupons, refunds, rebates,

contests etc.

Trade Oriented Promotion:

Also known as the PUSH strategy. Targeted to Dealers / Distributors., e.g. contests and dealer

incentives, trade shows, trade allowances, point of purchase displays etc.

GROWING IMPORTANCE OF SALES PROMOTION:

The reasons of growing important of the sales promotion is explained below:

· Retailers' Power: In these days there is the shift at the market place from manufacturer to

retailer.

· Declining brand loyalty: Over the last few years brand loyalty is on the decline and the

customers are purchasing more on the basis of price value and convenience. When they

view all brands equal they may shift from one brand to another.

· Brand proliferation:

· The market has become saturated with new brands across all product categories.

· Competition: To maintain competitive advantages manufacturers are increasingly using

sales promotion.

· Increased accountability: The companies now demand results from sale promotions

expenditures.

· Short term focus: The brand managers receive requests from the sales force retailers and

wholesalers for sales promotional activities to meet short term targets.

· Fragmentation of consumer market: The large numbers of marketers are also using sales

promotion techniques to target ethnic markets. As consumers markets are getting

fragmented, the fragmentation due to which mass media advertising is becoming less

effective.

Advertising and Promotion (MKT621)

HOW TO USE CONSUMER PROMOTION:

Following are the way to use consumer promotion:

1. Awareness: In order to make a consumer promotion successful it is essential to create

awareness in the minds of the target audience.

2. Trial: By creating awareness the mind set of the target audience to convince them to at least

try the product which will lead to their using the product.

3. Maintain market presence: It is essential that effective advertising campaign is backed up

by product supply chain to maintain market presence.

4. Brand Reminder: Necessary advertising will be required to remind consumer about a brand

ensuring that it doesn't go out of the mind of the consumers.

HOW TO USE TRADE PROMOTION:

There are three primary goals to be taken into consideration for using trade promotion:

· To stimulate in-store merchandising. e.g. feature pricing, superior store location, or shelf

space.

· To create a high level of excitement about the product among those responsible for its sale.

· To manipulate levels of inventory held by whole sellers & retailers & expanding product

distribution to new areas of the country or new classes of trade.

The following chart explains the push pull strategies for trade promotion from promotional

effort to demand creation:

PUSH - PULL STRATEGIES

PUSH

PULL

Promotional

Manufacturer

Effort

Reseller

Consumer

Demand

Creation

TOOLS OF TRADE PROMOTION:

There are different tools used for trade promotion which are described as below:

· Point of Purchase (POP) Displays: A manufacturer designed display distributed to retailers

for customers' attention is called POP display.

· Merchandise Display: Another popular POP form is the merchandizing display which

retailers used to show case their products and create a personality for their stores.

· Dealer Display: Dealers displays the product to attract customers.

· Trade Deals: Similar to consumer price deal a manufacturer may reward a reseller

financially for purchase of a certain level of a product or support of a promotion.

· Contests: Advertisers can develop contests to motivate resellers.

· Trade Shows and Exhibits: The trade show is where companies with in the same industry

gather to present and sell their merchandize as well as to demonstrate their products.

Advertising and Promotion (MKT621)

Dealing with the Trade:

There are various methods of deal with the trade to lure them for increasing sales.

· Bonuses: A monitory bonus is paid to a sales person who sells units/product over a period

of time.

· Dealer Loaders: These are premiums that a manufacturer gives to a retailer for buying a

certain amount of a product.

· Buying Allowances: A manufacturer pays a reseller a set amount of money or a discount

for purchasing a certain amount of the product during a specified period of time.

· Advertising Allowances: The manufacturer pay the wholesaler and retailer a certain amount

of money to advertise the manufacturers' product.

· Cooperative Advertising: The manufacturer agrees to pay a part or all of the advertising

expenses incurred by the retailer under a contractual agreement.

· Display Allowances: A direct payment of cash and goods is given to the retailer agreeing to

setup the point of sale display.

OTHER PROMOTION TECHNIQUES:

Following are the few other promotional techniques being used now days.

· Sponsorships.

· Event Marketing.

· Aerial Advertising Support.

· Interactive and Internet Promotions.

· Loyalty Programs.

· Partnership Programs.

· Licensing.

· Tie Ins.

Loyalty Programs:

Amongst the other promotional techniques an important technique being used these days is

called loyalty program which also called a continuity or frequency program (such as airline

frequent flyer programs) in fact these programs are a promotional activity to increase customer

attention. Following are the four mandates of loyalty programs.

· Identify your best customers.

· Connect with those best customers.

· Retain the best customers, usually by rewarding them for their patronage.

· Cultivate new "best customers."

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