Marketing Communications

Chapter 12 : Sales Promotion Strategy

Reasons Behind Growing Importance of Sales Promotions

Growing Might of Retailers
Saturation of Market and Increased Similarities in Competing Brands
Consumer Preference Towards Promotional Offers
Decline in the Effectiveness of Advertising
Short-term Focus of the Companies

Types of Sales Promotions

Trade Promotions
Consumer Promotions

Objectives of Sales Promotions

Consumer Promotion Objectives
Trade Promotion Objectives

Planning Sales Promotion Program

Situational Analysis
Identification and Setting up of Basic Objectives
Identification of Right Promotion Program
Implementation of the Promotion Program
Follow-up and Evaluation of Results

Measures to Improve Effectiveness of Sales Promotions

Customize Sales Promotion Campaign to Suit the Target Market Segment
Identifying Synergies Between Various Types of Promotions
Understanding the Impact of Sales Promotion Activities on Channel Members
Systematic Tracking and Assessment of Sales Promotion Activities.

Chapter Summary

Sales promotions are short-term incentives that are offered to consumers and channel members to stimulate consumer demand and improve dealer effectiveness. There are two types of sales promotion activities, consumer promotions and trade promotions. Consumer promotions include price-offs, coupons, bonus packs, sampling, premiums and prize promotions.

Trade promotions include trade incentives, trade contests, training programs, cooperative advertising and trade shows. The importance of sales promotion activities in the marketing communication mix is increasing. Nearly 50% of the marketing communication budget is being allocated to sales promotions.

Various factors have led to the growth in sales promotions. They are: decrease in the effectiveness of advertising; increased presence of retailers in the consumer product market and their influence on consumer behavior; increasing competition and decrease in product differentiation among competing brands; the short term focus of companies coupled with consumer preference for promotional offers.

Proliferation of brands in the consumer goods industry has made it difficult for packaged goods manufacturers to secure the cooperation of intermediaries and patronage of end customers. Manufacturers thus, use sales promotions to attract the attention of end customers and the cooperation of trade channel members.

Some of the major objectives of sales promotion activities include increasing brand awareness, inducing trial, improving market share, increasing brand loyalty of the customers and motivating channel members. Proper planning and implementation are essential for success of sales promotion programs. Planning of the sales promotion program starts with situational analysis where the role of sales promotion in solving a problem or exploiting opportunities is determined.

Then, the basic objectives behind implementation of the sales promotion program are identified. Later, an optimal promotional program that would help in achieving the set objectives is designed. The sales promotion program is then implemented. Finally, the results obtained from the sales promotion are analyzed, to incorporate the findings in future campaigns.

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