Major decisions in sales promotion: in using sales promotion a company must establish its objectives select the tools develop the program pretest the program implement and control it and evaluate the results.
1. Establishing objectives: sales promotion objectives are derived from broader promotion objectives which are derived from more basic marketing objectives developed for the product. The specific objectives for sales promotion vary with the target market. For consumers objectives include encouraging purchase of larger size units building trial among nonusers and attracting switchers away from competitor's brands. For retailers objectives include persuading retailers to carry new items and higher levels of inventory encouraging off season buying encouraging stocking of related items off setting competitive promotions building brand loyalty and gaining entry into new retail outlets. For the sales force objectives include encouraging support of a new product or model encouraging more prospecting and stimulating off season sales.
2. Select the tools: there are three types of tools:
- Selecting consumer promotion tools: the promotion planner should take into account the type of market sales promotion objectives competitive conditions and each tools cost effectiveness.
- Selecting trade promotion tools: manufactures use a number of trade promotion tools. Surprisingly a higher proportion of the pie is devoted to trade promotion tools than to consumer promotion with media advertising capturing the remaining 25.2 percent. Manufactures award money to the trade for four reasons.
i) to persuade the retailer or wholesaler to carry the brand: shelf space is so scare that manufactures often have to offer prices off allowances buyback guarantees free goods or outright payments (called slotting allowances) to get on the shelf and once there to stay on the shelf.
ii) to persuade the retailer or wholesaler to carry more units than the normal amount: manufactures will offer volume allowances to get the to carry more in ware houses and stores. Manufactures belive the trade will work harder when they are "loaded" with the manufacture's product.
iii) to induce retailers to promote the brand by featuring display and price reductions: manufactures might seek an end of aisle display increased shelf facings or price reduction stickers and obtain them by offering the retailers allowances paid on "proof of performance".
iv) to stimulate retailers and their sales clerks to push the product: manufactures compete for retailer sales effort by offering push money sales aids recognition programs premiums and sales contests.
- selecting business and sales force promotion tools: companies spend billions of rupees on business and sales force promotion tools. These tools are used to gather business leads impress and reward customers and motivate the sales force to greater effort. Companies typically develop budgets for each business promotion tool that remain fairly constant from year to year.
3. Developing the program: in planingn sales promotion programs marketers are increasingly blending several media into a total campaign concept. In deciding to use a particular incentive marketers have several factors to consider.
- size: they must determine the size of the incentive. A certain minimum is necessary if the promotion is to succeed. A higher incentive level will produce more sales response but at a diminishing rate.
- conditions: the marketing manager must establish conditions for participation. Incentives might be offered to every one or to select groups. A premium might be offered only to those who turn in proof of purchase seals or UPC codes.
- duration: the marketer has to decide on the duration of promotion. If the period is too short many prospects will not be able to take advantages of it. if the promotion runs too long the deal will lose some of its "act now" force.
- distribution vehicle: the marketer must choose a distribution vehicle. Fifteen cents off coupon can be distributed in the package in stores by mail or in advertising. Each distribution method involves a different level of reach cost and impact.
- timing: the marketing manager must establish the timing promotion. For example brand managers develop calander dates for annual promotions. These dates are used by the production, sales, and distribution departments.
- sales promotion budgets: the marketer must determine the total sales promotion budget.the budget can be built from the ground up with the marketer choosing the individual promotions and estimating their total cost. The cost of a particular promotion consists of the administrative cost(printing, mailing and promotion the deal) and the incentive cost(cost of premium or cents off including redemption costs) multiplied by the expected number of units that will be sold on the deal.
4. pre testing the program: although must sales promotion programs are designed on the basic of experience pretests should br conducted to determine if the tools are appropriate the incentive size optimal and the presentation method efficient.
5. implementing and controlling the program: marketing managers must prepare implementation and control plans for each individual promotion. Implementation planning must cover lead time and sell in time. Lead time is the time necessary to prepare the program prior to launching it distributed prepration od advertising and point of sale materials notification of field sales personnel establishment of allocations for individual distributors purchasing and printing of special premiums or packaging materials production of advance inventories in preparation for release at a specific date and finally the distribution to the retailer. Sell in time begins with the promotional launch and ends when approximately 95 perecent of thwe deal merchandise is in the hands of consumers.
6. evaluating results: manufactures can use three methods to measure sales promotion effective ness sales data consumer surveys and experiments.