Sales Promotions may be defined as (short term) incentives
to encourage trial or purchase of any product
Sales Promotions: Marketing activities that add to
the perceived value of a product for a limited time and thus directly stimulate customer purchases Brand image advertising is a strategic activity, using rational & emotional appeals to encourage prospects to buy the brand rather than choose competitive brands
Sales Promotions are usually tactical actions,
providing customers incentives to buy a specific brand within a particular time, or to buy larger than normal amounts, or to try a new category or brand
Certain Sales Promotions cannot be short term exercises –
customer loyalty programmes like frequent flier schemes or credit card reward point offers Advertising
Increases ‘prime franchise’ of brand –
gives reasons to prefer / select brand Requires time to achieve results Effects decay slowly after campaign concludes Can build brand loyalty over time Sales Promotions
Exhibit immediate response by way of sales
Cannot easily get new loyal customers, especially in mature markets Succeed due to “deal prone” customers Brand loyal users seldom tempted even for trial purchase No residual effect after cessation of promo Reasons for Rapid Growth in Sales Promotions
Multiplicity of parity brands in each category
Customers have become ‘deal oriented’ Most companies use sales promotions; not offering incentives risky for a brand Advertising efficiency declining due to media clutter and fragmentation along with rising costs Greater pressure to achieve volume targets Roles & Objectives Customer oriented Generating trial at launch Generating trial among Trade oriented non-users Offsetting competitive Encouraging larger volume promotions purchases Getting more shelf space Retaining loyalty Achieving off-season Moving stagnant stocks stocking Creating excitement for Motivating during launch, fashions / fads inducing stocking & visibility Countering competitive promotions / launches Consumer Oriented Schemes
Most schemes are ‘indiscriminate’ – they tend to reward
all buyers identically, irrespective of brand loyalty A scheme where coupons or a used pack may be exchanged against the next purchase tends to build some loyalty, if only for the duration of the scheme Not all customers are equal… Providing average-value products to all customers means wasting resources in over-satisfying less profitable customers while under-satisfying more valuable (more loyal) customers
Can you guess the outcome?
More valuable / profitable customers leave due to
dissatisfaction… less desirable customers stay, diluting profits and creating frustration among all Sampling
Free / subsidized trial – single / multiple stage
Somewhat expensive, but quite effective “Get them to try… if you want them to buy” Coupons on pack / in print media / door to door 15-20% savings attractive Redemption rates usually 10-15% Handling charge to ensure cooperation from trade Discounts / Price Offs
Very commonly used
Tend to downgrade brand image, especially if used too often Easy to administer, but pack changes might be needed Premium Packs
Also called bonus packs – larger than
normal quantity at same price Deleterious effect on brand image less than simple price-off Need pack change Gifts Banded offers – gift attached outside pack; also called on-pack gifts In-pack gifts BOGOF Scratch cards – retailer cooperation needed Separate gifts – retailer cooperation needed; scheme has to be adequately advertised Special Packs
Usually packs that may be re-used as mugs,
jars, storage containers… May also be used for next purchase which comes as “refill pack” at lower price Demonstrations Are these sales promotions or some other type of marketing activity?
Common for durables
Can be clubbed with special offers Can create quick awareness and excitement Games
Contests / games / lucky draws
Governed by laws applicable to lotteries Other legal implications Need extensive advertising support Loyalty Programmes Extensively used by retail chains: supermarkets, departmental stores, medicine shops Also by airlines, hotels, credit cards… Rewards & redemptions moving out of specific sector to include unrelated non-competing brands – airlines, fuel pumps, retail, multiplexes, florists, coffee shops, salons / saloons, bookstores, spas… the list goes on Loyalty & Rewards Programmes
Long term perspectives essential
Offers must target attractive and valuable customers Question: does the programme align with company capabilities, mission, aims? Will customers value the programme? Will partnering make the programme more competitive? Trade Oriented Schemes Quite commonly used to obtain cooperation from various levels of distribution channels. Usually transparent to buyers / customers, except display contests
Display contests quite useful for launches and
seasonal products; create quick awareness and interest among buyers Special discounts – to induce higher stocking Free goods – much like the above Speciality advertising items / allowances / shop décor items… Some Tips… 1. Aim: to maximize effect of promotion at minimum expenditure on promotion + support advertising 2. Scheme should encourage immediate response 3. Incentives / rewards should be meaningful from customers’ perspective 4. Clear, transparent, credible, honest, easily understood 5. Support ad highly visible in multiple media 6. Close identification with brand – theme, mood, visuals… 7. Should benefit customers, trade channels, sales force 8. Follow legal stipulations More Tips… Freebies give immediate surge in volumes… but used too often means consumers get habituated Look beyond the obvious: Pepsi offer with mobile phone service providers, retailers… don’t make the buyer work too hard to win “Add-on” better than “Pile-on”: give-aways must be complementary and meaningful for the buyer... “who needs a third shirt?” Let the customer work out the freebie: gifts worth Rs X or price reduction of Rs X