The Purpose Behind
Sales Promotion
Sales Promotion
• Definition :
“Sales Promotion is a range of tactical marketing techniques
designed within a strategic framework to add value to a
product or service in order to achieve specific sales and
marketing objectives “
Promotional Mix
• Advertising
• Sales Promotion
• Publicity
• Direct Marketing
Sales Promotion
• Sales Promotions are :
– Action focused : Clipping, saving and redemptions, mailing,
consumer effort, cooperative adveritising
– Marketing Events : End users, retailers or distributors
– Have direct impact on behavior – problem recognition,
awareness, attitude and purchase intentions
– Designed to influence consumers or marketing
intermediaries
Sales Promotion
• Hence the alternate definition is:
“ Sales promotion is an action-focused marketing
event whose purpose is to have a direct impact on the
behaviour of the firm’s customers”.
• Advertising brings horse to the water;
sales promotion makes it drink
• Sales promotion focuses consumer
attention on particular product, at a
particular time, in particular place and
provides the incentive to buy at that
moment
Types of Sales Promotion
• Consumer Promotions
• Retailer Promotions
• Trade Promotions
Business & Marketing
The Consumer
Market Intelligence Marketing Order
Inputs Promotion Sales Fulfilment
Marketing Customer
Business Plan Services
Objective
Order
Processing
Strategy The Business
New Product
Development
Office, Production
Finance
Marketing Tools
The Consumer
Customer
Tool 1
The Public Tool 7 Revenue
Market
Measure Expenditure
Research
VFMM
Tool 2 Tool 3 Tool 4 Tool 5 Tool 6
Brand / The Offer Promotion The Sales Sales
reputation The six Cs Process Promotion
PR Direct Marketing
Advertising
Non face-to-face Face-to-Face
D2D,Direct Mail FM
P&G’s Business Strategy
• P&Gs new purpose is to “touch and improve
more people’s lives, in more parts of the world,
more completely”
CEO, Bob Mcdonald
Business & Marketing Objectives
• Must be SMART
– Specific
– Measurable
– Agreed
– Reasonable
– Timebound
Factors Influencing Sales Promotion
Growth
• Increasing Competition
• Price sensitive customers
• Immediate positive impact on sales
• Standarised products
• Consumer Acceptance
• Expectations of price decrease
• More expensive and less effective
advertisements
• Powerful trade
Factors Influencing Sales Promotion
Growth (2)
• Emphasis on Sales Volume
• Maximise profit
• Introducing element of interest
• Increased impulse buying
• Availability of specialists
• Excess stocks
Price Versus
Value Promotions
Theory of the Prisoner’s Dilemma
Prisoner B
Does Not Confess Confesses
(2,2) (10,0)
Does Not Confess
Prisoner A Confesses (0,10) (5,5)
Prisoner B
Does Not Confess Confesses
Does Not Confess 2 10
Prisoner A Confesses 0 5
Promotion / No Promotion
Competitor ‘A’
No Promotion Promotion
High Profits for both Increase in Market
No Promotion
competitors share of Competitor A
Competitor ‘B
Increase in Market 5 years
share of Competitor B Profits low for both
Promotion Profits low for both,
Market Share stable
Sales Promotion planned for
contingencies
• Contingencies due to competition action
– Slow offtake
– Loss of distribution width
• Opportunity
– Share from competition
– Build awareness
Capability of the Organisation
Tactical approach
• Having number of promotional offers to
use when called for
• Imagination
• Speed
• Resourcefulness to react quickly to
competitive pressure
• To seize short term market opportunities
• Short term vs long term view
Strategic approach
• Understand the strategic framework in terms of
the competitive advantage and positioning that
should underpin every sales promotion, as with
any other marketing activity.
• Establish guidelines for each product or service,
determining the style of sales promotion that will
be appropirate to it. – this is the same for all
marketing activities.
• Ensure that sales promotions are handled or
overseem by a sufficiently senior executive that
that they are conceived, integrated and
implemented professionally
Strategic approach (2)
• Insist that sales promotions are researched
and evaluated through marketing
accountability measurement in a way that
enables you to assess their performance and
compare it to that of other types of marketing
expenditure.
• Plan and budget for your use of sales
promotion over the year ahead so that the
promotions become integral to your marketing
effort alongside other marketing activities.
