advertising * sales promotion
The Strategic Use of Sales Promotion…. Over the years, theAgency.SP has become aware of a general group of misconceptions about sales promotion and its role in a marketing strategy. Volumes have been written on sales promotion and it is not our intent to duplicate those volumes in this article. We do intend to outline a few of the more effective and overlooked uses of sales promotion as well as some of the more commonly overlooked implementation pitfalls. It is also not our intent to cover the many brand strategy considerations that should be considered before any advertising and sales promotion plans are drawn. We will attempt to clarify the strategic use of sales promotion to bolster a marketing plan in several product lifecycle scenarios. It is comforting to remember that 15 years ago, the ratio of advertising dollars to sales promotion dollars was approximately 60:40. Today, in many categories that ratio has reversed. When Does Sales Promotion Work? Sales promotion is most commonly thought of as cents-off coupons, sweepstakes, scratch-off games and certain “giveaways” aimed at consumers within a short period of time and meant to generate quick sales or short-term volume. While sales promotion can be produced in a relatively short period of time and does not carry the same indirect costs associated with traditional advertising, sales promotion is not thought of as a way to build a brand or enhance an image. Fortunately, these misapprehensions are not necessarily true. Sales promotion, when folded into a comprehensive marketing plan, can contribute to a company’s brand, employee utilization, distribution channels, training and much more. Sales promotion can “smooth” seasonality, inventory or pipeline inefficiencies. Because of its immediate impact on the market, sales promotion can be used to test pricing issues and clarify price elasticity or inelasticity. The ability to improve short-term volume can also be used sparingly to lower per unit costs. The key is to avoid using sales promotion merely as tourniquet to stop bleeding in an unforeseen crisis. When this happens, it is much harder to make sure your message maintains fidelity to the longer term marketing strategy, formed when things were calm. While it is true that sales promotion can work effectively in emergency situations, and should not be overlooked, it is ultimately more effective when it is a regular part of your marketing arsenal. The most common use of sales promotion is to attract consumers to your product. Traditionally, it is used against products in the latter stages of life. To a lesser extent, it has been used to introduce a product, stimulate consumer trial and generate interest from distribution channels in new products. Sales promotion is used more often when you are faced with a large number of competitors. It helps pull your product out of the pack. It can also help when your distribution channels are limited and wield a great deal of power. A few questions to ask as you consider consumer directed sales promotion:
How to chose a promotion design. There are as many promotion types as there are creative minds to design them. COMMON CONSUMER PROMOTION TYPES
Each promotion type has distinct characteristics suggesting its appropriateness. It is important to keep these in mind when developing a promotion plan. What if you gave a party and nobody... How you plan to “distribute” your promotion is an important decision. For example a coupon can be: in-pack, available at the point of purchase, part of a direct mail program, or in print or online media. The choice of distribution will impact how many people are exposed to your promotion, its cost and effectiveness. Your choice will be dependent on the category, what your competitors are doing, the length of the promotion, the scope of your market and the promotion type. Always keep in mind how you will distribute your promotion to your audience and make the determination early in your planning. Sales promotion directed elsewhere. Trade promotions have been around even longer than consumer promotions.They are so common that in many industries, they are practically a required part of doing business. Trade promotions are used to:
Unfortunately, in many industries, trade promotion has become a bloody battlefield between the marketer and the distribution channel. No industry is a better example than the grocery business, where slotting fees are mandatory and the number of brands carried shrinks yearly. (This unfortunately is becoming the standard in other industries such as computer software retailing as well.) If your product category is one in which trade promotions have become mandatory, innovative thinking may help protect precious margins. In trade promotions there are fewer “types” and thus the decisions are somewhat easier and their applicability much less sensitive. Common trade promotion types.
Inner directed promotions. Often overlooked is the use of promotion to incent and train employees. Here again, creativity is the only limiting factor in promotion’s use and effectiveness. While it is not uncommon to use a promotion to invigorate a sales force, promotion can also expand a sales force by enlisting the aid of retail clerks, consumers, customer service and repair forces.
A well designed, on-going promotional plan can help turn a hostile, disenfranchised work force into an evangelizing “family”. This is particularly well documented in industries where takeovers have produced widespread employee unrest. We hope this has helped you begin your thinking about the use of sales promotion. As in every other form of marketing communication, sales promotion must begin with a clear, competitive strategy. Remember, marketing is civilized warfare and you must have a battleplan. |