Sales promotion helps in increasing sales for potential short term period; however, it is not helpful enough to generate long-term customer loyalty. It is designed for distribution channels and also for sales force of the organization.
According to William J. Stanton, “Sales promotion is an exercise in information, persuasion, and influence”.
According to Philip Kotler, “Promotion encompasses all the tools in the marketing mix whose major role is persuasive communication”.
There are different types of sales promotion and each is given importance, depending on the circumstances or situations, like:
1) ‘Consumer-based sales promotion’ is used to enhance the sale of seasonal products during off-seasons.
2) ‘Middlemen or channel-based sales promotion’ is used in the case when the middlemen or channel intermediaries are more close to customers than original manufacturers.
3) ‘Salesmen-based sales promotion’ is used to motivate salespeople when the focus of sales is to remove old inventory.
Process of Planning Sales Promotion Programme: Sales Promotion Plan
Different types of media are used by marketers in any sales promotion plan. A typical sales promotion plan includes the following steps:
1) Establishing Objectives:
The very first step of a sales promotion plan is to establish a sales promotion objective(s). Product-related marketing, as well as promotion objectives, help in designing the sales promotion objectives. Different sales promotion objectives are established for different target markets. For example, sales promotion objectives established for consumers may include prompting bulk purchases (or purchasing large units), getting switchers back, and encouraging nonusers to purchase organizational products and services.
2) Select the Tools:
In the second step, as per the sales promotion objective(s), promotion tools are selected, Different promotion tools are as follows:
- Consumer-Promotion Tools: Here, tools targeted at consumer-promotion are selected by the promotion planner. Factors like expense, target market, competitive conditions, and sales promotion objectives are considered for suitable tool selection.
- Trade-Promotion Tools: According to the objective, most of the times trade promotion tools are selected by promotion planners. In a particular sales promotion pie chart, the largest section is covered with trade-promotion tools, whereas consumer-promotion tools and media advertising cover the rest.
- Business and SalesForce Promotion Tools: In order to fulfill certain business and sales force related promotion objectives like collecting leads, motivating sales force to improve its performance, and impressing and rewarding customers, organizations generally use business and sales force promotion tools. An annual budget for different business promotion tools is designed by the organization. Thus, billions of rupees are spent on designing and utilizing such tools.
3) Developing the Plan:
The next step is devoted to the development of a sales promotion plan. Following factors should be considered while developing the sales promotion plan:
- Size: Determining the size of the promotion tool is very crucial for effective sales promotion. An appropriate size of the promotion is required for successful sales promotion as using a huge promotion tool may lead to improved sales but with a fading rate.
- Conditions: It is also essential to draw the conditions for consumers to avail of such promotion tools. Either it may be targeted at every individual or some specific person or group. A person or group of persons having UPC codes (or proof-of-purchase seals) may avail premiums of the promotion.
- Duration: The appropriate duration of the sales promotion tool(s) should also be decided by the promotion planner. It should not be too short (so that majority of prospects remain unserved) or too long (so that it diminishes its value).
- Distribution Vehicle: A distribution vehicle is also necessary for serving sales promotion tools to consumers. The promotion planner is required to select a suitable distribution vehicle (according to cost, the extent of reach and effect) for each promotion tool. For example, simple mail, advertisement, package of the product, or even the store may be used as a distribution vehicle for offering fifteen percent off coupon.
- Timing: The timing of offering a particular sales promotion is also considered before finalizing the sales promotion plan. For example, different calendar dates are selected by brand managers to offer sales promotion tools and production, sales, and distribution departments of the organization manage their operations as per these dates.
- Sales-Promotion Budget: The last factor considered while developing the sales promotion plan is the budget of the sales promotion. This budget may be developed by estimating the cost individually or collectively. Sum of promotion tool cost (like cost incurred on discounts or premiums) and administrative cost (like the cost of mailing, printing and communicating) is multiplied with the possible number of units to be sold, to determine the total cost of the promotion.
4) Pre-testing the Program:
After developing a sales promotion plan, it is essential to pre-test it. Although a list of factors is considered while developing the plan, the pre-test highlights its merits and demerits. Several aspects of the promotion tool like its size, distribution method, suitability, etc., are analyzed with the help of the pre-test.
5) Implementing and Controlling the Program:
The next step includes the formulation of implementation and control plan so as to manage every sales promotion tool. Two important aspects, i.e., lead time and sell-in too are covered under the implementation plan. The time elapsed in developing the sales promotion plan prior to its launch is called Lead time. It starts from initial planning and lasts up to final distribution to the dealer, involving several important happenings (like designing and selection of package materials, finalizing promotion and sale materials, informing and preparing salespersons, allocating distributors, and producing inventories).
The time elapsed from the launch of the sales promotion tool to the sale of approximately ninety-five percent of the promoted product to the consumer is known as Sell-in time.