Evaluating sales promotion effectiveness

31/3 /2014

Made by:

Chernyak Elena

Karpukhina Tatiana

Solovyeva Tatiana

Shun Hui Luar

Overview

Introduction1. Sales promotion

Sales promotion techniques Purposes

2. Benefits and limitations of sales promotions3. Sales promotion effects4. Evaluation of sales promotion

Theory Practice Examples of promotional activities

Conclusion

Introduction

Important for most business enterprisesEspecially so with increasing market

competitionSales promotion can help achieve every

business’ ultimate goal of having greater salesSales promotion can also promote greater

usage and trialability Marketers often use sales promotion to alter

the price-value relationship of their products or services, as part of the overall marketing strategy

Introduction

Find out how effective are sales promotion

Techniques

1. Money off2. Coupons3. Free gifts4. Free mail-ins5. In-store sampling

Techniques

1. Money off Provides consumers additional products with little or no extra charge Most widely used today Example: price pack, buy 2 get 1 free Size of price reduction depends on brand requirements and the

competitive environment Disadvantages

All consumers (including non-loyals) receives the same incentive Can be easily matched by competitors Frequent use of this technique may result in lower price expectation

Advantages Can be implemented quickly Able to forecast outcomes with relatively high accuracy Well-liked by consumers and traders No need for economies for scale to implement, useful for small co.s

Techniques

2. Coupons Many different variations

Give coupon for product A upon purchase of product A

Give coupon for product A upon purchase of product B, also known as cross-couponing

Distributed online, or door-to-door Similar visual impact as that of

money off, but has a lower real cost, since the level of redemption is often low

Techniques

3. Free gifts Advantage of immediacy 4 main types

On-pack free gift In-pack free gift With-pack free gift Pack itself

Techniques

4. Free mail-ins Send in several proofs of purchase to redeem gift item The gift item may help in the brand differentiation Helps in building loyalty Potential problems

Difficulty in choosing the right merchandise to offer This technique lacks immediacy Generally low appeal to consumers

Techniques

In-store sampling Provides a direct interface between product and

potential customers Especially useful for complex or new products

Purposes

Increase market share For both new and existing

company in the market: encourage trials and hopefully a switch in loyalty to their brand

To clear stocks When the company is introducing

a new product, as a improved version of the old product

Not enough inventory space in the warehouse or retail outlets

Shelf-life

Benefits

To adjust to variations in supply and demand without changing list prices

Small firms can use this as a marketing strategy to compete with big firms

Firms with niche market products can use this marketing tool

Useful for first-time entry into the market Induce trials

Limitations

Weaker brand imageLower consumer loyaltyProblem of stocking up

Outcomes

Increased market shareUnchanged market share

Attracted “cherry pickers”, who did not buy the product after the promotion

Existing customers continue to buy the company’s products

Decreased market share

Evaluation - Theory

Obtain the actual volume of sales: before the promotion and after the promotion Three consumer responses

Competitor steal Brand cannibalization Category growth

Customer survey to evaluate brand awareness

Calculate total costs of the promotion Main cost = Volume sold * Reduced price per pack Other costs like dealer incentives

Evaluation - Practice

Seek help from marketing agencies Use panel data gathering to determine how successful

the promotion was Loyal customers Cherry pickers Brand-switchers Consumption per person in the short and long run The extent to which the promotion was made known to target group

Evaluation - Practice

Retailer to evaluate sales Before During After Using ad hoc research

like surveys

Example 1: Coca-Cola

Targeted at the loyal customers

Aims to increase the volume per buyer

Note that the campaign is held during the festive season

We expect an increase in sales will come from loyal customers, switches, and not cherry pickers

Example 2: Auchan Maslenitsa

Maslenitsa lasts for only one week every year

Auchan offers them at a low price even though there is high demand

Strengthen its brand image as a discount store and attract more sales in its other areas

Example 3: Domestos

Example of never ending promo campaign Offers extra mililitres free Bundles with other products

from the same companyDifficult to evaluate the

sales effectiveness of this product

Conclusion

Short term sales promotions may result in greater sales, so retailers should prepare more stocks to prevent shortage

Promotions can excite shoppersPromotions can also encourage trials and raise

brand awarenessFrequent price promotions are harmfulPromotions should be used together with

advertising for best outcomesEnsure consistency between promotional tool

and the product position

ENJOY SALES PROMOTIONS