Download - Evaluating sales promotion effectiveness
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