Tracking Sales Promotions

This response to a question was on a Yahoo blog and it relevant especially in regards to leveraging a Demand Signal Repository (DSR) to track the various promotion types. Of the 12 promotion types listed, only a few are easily tracked and reported. But if the manufacturer, retailer and/or promotional company have very good methods for tracking the promotions and correlating them back to either the store or region for integrating within the DSR, the benefits would be monumental for tracking the ROI for these investments.

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Several sales promotion techniques are highly effective in exposing customers to products for the first time and can serve as key promotional components in the early stages of new product introduction. Additionally, as part of the effort to build product awareness, several sales promotion techniques possess the added advantage of capturing customer information at the time of exposure to the promotion. In this way, sales promotion can act as an effective customer information gathering tool (i.e., sales lead generation), which can then be used as part of follow-up marketing efforts.



Why is the value of Sales Promotion?

* Creating Interest – Marketers find that sales promotions are very effective in creating interest in a product. In fact, creating interest is often considered the most important use of sales promotion. In the retail industry, an appealing sales promotion can significantly increase customer traffic to retail outlets. Internet marketers can use similar approaches to bolster the number of website visitors. Another important way to create interest is to move customers to experience a product. Several sales promotion techniques offer the opportunity for customers to try products for free or at low cost.

* Providing Information – Generally sales promotion techniques are designed to move customers to some action and are rarely simply informational in nature. However, some sales promotions do offer customers access to product information. For instance, a promotion may allow customers to try a fee-based online service for free for several days. This free access may include receiving product information via email.

* Stimulating Demand – Next to building initial product awareness, the most important use of sales promotion is to build demand by convincing customers to make a purchase. Special promotions, especially those that lower the cost of ownership to the customer (e.g., price reduction), can be employed to stimulate sales.

* Reinforcing the Brand – Once customers have made a purchase sales promotion can be used to both encourage additional purchasing and also as a reward for purchase loyalty (see loyalty programs below). Many companies, including airlines and retail stores, reward good or “preferred” customers with special promotions, such as email “special deals” and surprise price reductions at the cash register.

Sales Promotion Forms and Objectives

There are many sales promotional techniques (and the number is still growing with the development of new ways to reach consumers), but they can apparently be reduced to 12 classical and widely used. The rest of the techniques usually include some kind of combination of these 12 most used techniques of sales promotion.

1. Sampling - the use of various distribution methods to deliver actual or trail size products to consumers with the purpose to initiate trial

2. Coupons - A promotional device that provides a price-off to consumer upon redeeming the coupon

3. Trade incentives - incentives that are given to retail managers and sales people for performing tasks such as displaying merchandise or selling certain lines of merchandise

4. Trade allowances - deals that are offered to retailers for performing activities in support of manufacturer brand

5. Price-offs - promotion which entails a reduction in the brand's regular price

6. In, on, and near-packs (and reusable containers) - specially designed pieces that retailers give to consumers who purchase the promoted product

7. Free-in the mail premiums - a promotion in which consumers receive premium item from the sponsoring manufacturer in return for submitting a required number of proofs of purchase

8. Self-liquidating premiums - a method where the consumer mails in a stipulated number of proofs of a purchase along with the fee to cover manufacturer's costs of shipping and handling of premium item. From manufacturer's point of view, this form of promotion is cost free, and therefore the name is self-litigating

9. Contests and sweepstakes - a form of consumer oriented promotion in which winners receive prizes, cash, or merchandise

10. Refund offers - A cash reimbursement to the consumer by the manufacturer whose product the consumer has purchased

11. Bonus packs - Extra-quantities of a product that company gives to consumers at a regular price

12. Stamp plans and continuity premiums - type of promotion where the consumer is getting rewarded for continuos use or repetitive purchase of a product or service, such as a frequent flyer programs.These techniques can be trade or consumer oriented.Because sales promotional tools are so varied in form, no single unified objective can be identified for them

There are three major contributions of sales promotions that have practical influence of the objectives of promotion: (Kotler 1988)

1. Communication - promotions gain attention and usually provide information that may lead the consumer to the product

2. Incentive - they incorporate some concession, inducement or contribution designed to represent value to the receiver.

3.Invitation - promotions include a distinct invitation to engage in the transaction now.

Source: http://answers.yahoo.com/question/index?qid=20070602104110AANfRTs