Page 173 - DMGT507_SALES AND PROMOTIONS MANAGEMENT

Unit 9: Sales Promotion

2. Trade promotion, and Notes
3. Sales force promotion
There are two major approaches for consumer and trade promotions:
1. Same for less, and

2. More for the same
Immediate Value Offer vs Delayed Value Offer: Sales promotions can offer immediate value to
consumers or the re-sellers, such as a discount, extra goods, or a premium. The delayed value
promotions reward the consumer or re-seller sometime after the purchase of the product or
service, such as rebates, contests and sweepstakes, frequent flier offer, or after making multiple
purchases. Immediate value offers produce a stronger impact, stimulate customers for unplanned
purchases, and encourage brand switching at the point-of-purchase.

Example: There is significant brand switching in toiletries, laundry products, soft drinks,
and cooking oils, etc.
Delayed value offers produce a weaker response because the reward for behaviour is possible
after some time lag. However, the effect of delayed value offers is longer lasting. When a
customer is required to collect proof of multiple purchases, there is a reminder of the product
and the customer is also exposed to longer duration of product usage.

Price-Cut vs Extra Value Offer: The manufacturer or the retailer may offer "same for less" in the
form of a price discount on the promoted product. Or, there could be an offer of extra value,
which would be "more for the same". For example, a special bonus-pack that contains more
quantity of the same product without any increase in the price, or a premium offered free with
the purchased product. This extra value offered is independent of the promoted product and has
more value to the customer than the cost to the marketer. Such premiums can be quite helpful in
building the long-term brand strength of certain brands. Consumer promotions, which frequently
offer price cut, or extra quantity of the same product, generally degrade the perceived value of
the brand and may weaken its brand strength.
Manufacturers of high-involvement products prefer not to offer straight price discounts because
this approach may disrupt the price-quality perception of customers, who may develop some
negative evaluation of the product. Straight price reductions may be used only in case this type
of promotion is common to the category. In general, price cuts are limited to low-end products
in a product-line and prove to be more effective. A variety of "more for the same" or extra-value
promotions can be used for expensive high-involvement products. For example, some computer
manufacturers are adding accessories in their offer.
In case of low-involvement products, major portion of sales promotion budget is allocated for
rewarding the consumers at the time of purchase by cutting the price or offering extra quantity
of the product (immediate value offer). This is especially true if the product category is susceptible
to unplanned or impulse buying and variety seeking; offers that encourage consumers to buy
multiple units; continuity promotions, such as in-pack or on-pack coupons; and interest
promotions that excite consumers, such as contests and sweepstakes.

Which Products to Promote

Resellers perceive inventory risk associated with stocking or not stocking the product on
promotion. The following conditions may be the cause of risk perception:
1. When the consumer demand for the product is unpredictable.

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