In planning sales promotion programs, marketers are increasingly blending several media into a total campaign concept.
In deciding to use a particular incentive, marketers have several factors to consider. First, they must determine the size of the incentive. A certain minimum is necessary if the promotion is to succeed. Second, the marketing manager must establish conditions for participation. Incentives might be offered to everyone or to select groups. Third, the marketer has to decide on the duration of the promotion. According to one researcher, the optimal frequency is about three weeks per quarter and optimal duration is the length of the average purchase cycle. Fourth, the marketer must choose a distribution vehicle. A 15-cent off coupon can be distributed in the package, in stores, by mail or in advertising. Fifth, the marketing manager must establish the timing of promotion. Finally, the marketers must determine the total sales promotion budget. The cost of a particular promotion consists of the administrative cost(printing mailing, and promoting the deal) and the incentive cost (cost of premium or cents-off, including redemption costs), multiplied by the expected number of units that will be sold on the deal. In the case of a coupon deal, the cost would take into account the fact that only a fraction of the consumers will redeem the coupons.
Although most sales promotion programs are designed on the basis of experience, pretests can determine if the tools are appropriate, the incentive size optimal and the presentation method efficient. Consumers can be asked to rate or rank different possible deals, or trial tests can run in limited geographical areas.
Marketing managers must prepare implementation and control plans that cover lead time and sell-in time for each individual promotion. Lead time is the time necessary to prepare the program prior to launching it: initial planning, design, and approval of package modification or material to be mailed or distributed; preparation of advertising and point-of-sale materials; notification of field sales personnel; establishment of allocations for individual distributors; purchasing and printing of special premiums or packaging materials , production of advance inventories in preparation for release at a specific date; and finally the distribution to the retailer. Sell-in time begins with the promotional launch and ends when approximately 95% of the deal merchandise is in the hands of consumers.
Manufacturers can evaluate the program using three methods: sales data, consumer surveys, and experiments. The first method involves scanner sales data Marketers can analyze the types of people who took advantage of the promotion, what they bought before the promotion and how they behaved later toward the brand and other brands. Did promotion attract new trial customers and also stimulate more purchasing by existing customers?
In general, sales promotions work best when they attract competitors’ customers who then switch. If the company’s product is not superior, the brand’s share is likely to return to its pre-promotion level. Consumer surveys can be conducted to learn how many recall promotion what they thought of it, how many took advantage of it, and how the promotion affected subsequent brand choice behavior. Sales promotions can also be evaluated though experiments that vary such attributes value, duration, and distribution media. For example, coupons can be sent to half of the households in a consumer panel. Scanner data can be used to track whether the coupons led more people to buy the product and when.
There are additional costs beyond the cost of specific promotions. First promotions might decrease long run brand loyalty. Second, promotion can be more expensive than they appear. Some are inevitably distributed to the wrong consumers. Third, there are the costs of special production runs, extra sales forces effort, and handling requirements. Finally, certain promotions irritate retailers who may demand extra trade allowances or refuse to cooperate.