SALES PROMOTION BUDGET AND SALES PROMOTION EVALATION

SALES BUBGET PROMOTION

The allocation of monetary resources to sale promotion is determined by the promotion strategy of the firm most major firm keep a contingency reserve. Before deciding the budget for sale promotion the management should evaluate relevant factor such as

 Type of product its stage in PLC Market situation Level of competitive activities All these factor along or in combination can significantly affect the promotion budget .

 There are five important techniques which are commonly used to allocate funds to sales promotion. 1. Percentage of sales method The percentage of sales method to allocate the fund is probably most popular among companies .In this approch, the budget is determined by taking a fixed percentage of sales

2. Unit of sales method this method is commonly used by companies dealing in high priced products, generally consumer durable goods such as four and two- wheeler ,auto, refrigerators, washing machines, microwave ovens, entertainment electronics and many other items.

3. Competitive parity method Many marketers feel comfortable in matching or basing their sales promotion budget to that of the major competitors .The logic attributed to this method is that the collective minds of the companies in the industry probably generate promotion budgets that are close to optimal and any departure from the industry norms may lead to promotion war.

4. All you-can-afford method In using this approach to budget allocation, the amount that is left over after all relevant allocations have been made, is earmarked for sales promotion. This approach is ,used, generally by companies, large as well as small, when they are introducing a new product .s

5. Objective end-task method Objective-end-task approach is one which is driven by strategy. This is also the most popular technique to decide the sales promotion budget. The promotion manager starts by making a thorough study of the market, the product, competition and consumer behaviour in order to set appropriate promotion objectives. These objectives may relate to increasing short-term sales introducing a new product, stimulate trial, increasing distribution, etc., with in a specified period of time.

Sales promotion evaluation

Sales promotion are undertaken to achieve specific business objectives. They are undertaken in preference to other forms of marketing expenditure because they are thought to be the most effective way to achieve the task in hand. To be effective, they must offer real extra benefit and that normally costs money. So it is absolutely critical to ensure the promotions are thoroughly research and evaluate to ensure that they are effective

Research objectives
sales promotions research is subject to the same rules as any other marketing research research. There are three main area of promotional research: - Planning research to segment the market into particular groups that will be suspectible to particular types of promotional activity. -Pre-testing research to identify the particular promotional concepts that will meet the objectives

-Evaluative research to measure the effect and impact of promotions and to feed into the planning of future promotions. Each of these areas can be addressed by the three methods of desk research, field research and market testing. Planning research Planning research is an input into strategic questions such as the split of marketing budget between advertising, sales promotion, direct marketing and publicity, and the formation of strategic plan for sales promotional activity over a number of years.

Pre-testing research
this research comes in when you have clearly established objectives for a particular promotion,and a series of alternative promotional concepts that meet those objectives.there are a number of questions which research can be used to answer,and which can have a vital bearing on the selection of the promotional concept: -The level of respose you can expect from a particular element in the promotion.

-The clarity of communication in the particular way the offer is themed and expressed. -The effect on the image and value of product or services made by a particular promotional offer. -The level of spontaneous interest in, and therefore the attractive of, different promotional concepts.

 Evaluative research involves collecting together all the factual data on response rates, sales patterns, consumer complaints and other readily measurable variables Desk research it has the advantage that it can be done by yourself, at your desk and at nil or low cost. Field research Field research involves collecting information directly from the market by way of a sample designed to be representative of your target market.

 Market testing overcome the gap between what people say they do and what they actually do:itr measures actual behavior in the market place

Market testing

Sales Promotion Design Issues

There are a number of internal and external factors that influence sales promotions design. These factors include (1) place of sales promotion in marketing strategy (2) allocation of budget (3) present and expected competitive moves and (4) significant external macro environmental factors.

The starting point in developing the promotional design is to specify the sales promotion objectives. The range of sales promotion objective is fairly large because the target groups involved can be consumers, trade and sales force.

 Confusion often may arise in determining what type of promotion will best produce the desired result, and this is a key decision area concerning the promotion design that must be taken up one after the other, in a sequential manner. 1. Promotion Choice
There are different types of promotions that can be used, singly, or in combination: a. Consumer promotion b. Trade promotion, and c. Sales force promotion. There are two major approaches for consumer and trade promotions: a. Same for less, and b. More for the same c. The type of promotions for consumers and the trade can be usefully put under two headings immediate value offer vs delayed value offer, and price-cut vs extra value offer.

2. Product Choice
This step focuses on choosing the products for sales promotion, their pack sizes, or models, and different variations of the product, etc. Sales promotion planners have to decide whether to run promotions on the entire product-line, or only selected items in the line? Should the promotions be run on higher priced or lowerpriced products, the products that contribute more to the sales or those that contribute less? In case of consumer non-durable products, would it be advantageous to come out with special promotion packs, or the promotion should be run on regular packs ? Answers to these questions are likely to be significantly influenced by taking into account consumer and trade behaviour, competitive situation and coordination with advertising and personal selling.

3. Choice of Market Areas

Promotion planners have the option to select national or regional markets. When promotion programmes are

developed for regional markets, they provide some degree of protection from competitive moves. However, developing different regional promotional deals can complicate sales forecasting, production scheduling and physical distribution; this may also lead to cost escalation.
Higher inventory risk would require that promotions be

developed for separate markets. Excess product stocks from one market can be shifted to another market where the sales potential is more.

4. Promotion Timing, Duration and Frequency When the product or brand inventories are less than normal in trade channels, the objective of the promotion would be to build inventories, but when the inventories with the traders are high then the objective would be to clear the inventories. It is inadvisable for the producer to announce a promotion when the retailer shelves are full with the competitive brand because the promotion is quite likely to prove unprofitable. Ideally, some manufacturers plan their promotions when annual marketing plans are developed. However, sometimes marketers face compulsions like unexpected moves by competitors The duration of consumer promotion should be such that a larger percentage of customers get exposed to the promotion offer. Frequency of promotion depends on competitive situation, deal sensitivity of customers, the interest of the trade, and the complexity of the promotion offer.

 Testing the Sales Promotion

Pre-testing How sales promotion is to be communicated and what would be communicated to the target groups is important and can be pretested. To test consumers behavioural response, such as trial purchase, or repeat purchase, etc., pre-testing consists of experimenting in certain markets or individual stores in a market. All other factors remain the same, only the sales promotion device being tested in the variable is manipulated. It is often quite helpful to evaluate the response of re-sellers before implementing the promotions programme. The simplest way is to visit several important retailers and wholesalers and discuss the programme and seek their opinion and suggestions. This may prove to be quite favourable in case the support of re-sellers is considered to be of paramount importance for promotion results.

 Concurrent Testing
This testing is done when the sales promotion is in progress. Concurrent testing may permit the promotion manager to modify the sales promotion, if needed. This type of testing is conducted in terms of sales data, which can be obtained on a weekly or monthly basis. Post-testing

Post-testing is done after the promotion period is over. To assess the change in consumer awareness and attitude, telephone calls, questionnaires mailed to consumers and personal interviews can be used. To measure the sales effect, sales figures before the promotion period can be compared with figures at the end of the promotion, and one month after the promotion ends.

 Types of Promotion
Promotion stands for personal selling, advertising, promotion mix., and customers relations. All of these methods try to inform, persuade and remind the target large no. of audience about your product or service. They are complementary to each other and should be integrated with your profit. There are some other different forms of these types of promotion such as broadcasting, printing, direct mail and electronic devices advertising that offer many advantages, disadvantages, costs and paybacks. The similar message may be evaluated based on the source of the message in terms of reliability.

Promotion Mix Decision: There is no any unique promotion mix (between Personal Selling, Advertising, Sales Promotion, and Public Relations) for all situations. The promotion mix for your company should be designed to fulfil your overall objectives. Push, Pull or Push-Pull Strategy? There are three basic promotional strategies or philosophies push, pull or push-pull

Guidelines to Planning Sales Promotion

i. First step in promotion planning is situation analysis. ii. Allocation of budget to sales promotion, out of the combined total budget for advertising and sales promotion. iii. Considering the objectives and the budget allocation, each promotion event must be carefully created. iv. There is vast choice of promotion tools, and the combinations of these tools seem to be endless. v. A clear understanding of various tools and techniques is essential for the planners to make the winning choice from among alternatives. vi. Next step relate to sales promotion design issues.

 Pertinent Points to Considered for Effective Promotion

A. Promotion Choice B. Product Choice C. Choice of Market Areas D. Promotion timing, duration and frequency

E. Rate of discount, terms and conditions

F. Protection from Competition

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