The role of sales promotion

The role of sales promotion . Sales promotion has been defined as a direct inducement that offers an extra value or incentive for the product to the sales force, distributors, or the ultimate consumer with the primary objectives of creating an immediate sale. ( Blesh,2008 ) . The sales promotion contains two types of inducement that provide extra incentive to buy. The incentive is very important element in the promotional program; it can be couponing, reduction in price, and free samples of the product. ( Blesh,2008 ) . The sales promotion can be allocated also in the marketing intermediaries; the retail and wholesale. By giving they more discount offers by offering them more financial incentives to stock and promote for the manufacture products. Types of sales promotion activities: . The sales promotion is divided into two main categories; the consumer oriented promotion and the trade oriented promotion. . The consumer oriented sales promotion includes sampling, premiums, bonus pack, price offs. This promotion are directed to the consumer, the end purchaser of the good or the service, these activities are designed to create more preferable action in the consumer mind toward the purchasing of the product. . In the consumer-oriented sales promotion they are mainly use also the promotional pull strategy by using some advertising that will be a support for the consumer and motivate him to purchase and create demand for it. . The second types is the trade-oriented sales promotion, thats include the incentives, point of purchase and another activities that also designed to motivate the distributors and the retailers to carry and use this product and then deliver the product to the consumer. Reasons for the increase in sales promotion: . There are many reasons that increase the sales promotion, but from Nestle point of view that there are only two types for increasing in the sales promotion. They are the declining of brand loyalty and the short-term focus. . First the declining brand loyalty, which the consumer become less loyal toward the brand, and the purchase of the product based on the price and value. There are consumers buying the product with in its full price without looking for promotional offers. Also on the other hand there is some consumer that are more loyal to the promotional offers looking for couponing , premiums, bonus pack, or price-offs. . The short- term focus a lot of people see that the increase in the sales promotion based on the short term performance and the increasing in sales volume. The brand managers in Nestle are using the sales promotion routinely, not only for introducing new products to the market or defending against competition, but also to meet the year goal of achieving sales and the market share goal. Consumer-oriented sales promotion objectives: . Obtaining trial and repurchase its one of the most important uses of sales promotion techniques that encourage the consumer to try a new product or service. Nestle will use the technique of the trial for the new product Elite-Tea first in the supermarkets and the hyper market of the modern trade because, a lot of consumers visits the hyper and super market daily and that will let a lot of consumers try the product and gets more information about it and then repurchase it. . Defending current customers because of the new products that enter the market everyday they are trying to do something for defending their current costumer by do a lot of advertising and new sales promotion program, by giving special price promotion, coupons, and bonus packs. . Targeting specific market segments a lot of companies are focusing their efforts mostly on a specific market segments and are always looking for ways to reach the target audience. So the use of the coupons and the sampling is very effective in reaching company specific segment. Based on Elite-tea they are focusing more on the demographic and the psychographic. They focus on the demographic because they are targeting all of the genders even male or female, and they are targeting the age of the teens and seniors. Based on the psychographic they also focus on it because the tea is part of their life style. So Nestle will reach this targeted segment through the most effective tools of sales promotion start by making sampling. Nestle Sale Promotion Distribution: . Nestle Divided the market into two Promotion strategies they are: . The modern Trade, traditional Trade. . Modern Trade divided into three sectors the hypermarket, supermarkets, and discounters . Hyper market Like (Carrfour, Hyper one) . Super market (A-class) (Soudi, Metro) . Discounters super market who sells there product on lower price (El-mahaml, Awalad Ragab) . In the modern Trade they can use the promotion magazine, making advertising for the company and also let the consumer know your offer. . There is something called below the line market, which is contain the display floors, sampling and flyers. . The Traditional trade contains the supermarkets that are limited, which means the super markets that have limited branches like (royal House). Also its containing Kiosks. . Nestle types of promotions is the consumer promotion which is nationwide that means the promotion nestle do it in any supermarket will be in every super market in Egypt. The another type the costumer specific and that means that nestle went to a special super market like Carrefour and ask him to make a deal of promotion offers only for him, something specific, the consumer will find this offer only in Carrefour. . Trade deals, nestle sales people start by making special offer for the super markets by going to each super market and say to buyer today I have an offer, every 10 boxes you buy you will get 1 box for free and a display stand to show the product in professional appearance. Consumer-oriented sales promotion techniques: Nestle consumer-oriented sales promotion techniques Sampling Sampling Methods Premiums Bonus Packs . Sampling is a variety of procedures where by consumers are given some quantity of products for no charge only for trying this new product. Sampling first established to introduce new products in the market. Sampling is one of the most effective techniques in the sales promotional program and the most expensive. Nestle start to launch her new product in the market by first starting using the sampling form. They established there booths in all of the modern trade categories, and that one of the thing that helps them to reach the consumer taste and mind. The real benefits of sampling come to the consumer because that a risk-free because he will not buy the product its free and the consumer tries the brand directly, get more information about the brand and its benefits. Also its generating for Nestle much higher trail rates rather than advertising and Nestle did a brand that is unique and superior in benefits that makes the sampling program worthwhile. The cost of the sampling is very expensive so the cost can be recovered again if the consumer who tried the product can be a regular consumer for this product. . Nestle from here to start to put her sampling methods first because many reasons first the brand manager must take in-depth how the sample program will be distributed. The sampling method is very important because its the one that influence the type of consumer who receives the sample. The best sampling method gets the product to the best prospects for trail and repurchase. The sampling methods divided into four types: . Door-to-door sampling . Sampling through mail . In-store sampling the most effective Method Used by Nestle. . On-package sampling . Nestle in establishing their new product elite-tea used the most effective sampling method and its the in-store sampling. The in-store sampling starts by that the marketer starts to hire some people who set for him booths and then prepare small samples of the products ( for ex: 50 Boxes of tea ), then pass all of this to the shops. This was very effective for Nestle Elite-tea because it first established in the market and the consumer doesnt have any clue about this new product. Also what comes to the consumer mind first that the Tea is very expensive because of Nestle Brand name, so they used the in store sampling method to grape the consumer to taste the product and give them a lot of information about the product price and how its unique from the other products. In the modern Trade nestle used to distribute some flyers that contain all of the information about the new product, if the consumer not interested in sampling the new product they are mostly giving him a flyer thats con tain information about the product. . Premium is an offer of an item of service either free or at low price that have an extra incentive for the purchaser. The free premiums are usually small gifts included in the product package sent to the consumer who buys the product. Nestle used this technique in her new product elite tea by putting inside every package mug and spoon. They also increased their package by 25% for every package the consumer purchase it, he will find that another box stamped with the original package that contain 25 tea bags. . Bonus pack offers the consumer extra amount of packs of the product at a regular price. Nestle did that in Elite tea they was putting with the original pack another pack with the same quantity that have a regular price, that was one of the most important steps letting the consumer start to buy nestle new product because of the bonus offer and that will make the consumer try the product, that will lead him for more purchase and become a regular consumer. This offer most used in the modern trade in the hypermarkets and high class super markets (Metro, Soudi ) Nestle Elite Tea Sampling Promotion Cost: . First it depend on the sales forecast or the budget itself . Then its based on the marketing support percentage of the main budget for example the percentage of the marketing support between 15-20% of the main budget. . If the whole budget is 1000000$ and the marketing support is 20% so they will need 200,000$ for the sales promotion technique. . Then they will dived this 200,000$ based on the methods they will use. For example: . 50,000$ for Sampling . 25,000$ for Premiers. . 25,000$ for Bonus packs.