sales_&_Promotions

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Trade promotions In marketing , trade refers to the relationshi p between manufacturers and retailers. ‘’Trade Promotions refers to the marketing activities that are executed in retail between the manufacturers and the retailers partners ‘’. Trade promotion is a marketing technique aimed at increasing the demand for products in retail stores based on special pricing, offers etc. Helpful in increasing product visibility and brand awareness with consumers Act as a leverage in introducing new product

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Types of trade promotions In- store Displays In store displays are promotional fixtures in retail stores. Variations of in-store displays include Point-of-sale displays, which are located near cash tills to encourage impulse buying. Feature display, which can be located at the end of an aisle to draw attention to a product; and special racks, or manipulation of a store shelf to make it look more attractive and bring more attention to the promoted product. In store displays can be perceived as more visually appealing to consumers than a product alone on a retail shelf.

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Consumer behaviour Creates Awareness Brings attention to promoted product Encourages impulse buying Consumers tend to at least inquire about the promoted product

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Temporary price reductions (TPR) TPR either directly or indirectly lowers the per unit cost of the product Example:- ‘’Cents-off’’ promotions, where manufacturers or retailers temporarily reduce the price of a product and bonus pack promotions which offers extra product for free. Consumers benefit from either paying less price for a product or getting more of a product for less money

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Consumer behaviour Pays a lower price hence impulse buying The price reductions are so tempting that the consumer ends up making a purchase Consumer tends to pick up and have a look at the product Consumers tend to enter a store which has temporary price redcutions

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COUPONS Coupons offer instantly redeemable savings on certain products. Coupons can be featured on In-store display, on their own, or on the product. Coupons instantly reduce the price of a product , making it more desirable to consumers. Coupons have their own Pros and Cons:- Pros Consumer sees the brand name on the coupon even when the coupon is not redeemed Coupons also encourage consumers to purchase brands on the next trip to the store. Cons Reduced revenues Mass cutting Counterfeiting Mis -redemptions

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Consumer behaviour Creates brand awareness Prompts customer to take advantage of the coupons Also prompts them to visit the brand or the store again Makes purchase more desirable

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CONTESTS Contests normally require the participant to perform some activity. The winner is selected based on who perform best or provides the most correct answers.

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Consumer behaviour Encourages bulk buying Creates brand awareness on a mass level Consumers take part in contest as the returns offered are really mouth watering

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Rebates Rebates offer money back to the consumer. Unlike coupons, rebates cannot be used immediately , but instead must be mailed to the products manufacturer. Consumers benefit from the lower price, while companies benefit because not every consumer will redeem the offer Consumer Behaviour Consumers get attracted due to lowered price Cash back offered to consumers

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PREMIUMS Premiums incentivize consumers to purchase a product with a tangible benefit, such as a no-obligations gift. Premiums make the product offer more valuable to consumers by including a related product for no additional cost. SAMPLING Sampling allows the consumers to try the product either in-store or via free samples before buying it. This can reduce consumers apprehension about a new product or introduce them to a product they are unfamiliar with before

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In 2004, less than 30% of trade promotions in the consumer packaged goods industry were profitable. Several issues cause lack of profitability. Lack of Accurate and timely information Trade promotion decisions are often rushed and based on sub-par data. While sales and marketing managers are surrounded by promotion information, future demand forecasting process may be affected. Multiple data sources and conflicting needs from various departments further complicate the issue . Inability to plan promotions based on analytics Past trade promotion data should be analysed in order to continually improve trade promotions. If a company does not utilize its systems that measure the performance of trade promotions, future trade promotion execution could be less effective than if they’d be planned using the past data. Issues in trade promotions

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(Continued…) Ineffective relationship with retailers If the manufacturer does not have a good relationship with the retailer it may affect the trade promotions, as the retailer may not provide the right information as far as trade promotions are concerned Lack of key Performance indicators (KPI’s) KPI tell the manufacturer and retailers how successful the trade promotions have been and if the trade promotions have achieved the desired objective. A lack of understanding on what parameters the data should be measured and how they should be measured, it can hinder the entire process. Manufacturers and retailers will not know what made a promotion effective or ineffective unless they have predetermined data point to measure and analyse.

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