SALES PROMOTION

Company Products & Services

SALES PROMOTION

CONTENTS

SALES PROMOTION

The product features and benefits have been decided, the packaging designed, the consumer proposition researched, and the launch date, price and distribution margins decided, the advertising agency has been briefed and it has come up with a good creative theme for the products. What's more, the whole operation has reached a stage whereby it is developing well into mail, poster, newspaper and cinema campaigns.

How often are sales promotion and merchandising considered far too late in the day to be fully effective in the marketing mixture? From the look of some sales promotions one sees, virtually everywhere the answer is, unfortunately, far too often.

Certainly in the Company’s market the track record of many is far from encouraging and as a consequence many companies in the market have undoubtedly suffered.


1. Integrating the total marketing operation

The industry sales promotion, and by that is meant special incentives aimed at persuading customers to buy products and distribution channels incentives designed to encourage retailers to stock and fully display the product, need to be considered early in an existing campaign or new-product launch. This is the only positive way of ensuring that sufficient funds are set aside to enable promotion and merchandising to be carried out on a proper scale. Early planning is also essential so as to enable the various options to be considered, researched and evaluated in order to achieve the maximum cost effectiveness.

i. Promotional aims
The first consideration, however, must be to decide what, precisely, promotion and merchandising are to achieve in the particular marketing situation being faced by the Company. When the actual campaign is being discussed, the primary promotion and merchandising objectives are likely to be couched in such terms as: To achieve trial of the optimum quantity in such a way as to encourage the consumer to repeat purchase and develop loyalty within a prescribed period. Such an objective, however, needs to be completely complementary with the advertising strategy for the new product and also with the promotion and merchandising of the other products in the industry. Also, one should take into account the likely competitive activity at the time, and also the possible reaction by them to the product.

The foregoing, of course, applies only to new campaigns. When it comes to existing campaigns then the promotion and merchandising objectives are quite different. In such cases the aim may be to increase frequency of purchase, to stimulate additional use of the product, to achieve retrial of a previously rejected product, to deepen brand loyalty of regular users or to defend the product from the attacks of its current or future competitors.

ii. Coordination
After the medium-and-long term aims have been decided on, the planning now needs to be sufficiently advanced to allow for the best development and co-ordination of the plan. In most promotions, communications need to be simple and precise, warm and encouraging. Packaging, for example, should be intrusive yet not undo all the good work of the basic package design. For its part, the POS material should create excitement around the product and the point of sale, and command the best display sites because of its mechanical suitability, and promotional main-media support advertising should be designed to do the same job. At the same time the marketing man needs to take every possible step to ensure that the distribution channels understand the precise intentions of the industry. Because of security it is not always possible to tell the distribution channels everything, but the company certainly needs to keep distributors well informed. Another point to bear in mind is that in far too many cases major distribution channels buyers and even the competitors know all about the company's plans and the only people left wondering are the company's salesmen in the field. So if the promotion is aimed at the distribution channels, then the company needs to inform everyone concerned, not simply the distribution channels in the hope that he will inform all the customers. Probably direct mail can help here. Caution is needed because, if direct mail is to be effective then it needs to be planned carefully: the direct-mail firms themselves need looking at particularly closely, they need to be well briefed, and the actual printing needs placing with the printers to allow plenty of time for the operation to be carried out efficiently and well. At the same time, thought needs to be given to the right distribution channels and consumer public-relations activity surrounding the promotion so that it fully complements other elements of the campaign. While needing to exploit all worth while opportunities which could lead to extra sales, money and effort should not be wasted on trying to make the whole thing too elaborate.

iii. Sales-force presentation
The presentation to the salesforce should contain all the key elements for success - drama, personal incentive, realistic targeting. Only if this is done will the salesforce feel sufficient enthusiasm for the project. It is specially important that the salesman is left in no doubt as to what is required from him in the promotion and that it is put properly into perspective against his other responsibilities.


2. Budgeting

Where does Sales Promotion fit into the marketing-mix? Is it, for instance, the icing on the cake? Possibly thus. It is certainly not the cake itself because that is the basic product. Even so, it needs to stand up, by itself, as an adequate consumer proposition aimed at holding a useful share of its market without continuous promotion.

The next question is: How often does the industry promote within a year's marketing plan and what budgets does it allow? Clearly, this will depend on the product field; the product's share of the market; whether that share and the market as a whole are increasing or decreasing; what the special problems are; and what the opportunities are for tactical promotion and merchandising.

For a start, one must assume that the marketing manager has up-to-date knowledge in these areas and has the benefits of current research into distribution channels and stock holdings, into consumer trial, retention rate and quantity usage, and into consumer penetration, etc. Also one must assume that he has information on awareness of the product amongst the target market. Probably, most of these problems and opportunities will be highlighted when this information is analyzed. The next step is to decide just how much to spend 'above' and how much to spend 'below' the mystical line. Ideally , of course, the industry will want to spend as much as is useful on promotion, merchandising and other below-the-line activities, provided that the consumer franchise is not seriously prejudiced by reducing the theme advertising below that critical point - the assessment of which must be one of the marketing man's most difficult decisions.

3. Frequency of promotions

How often the industry promotes will depend on a number of factors: selling time available, the traditions of the distribution channels, the competitors' likely activities, the apparent loyalty of current users, consumers' buying habits, etc.

If, then, the brand's manager decides that three consumer promotions a year should meet all these requirements he will, naturally enough, need to be sure that his budget is sufficient to allow all the back-up promotional services, for example, full distribution channels incentive support, special point-of-sale display, main-media support, perhaps stocking support, sales-force aids and an incentive plan. In addition, he will need to test and evaluate the promotions as well as provide continuous merchandising and display material.

By and large this sort of marketing - running three promotions a year - applies to high-turnover product companies. Companies marketing, say, seasonal products, are unlikely to have more than one consumer promotion opportunity a year.


4. Matching product to promotion

How does the industry decide on the best promotion for its product? This is done by testing the various options and using the most cost-effective. But how is this done? The simple answer is: by following the recommendations of the sales promotion manager or, if such an animal does not exist within the company and a good one is not affordable, by hiring a good sales promotion consultancy and taking its advice. The basic essentials of all promotion tests are that they should be properly controlled, adequately analyzed and, most important, capable of national or regional development. If these essentials are not met, the promoter might as well save his time and money.


5. Different types of testing

There are many forms of testing techniques available to the promoter: hall tests, mail tests, store tests and discussion groups. The problem is to choose the best combination, given the requirements of time, the particular objectives of the promotion and the constant aim of keeping costs as low as possible.

It should also be borne in mind that research into promotion has certain limitations. Used as a so-called aid to judgment it is certainly very valuable; used as a decision maker it can sometimes be very misleading, mainly because the success of promotions is so often dependent on the winds of fashion.

i. Conditions and restrictions
The promoter should ensure that the promotion conforms with the prevailing legal restrictions, and thereafter ensure that the conditions under which the offer is made to the consumer or to the distribution channels are indelibly clear. If this is not so then existing customer relationships may be damaged.

ii. Selecting services and supplies
The promoter is well advised to select service companies and suppliers from within the promotions industry. This means printers, handling companies, demonstrator agencies, pioneer-salesmen companies, rack suppliers, point-of-sale material makers, door-to-door distribution companies, premium suppliers, and direct-mail companies. The industry will not only get specialists but will also pay the right price for the job. Admittedly, there are many companies around that will be prepared to do the job just that little bit cheaper, but picking a bad one can turn out to be a costly experience.


6. Meeting deadlines

Sufficient lead times should be allowed for each element of the promotion (personnel hire, legal clearance, transport arrangements, material supply, briefings and other communications), with a sensible 25% addition for unexpected delays and problems.

Continuity of interest
The right controls must be applied as soon as the promotion takes off. This should ensure that the operation keeps at near boiling throughout and does not cool once it has been effectively launched and the initial heating is over. In turn, sales personnel should be properly motivated throughout (whether by incentives, or motivation activities) as must the distributor staff. Consumer and distribution channels correspondence and telephone calls must have prompt, and expert, attention. Many consumer and distribution channels queries can be anticipated and it is worth preparing standard replies, within the bounds of courtesy, to many of these enquiries. A close watch also needs to be kept, as the promotion progresses, on stock levels, material stock levels, response time, the supply of leaflets and material to distributors, and the maintenance of adequate product special stock.


7. Evaluating campaigns

Evaluation of sales-promotion and merchandising campaigns is one of the most neglected and abused aspect of the industry. So often the evaluation is either restricted to one of two comments: "Yes, it worked because... ", or: "No, it failed because... ". Sometimes, it even fails because it takes companies so long to analyze the results that by the time the analysis is complete it is too late to be of any real use.

The most effective method of evaluating most sales promotion and merchandising schemes is to ask a number of simple questions:

   1) What did it cost?
   2) What did it sell?
   3) Did it achieve the scheme's major objective?

Beyond answering these questions it is worthwhile measuring the results using a control-town system, considering other benefits and drawbacks from the promotion and contemplating the possible outcome of other options, particularly those relating to competitors' promotional activities. Still other factors include the variations in proof of purchase and the variation in support-advertising weight. These are only worth discussing, of course, if they have not been included in control-town tests. The main point to be made, however, is that these interesting but lesser considerations should not cloud the issue of a promotion's success or failure against its classified objective, and the major lesson for the future.

	SALES CAMPAIGNS
	Marketing Integration
	Budgeting Efficiency
	Campaign Performance
	Campaign Monitoring & Evaluation Procedures
	Campaign Flexibility

H84      Grid Definition

Emotional response
Sales promotion techniques, in common with most other marketing practices, are constantly evolving. But, unlike most other marketing activities, many of them rely, for the major part of their success, on emotive response. It is irrational, for instance, that customers should choose a gift instead of small discount on the purchase price - but they do.

On the other hand there is an increasing tendency for suppliers to select price promotions to meet objectives of one sort or another. The same kind of energy seems to be going into merchandising equipment, especially in marketing to the newer links in the distributive chain.


8. Increasing promotional activity

Over the next few years there will undoubtedly be many new suppliers in the market who will start using those promotional techniques which have hitherto been used almost exclusively in the highly specialized and hybrid businesses. This will be particularly so in view of the fact that there is increasing competition amongst hitherto non-competing companies, for consumer spending. As this sort of marketing situation evolves more and more, so we will see the breakdown of many distribution channels traditions and agreements - presumably some of this will be to the public good, and some far less so. But one thing is certain: it will all change.

There will continue to be changes in the choice of below-the-line activities so as to meet new consumer requirements and there will also be changes in the relationship of promotional activities to theme advertising.

More and more marketing men and advertising agencies in the industry are beginning to recognize that advertising and promotions are independent parts of a total plan designed to gain or retain a major share of business.

Furthermore, there will be further changes in supplier / distributor relationships. As the dust begins to settle around the current own-label activity, added-value marketing, captive or franchised distribution channels, et cetera, suppliers are going to ensure that the marketing activity pumped into their products is not simply pilfered for the benefit of others in the distribution channels.

Likewise, large groups will gradually recognize the importance of sales promotion and advertising to the generic development of product groups. Suppliers and retailers will unquestionably start to work closer together as this situation develops and much of the current in-fighting with 'display' bonuses will disappear. Government legislation may even play a part in these developments.

For the Company the role of sales promotion in the marketing-mix is therefore due for some changes. This means that each marketing man will need to study his own situation and promote accordingly. The one thing that can safely be forecast is an increasing need for promotion in most product fields. The more sophisticated marketing becomes, the closer the character of competing products becomes - and the more, therefore, the consumer looks for the icing on the cake, to help him make the product choice.

PROMOTION EVALUATION

Sales promotions in the industry are defined in the current context to include the following, whether or not they are supported by media advertising:

1)	Any point-of-sale promotional activity to the customer such as premium offers, reduced-price offers, stamps and coupons, gifts, competitions and banded packs.
2)	Any distribution channels incentives or discounts to the retailer.
3)	All display material whether in support of specific promotions or not.
4)	Any point-of-sale aids such as leaflets, brochures and store demonstrations.
5)	Any direct promotion to the consumer, such as coupons or free samples.
6)	Sponsorship.

The Company’s market place comprises of more than simply the advertiser and consumers, linked by advertising and sales promotion. One can identify the producer, his competitors, the government, distributors, retailers and the salesforce, as well as the final consumer. The producer advertises and promotes a product or service. So do his competitors. The retailer tries to attract the consumer to his shop often by separate advertising and promotional activity. In some cases salesmen may influence the consumer; in others the government is an active market force; in others consumers influence more consumers.


1. PERCEPTION OF THE MARKET

Part of the reason why marketing in the industry is such a complex subject is that it is dealing with people. Consumers are not only different in terms of their wants, needs, beliefs, attitudes, feelings and motives, but they perceive the market differently. They see it differently from each other and from the way the advertiser perceives the market place. How the advertiser sees market forces acting on the consumer, the consumer may see entirely differently. For example, while advertisers may know that there are six brands in a market, any one consumer may know a mere two or three of them. While they see their own product as such-and-such, the consumer may see it as something else. The producer spends money on advertising and sales promotion, but what does the consumer see? They may or may not see individual advertisement or promotional schemes, or parts of campaigns. Exactly what they perceive in terms of content, information and persuasion cannot be taken for granted. The advertiser may temporarily cut the price of a brand, but does the consumer see the price cut as a bargain?

The actual factors likely to figure in the consumer's perception of their market situation or their 'decision environment' go to determine how individual consumers behave and explain why people behave differently.

The pattern of consumer behavior will largely be a function of the factors in the consumer's market environment:

     1.  The brand knowledge
     2.  The advertisements perceived
     3.  The points-of-sale known
     4.  The in-store factors encountered
     5.  Other point-of-sale factors
     6.  Promotions
     7.  Availability
     8.  Price
     9.  Retailer communication
   10.  Salesman communication
   11.  Communication from other consumers
   12.  The social setting
   13.  Perceived opportunities for using the product

In this section we shall just be concerned with three major factors: point-of-sale influences (which will include promotions to the retailer), point-of-sale factors and other promotional activity.


2. SALES PROMOTIONS RESEARCH

At the current level of research technology there would not appear to be a proven single method, either simple or complex, that provides an accurate and valid way of measuring the effectiveness of sales promotion activity. (The same observation applies equally to media advertising.)

What exists are a number of different approaches to a range of different problems that are, as yet, partial solutions. Each approach, in relation to a specific kind of activity and set of circumstances, may provide valuable information and insights into promotional evaluation. None of these amount to a measurement approach that is sufficiently accurate and valid to the extent of being able to be applied as a rule of thumb. In combination with experience, they represent a compromise preferable to pure guess work, but not as good as the perfect measure that may be regarded as only a theoretical concept.

At this time a perfect evaluation measure represents a goal researchers must aim for. In practice, one does not believe that this goal will ever be absolutely attainable because human responses are extremely complex, and we are concerned with problems where behavioral, psychological and market-place variables are too numerous for one to take account of in any evaluation model. Moreover, some variables are probably unknown or 'invisible' and other known ones may be difficult to measure because of inadequacies in measurement techniques. Additionally, one does not know precisely how sales promotions work. Until this is known, or a least until one has a better idea as to how they work, perfect evaluation is a somewhat academic issue. However, by continuing to seek ideal solutions, and given a constantly improving technology, it should be possible, at the very least, to improve evaluation measures.

When one thinks about evaluating sales promotions, apart from the problems of complex market places, complex consumers, a large number of influencing factors and the fact that one does not know how promotions work, there is also the point that when one speaks of sales promotions, one is speaking of a number of things rather than something in particular. Sales promotions come in all shapes and sizes. Thus when one talks about evaluating sales promotions, one is talking about evaluating activities as diverse as offering retailers a bonus for stocking a product on the one hand, to sponsoring a national sporting event on the other.

The industry have a number of types of sales promotion activities which are well-tried research techniques that are clearly laid down as being the most appropriate. They include such research methods as follows:

i. Research pre-testing

There are various techniques for pre-testing sales promotions, such as:

1.	Group discussions and 'depth interviews'
2.	Hall tests
3.	Van tests
4.	Mini-van tests
5.	Postal and door-to-door tests
6.	Pre-testing the advertising of promotions
7.	In-store tests
8.	Area experiments

The limitations of consumer-based pretests are that:

1)	The methods do not really measure what is likely to take place in the actual market situation. They cover preferences and attitudes and should not be used to forecast potential sales.
2)	They cannot be used for certain types of promotional activity, for example, price changes, display positions, shelf-space allocation, et cetera.

The limitations of in-store and area pretests are that:

1)	They are difficult to control.
2)	They tell one nothing about the consumer, for example, whether the promotion is attracting new buyers or people who would have bought anyway. This limitation can sometimes be overcome by linking in-store consumer interviews to the test.
3)	Again, they are limited to being appropriate for certain types of activity only.

ii. Research post-testing

Techniques that can be used to evaluate sales promotion activities either during the activity or after the event include:

   1.  Store checks
   2.  Retail audits
   3.  Consumer panels
   4.  Usage and attitude surveys
   5.  Inter-media or 'test' -v- 'no-test' area experiments


The major problem in any post-testing of sales promotions is the one of isolating the other influencing variables like seasonality and competitive activity. Controls can sometimes be set up but these are usually expensive and difficult to operate.

The retail audit has certain limitations:

1)	The timing of a retail audit, for example, bimonthly, may not fit in with the promotional activity.
2)	Retail audits are rather inflexible. It may be impractical or expensive to adapt an ongoing service to the specific needs of a particular promotion.
3)	Retail audits provide no information about the consumer, for example, on repeat-buying behavior.

Consumer panels do not verify information on certain in-store activity, like distribution, display and the penetration achieved by a promotion.

iii. Constraints on research
However, circumstances often preclude the most appropriate research technique being applied. What circumstances might these be? Unfortunately, in the real world, research cannot always be conducted according to the textbook. Certain constraints may be imposed that result in compromises having to be made regarding method; circumstances like:

1)	The available money for research: often the best method cannot be used because the funds are insufficient.
2)	Timing: again, the amount of time available can restrict the research approach.
3)	The lack of alternative facilities, for example, one might prefer to evaluate a particular promotion by using a consumer panel but unfortunately a ready-made panel is not available. The cost and time factors can enter in here because there may be insufficient of both to, say, set up an ad hoc panel.
4)	The need to maintain comparability: very often an alternative and better method cannot be used because there are even better grounds for carrying on with a less satisfactory alternative merely to maintain comparability with previous research.

Thus, whereas it may be possible to conclude that there are good and not-so-good methods of evaluating particular sales promotions, one tends to believe that, more often than not, the choice of techniques will be determined largely by circumstances. This is rather unfair on research since, if given sufficient resources, the researcher could do a much better job than he is often allowed (or constrained) to do.


3. METHODOLOGY

A large number of advertisers make no attempt to measure the effectiveness of their advertising and promotional investment. Could this be because they are disenchanted with the results after having tried, skeptical of research anyway, or that they just do not care? To some extent the first two reasons might be justifiable, but the third can never be. Sound management practice dictates that all new phases and operations of the company be subject to systematic review in order to achieve a maximum level of performance. This should include advertising and, of course, sales promotion activity. In the industry the short-term and long-term benefits of systematically reviewing these activities are:

1)	Marketing management is forced to define specifically what each element of its programme is intended to accomplish in advance of exposure.
2)	An accurate feedback system provides management with details of company achievement on a running basis. This enables more effective use to be made of both tactical and strategic measures and counter measures in a dynamic market situation.
3)	A body of experience can be built up from both successes and failures in order to create more effective future communication.

In the industry measuring the performance of sales promotion activities (against expectations or targets) by means of an organized feedback of information becomes an essential part of management by objectives.

4. PROBLEMS OF EVALUATION OF SALES PROMOTION

In discussing the matter of evaluation, there are three major problems:

1)	What do we mean by evaluation?
2)	What criteria can we use to evaluate by?
3)	How do we undertake the actual business of evaluation?

When discussing the whole business of evaluating the effectiveness of sales promotions, what is meant by evaluation? Evaluation implies a value judgment and invariably this is in terms of concepts like goodness or badness. In seeking to discover whether a certain promotional activity is good or bad, we are not really concerned with the intrinsic or aesthetic merits of that activity. We are interested in its performance. Performance ceases to be merely a value judgment if we have some valid criterion, standard or norm by which to objectively judge the performance of an activity.

However, there are two major difficulties:

1)	How can one evaluate something, the precise working of which, one is uncertain about?
2)	It is not always a simple matter to establish performance criteria.

As far as the first point is concerned, more is claimed to be known about how advertising works than about how sales promotion actively works. Sales promotions are likely to be concerned with reinforcement of some sort of behavior pattern or habit formation. This would be a valuable field within which to conduct research, but at present it would be fair to say that nobody really knows. So if one does not know how something works, it is difficult to evaluate it.

As far as the second point is concerned, the trouble is that for most promotional activity either no criteria or inadequate criteria are put forward, which makes the task of evaluating performance impossible from the very outset. Given that one has correct, adequate performance criteria, a start can be made on evaluation. What criteria then can be used to evaluate promotions?

i. Proofs of success
The current unsatisfactory situation has been discussed by reference to how an analysis of proofs of success for 135 advertising campaigns put out by 40 leading American agencies, showed that almost none of the agencies really knew, or ever could know, whether or not their campaigns were successful. The fact that they could never have known even if they had wanted to, is the important point. Why was this? It was primarily because of deficiencies in the statement of promotional objectives. These were of three types, as detailed below. Although one analyzed above-the-line or 'mixed' advertising campaigns, the same comments apply to sales promotions and their objectives.

Deficiencies in statement of objectives for sales promotions are, for example:

1)	Failure to state the objective(s) in quantifiable terms: For example, to increase the awareness of product X. (By how much?)
2)	Failure to identify the target market: For example, to increase the awareness of product X by 50%. (From what and amongst whom?)
3)	The use of superlatives: For example, to maximize sales of product X. (What does this mean?)

A better statement of objectives might be:

	To increase the awareness of product X from 25% (of all buyers) as determined by the last awareness check, to 50% of all buyers; and to increase sales by 60% over the corresponding period in the last fiscal year.
	An alternative approach is to make 'communication goal statements'. For example: Objective: To increase ratings of product 'X' regarding economy by 20% in the current fiscal year. Target market: All male heads of households who are aware of product 'X'. Dates goal is to be in effect: February 200? - January 200? Size of target: 10,000 Buyers.

The implications in these two examples are that awareness and sales may be taken as evaluation criteria. This is a debatable point, which is discussed in detail in the next section.


5. SALES PROMOTIONS EVALUATION CRITERIA

If one regards advertising or, indeed, any promotional activity as an independent variable, and makes the assumption that the effectiveness (measured by some dependent variable) of that activity will increase as the quantity of it increases, all other things being equal, one has a response function typified, say, by the S curve. The major question is: What can be selected as the dependent or 'response' variable?

A list of 'success criteria' or possible dependent variables that may be used in assessing promotions, is related to specific promotional objectives in that some criteria apply to some objectives but not others. As a general list, it is a useful checklist of likely measurement criteria, although in many instances measurement will not be possible on grounds of practicability.

The list covers:

1)	Number of 'promoted' units taken up.
2)	Number of new users who repeat purchase.
3)	Profit per promoted unit and profit for those unprompted units which can be ascribed to the promotion.
4)	Attitudes (short- and long-term) towards the brand (product) amongst actual and potential users.
5)	Ascribable profit from both new and former users who take up the promotion.
6)	Ascribable sales and profit against promotional cost.
7)	Distribution and display increases in impulse buying, sales, distribution channels (and consumer) goodwill.

To these may be added:

8)	The size and cost of target audience reached by the promotion.
9)	The extent of brand switching from competitive to promoted brand.
10)	The general organization of the product.
11)	The corporate goodwill achieved.

These criteria can then be examined to see whether, in the context of the Company, they might be applicable to 'tactical' (or short-term) or 'strategic' (or medium- or long-term) promotional objectives, or both.

6. TACTICAL AND STRATEGIC OBJECTIVES

i. Tactical below-the-line activities
These may be offensive, defensive, or merely concerned with preserving the status quo in the industry. Their effect or benefit (whether measurable or not) is meant to be felt amongst the exposed and/or target group in the immediate period of, and following, the promotion. The target group may be a large or small market segment, or within a geographic region.

ii. Strategic below-the-line activities
These are not expected to yield any noticeable immediate effect or benefit upon the exposed or target group for the industry. Over a period of time, it is hoped that they will produce a more favorable marketing climate for the product, brand or company.

All tactical activity thus contains an element of the strategic, but the converse may not be true. Strategic activity, amongst its other effects, will create a climate in which tactical activity may be more fruitful.


7. PERFORMANCE-EVALUATION CRITERIA

Performance-evaluation criteria in the industry are as follows:

1)	Profit (as a percentage of overall company sales, by product line, by product by geographic area, by distribution channel, and by type of customer). Strategic.
2)	Sales targets (for the company as a whole, by product line, by product, by distribution channel, by type of customer and by customer). Strategic and Tactical.
3)	Continuing growth of sales at least at the pace of industry to enable the firm to maintain its share of the market. Strategic.
4)	Increase in relative market share. Strategic and Tactical.
5)	Sales quotas by geographic territory and by salesman. Strategic and Tactical.
6)	Growth in earnings to provide resources for reinvestment. Strategic.
7)	Continuing addition of new products and product lines. Strategic and Tactical
8)	Continuing expansion of the firm's target market(s). Strategic and Tactical.
9)	Absence of excessive seasonal or cyclical fluctuations in sales and earnings and of consequent loss of competitive position through externally forced inefficiency in the use of the firm's resources. Strategic and Tactical.
10)	'One-off' cost-benefit studies of single activities, and synergistic analysis of multiple activities. Tactical.
11)	Increase in net current worth of the firm. Strategic.

For the Company the essential differences between the problem of measuring the effectiveness of tactical below-the-line promotions compared with strategic promotions, is the time period. In a short time period (relating to tactical activity) one is likely to be concerned with fewer extraneous variables exercising a smaller aggregate effect on any dependent variable one chooses. Conversely, in a long time periods (relating to strategic activity) one is likely to be concerned with many extraneous variables which exercise a large aggregate effect on the dependent variable. It may be concluded, therefore, that it is relatively easier to measure the effectiveness of tactical below-the-line promotions like competitions, premiums, coupons, et cetera, than strategic promotions like sponsorship.


8. SALES AS THE DEPENDENT VARIABLE

In the industry two sorts of criticisms appear to be leveled at the suggestion that sales response is the best measure of the effectiveness of advertising (or promotional activity of any sort, including below-the-line activity). First, there is no proven causal relationship between sales and advertising, and second, if there is, it is difficult to ascertain the true level of sales (for most products) in a particular time period, thus making it an immeasurable dependent variable.

To suggest that product sales are caused by advertising implies that if advertising is varied, while all other factors that might affect sales are held constant, sales will vary in a predictable way.

It has often been argued that this is not so, and no foolproof case has yet been established that suggests that it is. However, one may question the need to establish unequivocally, a causal relationship between sales and advertising or sales and promotional activity. A fair test of validity (of the sales effectiveness of advertising and promotional activity) is the fact that hundreds of millions are spent each year on them. On the face of it, it would appear reasonable to accept Company sales as a viable criterion or dependent variable and then set about the practical problems of measuring sales accurately. As a dependent variable, sales appear more sensible than, say, awareness or attitude measures. Achieving high awareness of favorable attitudes does not indicate, necessarily, an effective promotion. In the final analysis, sales have to enter into the equation somewhere, so why not treat this variable as a key one from the outset? In addition, there are other variables that may be chosen. Indeed, in selecting evaluation criteria, it is advisable to utilize several criteria if possible, for example, sales plus awareness and attitude measures.

Thus for the Company it would be true to say that a satisfactory measurement approach would need to account for a number of criteria or dependent variables within a total response function.

9. MODEL RESEARCH BRIEF

Below is an example of an ideas research brief that can enable a researcher to begin to evaluate sales promotions in the industry properly.

i. Research objectives

Amongst target group:

1)	To establish the level of awareness of the companies undertaking the promotion.
2)	To establish the level of awareness of promotional details A, B, C and D.
3)	To establish a demographic profile of the target group (clearly defined).
4)	To establish attitudes towards the promotion along specified dimensions.
5)	To establish attitudes towards the promoted brand, along specified dimensions.
6)	To establish attitudes towards the company, along specified dimensions.
7)	To achieve a purchasing penetration of 15% (or to sell x 000 units).

Amongst non-target group:

1)	To establish attitudes towards the company, along specified dimensions.
2)	To establish attitudes towards the promoted brand, along specified dimensions.
3)	To establish attitudes towards the promotion, along specified dimensions.
4)	To establish the level of awareness of the supplier undertaking the promotion.

ii. Action criteria

1)	To continue the promotion unaltered.
2)	To modify the promotion and repeat it in modified form.
3)	To discontinue/reject the promotion for future use.

iii. Decision criteria

1)	Level of target-group and non-target awareness of promotion.
2)	Level of target-group awareness of details of promotion.
3)	Demographic profile of target group.
4)	Attitudes towards (a) Promotion (b) Promoted brand (c) Company
5)	Sales.

iv. Action standards

1.	Minimum acceptable level of awareness of promotion by target group to be 70%.
2.	Minimum acceptable level of awareness of promotion by non-target group to be 20%.
3.	Minimum acceptable level of awareness of promotional details by target group to be A:75%, B:30%, C:30%, and D:30%.
4.	Demographic profile of target group to be in line with current brand profile. (Specific criteria set here).
5.	Maximum acceptable level of adverse comment about the promotion to be 10%.
6.	Attitudes towards brand and company to be better amongst 'aware' respondents than amongst those unaware by Y%.
7.	Minimum acceptable purchasing penetration to be 10% (or to sell x 000 units).

	PROMOTIONAL PERFORMANCE
	Promotional Research & Methodology
	Promotion Evaluation & Monitoring
	Promotion Performance & Efficiency
	Promotion Targeting
	Promotion Flexibility

H85      Grid Definition

10. THRESHOLD AND TARGET GOALS

For the Company the next stage will be to refine these objectives still further by incorporating the concepts of threshold goals and target goals. By threshold goal is meant the minimum point of acceptability; by target goal is meant the desired, optimum or maximum level of expectancy.

The goal-threshold range becomes the basis for an evaluation yardstick. If a promotion fails to reach its threshold achievement goal, it should be rejected. If it is above, it should be evaluated as more or less desirable, depending upon how close it is to the target goal. If it reaches the target goal, it has achieved the desired result. The usefulness of a range of values lies in the fact that it permits different promotions to be evaluated. Once decision criteria have been set and action standards agreed (E.g. to continue with, discontinue, modify, etc.), performance can be related to achievement, threshold goals and target goals, and to the promotional expenditure.

Threshold and target goals may be determined by the industry:

   1)  Previous experience.
   2)  An estimate of future trends.
   3)  The anticipation of competitor activity.
   4)  The amount of resources committed to the project


Obviously, in evaluating promotions in such a way, the cost of the promotion must be taken into account. It is possible to work out figures relating to cost per 1000 impacts for awareness, and cost per unit sales. Another important point to bear in mind is the importance to be attributed to the measures set as threshold and target. Clearly, sales are more important than merely creating awareness. A promotion that exceeded its target considerably in terms of awareness but fell short on sales would be less successful than another that exceeded its sales targets by a great deal without affecting awareness.

The conclusion is a simple one and merely serves to illustrate the points:

1)	Actual figures or percentages should be stated for expectations and target goals.
2)	In evaluating a promotion there is a minimum point of acceptance as a measure of success or failure.

PRODUCT LAUNCH MARKETING COSTS

F_H - FIN_MKTG.HTM  HISTORIC MARKETING DATA 

Product Launch or Revision Marketing Scenario

FPL - FINAMKTG.HTM  PRODUCT LAUNCH MARKETING DATA 

IPL FINBMKTG.HTM  PRODUCT LAUNCH MARKETING RATIOS  

FIN_DEFI.HTM FINANCIAL DEFINITIONS

	SALES PROMOTION COSTS
	Advertising : Mail : Media
	Sales Personnel : Expenses : Materials
	Sale Promotion Materials : Print
	Sales Point-of-Sale Systems & Materials
	Publicity : P.R. : Exhibitions

H86      Grid Definition

HISTORIC FINANCIAL DATA

SALES PROMOTION FINANCIAL ISSUES

F_H - FIN_HIST.HTM   HISTORIC FINANCIAL DATA

 Financial Definitions

SALES PROMOTION FINANCIAL SCENARIOS

FINANCIAL DATA FORECAST

 

SALES PROMOTION SCENARIOS BASED BALANCE SHEET FORECASTS

The SALES PROMOTION FINANCIAL SCENARIOS BALANCE SHEET FORECASTS section gives a series of Balance Sheet Forecasts for the industry using a number of assumptions relating to the sales promotion decisions available to the management of the industry.

The Balance sheet forecast given shows the effects of sales promotion improvements which Financial Management is likely to recommend:

SALES PROMOTION FINANCIAL SCENARIOS

- Base Forecast : Median Market Scenario

- Marketing Expenditure
- Variable Marketing Cost Objectives
- Selling Cost Objectives
- Advertising Cost Objectives
- Promotional & Pricing Cost Objectives
- Promotional Expenditure
- Sales & Marketing Cost Scenarios

Managers in the industry will, in both the short-term and the long-term, have vital decisions to make regarding the sales promotion improvements, margins and profitability and these decisions will need to be evaluated in light of the customers, markets, competitors, products, industry and internal factors. The scenarios given isolate a number of the most important factors and provide balance sheet forecasts for each of the scenarios.

The data provides a short and medium term forecast covering the next 6 years for each of the Forecast Financial and Operational items. The Financial and Operational Data sections show each of the items listed below in terms of forecast data and covers a period of the next 6 years.

Base Forecast : Median Market Scenario

F0M|     MEDIAN  FORECAST : Financials

G0M|     MEDIAN  FORECAST : Margins & Ratios

Marketing Expenditure

F01|     MARKETING EXPENDITURE : Financials

G01|     MARKETING EXPENDITURE : Margins & Ratios

Variable Marketing Cost Objectives

F26|     VARIABLE MARKETING COST OBJECTIVES : Financials

G26|     VARIABLE MARKETING COST OBJECTIVES : Margins & Ratios

Selling Cost Objectives

F30|     SELLING COST OBJECTIVES : Financials

G30|     SELLING COST OBJECTIVES : Margins & Ratios

Advertising Cost Objectives

F31|     ADVERTISING COST OBJECTIVES : Financials

G31|     ADVERTISING COST OBJECTIVES : Margins & Ratios

Promotional & Pricing Cost Objectives

F32|     PROMOTIONAL & PRICING COST OBJECTIVES : Financials

G32|     PROMOTIONAL & PRICING COST OBJECTIVES : Margins & Ratios

Promotional Expenditure

F40|     PROMOTIONAL EXPENDITURE : Financials

G40|     PROMOTIONAL EXPENDITURE : Margins & Ratios

Sales & Marketing Cost Scenarios

F54|     SALES & MARKETING COST SCENARIOS : Financials

G54|     SALES & MARKETING COST SCENARIOS : Margins & Ratios

FIN_DEFI.HTM Financial Definitions

INDEX

Action criteria, 18
Action standards, 18
ADVERTISING COSTS, 24
ADVERTISING COSTS FORECAST, 26
Advertising : Mail : Media, 29
AFTER-SALES COSTS, 24
AFTER-SALES COSTS FORECAST, 26

Balance Sheet Advertising Cost Objectives, 56
Balance Sheet Base Forecast : Median Market Scenario, 40
Balance Sheet Historic, 34
Balance Sheet Marketing Expenditure, 44
Balance Sheet Promotional Expenditure, 64
Balance Sheet Promotional & Pricing Cost Objective, 60
Balance Sheet Sales & Marketing Cost Scenarios, 68
Balance Sheet Selling Cost Objectives, 52
Balance Sheet Variable Marketing Cost Objectives, 48
Budgeting, 2
Budgeting Efficiency, 5

Campaign Flexibility, 5
Campaign Monitoring & Evaluation Procedures, 5
Campaign Performance, 5
Conditions and restrictions, 3
Constraints on research, 13
Continuity of interest, 4
Costs & Margins Historic, 35
Co-ordination, 2

Decision criteria, 18
Different types of testing, 3
Direct promotion, 10
Display material, 10
Distribution channels incentives, 10
DISTRIBUTION + HANDLING COSTS, 24
DISTRIBUTION + HANDLING COSTS FORECAST, 26

Emotional response, 9
Evaluating campaigns, 4

Financial data definitions, 73
Financial forecast notes, 28, 38
Financial Ratios Advertising Cost Objectives, 58
Financial Ratios Base Forecast : Median Market, 42
Financial Ratios Marketing Expenditure, 46
Financial Ratios Promotional Expenditure, 66
Financial Ratios Promotional & Pricing Cost Objectives, 62
Financial Ratios Sales & Marketing Cost Scenarios, 70
Financial Ratios Selling Cost Objectives, 54
Financial Ratios Variable Marketing Cost Objective, 50
Financial Ratios & Margins Historic, 36
Frequency of promotions, 3

HISTORIC FINANCIAL DATA, 33
HISTORIC MARKETING COST RATIOS & MARGINS, 25
HISTORIC MARKETING COSTS & MARGINS, 24

Increasing promotional activity, 9
Integrating the total marketing operation, 1

MARKETING COSTS, 25
MARKETING COSTS FORECAST, 26
MARKETING FACTORS FORECAST, 27
Marketing Integration, 5
MARKETING MARGINS + RATIOS FORECAST, 27
MARKETING OPERATIONAL RATIOS, 25
MARKETING OPERATIONAL RATIOS FORECAST, 27
MARKETING RATIO, 25
MARKETING RATIOS FORECAST, 27
Matching product to promotion, 3
Meeting deadlines, 4
METHODOLOGY, 13
MODEL RESEARCH BRIEF, 18

Operational Costs Advertising Cost Objectives, 57
Operational Costs Base Forecast : Median Market, 41
Operational Costs Marketing Expenditure, 45
Operational Costs Promotional Expenditure, 65
Operational Costs Promotional & Pricing Cost Objectives, 61
Operational Costs Sales & Marketing Cost Scenarios, 69
Operational Costs Selling Cost Objectives, 53
Operational Costs Variable Marketing Cost Objectives, 49
Operational Margins Advertising Cost Objectives, 59
Operational Margins Base Forecast : Median Market, 43
Operational Margins Marketing Expenditure, 47
Operational Margins Promotional Expenditure, 67
Operational Margins Promotional & Pricing Cost, 63
Operational Margins Sales & Marketing Cost Scenario, 71
Operational Margins Selling Cost Objectives, 55
Operational Margins Variable Marketing Cost Objectives, 51
Operational Ratios & Margins Historic, 37

PERCEPTION OF THE MARKET, 10
PERFORMANCE-EVALUATION CRITERIA, 16
Point-of-sale aids, 10
Point-of-sale promotional activity, 10
PROBLEMS OF EVALUATION OF SALES PROMOTION, 14
PROFIT RATIOS, 25
PROFIT RATIOS FORECAST, 27
PROMOTION EVALUATION, 10
Promotion Evaluation & Monitoring, 19
Promotion Flexibility, 19
Promotion Performance & Efficiency, 19
Promotion Targeting, 19
Promotional aims, 1
PROMOTIONAL PERFORMANCE, 19
Promotional Research & Methodology, 19
Proofs of success, 14
Publicity : P.R. : Exhibitions, 29

Research objectives, 18
Research post-testing, 12
Research pre-testing, 12

Sale Promotion Materials : Print, 29
SALES AS THE DEPENDENT VARIABLE, 17
SALES CAMPAIGNS, 5
SALES COSTS, 24
SALES COSTS FORECAST, 26
Sales Personnel : Expenses : Materials, 29
Sales Point-of-Sale Systems & Materials, 29
SALES PROMOTION, 1
SALES PROMOTION COSTS, 29
SALES PROMOTION FINANCIAL SCENARIOS FORECASTS, 39
SALES PROMOTIONS EVALUATION CRITERIA, 15
SALES PROMOTIONS RESEARCH, 11
Sales-force presentation, 2
Selecting services and supplies, 4
Sponsorship., 10
Strategic below-the-line activities, 16

TACTICAL AND STRATEGIC OBJECTIVES, 16
Tactical below-the-line activities, 16
THRESHOLD AND TARGET GOALS, 23
TOTAL MARKETING COSTS, 24
TOTAL MARKETING COSTS FORECAST, 26

CONTENTS

 

Action criteria
Action standards
Advertising : Mail : Media
Advertising Cost Objectives
Base Forecast : Median Market Scenario
Budgeting Efficiency
Budgeting
Campaign Flexibility
Campaign Monitoring & Evaluation Procedures
Campaign Performance
Co-ordination
Conditions and restrictions
Constraints on research
Continuity of interest
Decision criteria
Different types of testing
direct promotion
display material
distribution channels incentives
Emotional response
Evaluating campaigns
Frequency of promotions
HISTORIC FINANCIAL DATA
Increasing promotional activity
Integrating the total marketing operation
Marketing Expenditure
Marketing Integration
Matching product to promotion
Meeting deadlines
METHODOLOGY
MODEL RESEARCH BRIEF
PERCEPTION OF THE MARKET
PERFORMANCE-EVALUATION CRITERIA
point-of-sale aids
point-of-sale promotional activity
PROBLEMS OF EVALUATION OF SALES PROMOTION
Product Launch or Revision Marketing Scenario
Promotion Evaluation & Monitoring
PROMOTION EVALUATION
Promotion Flexibility
Promotion Performance & Efficiency
Promotion Targeting
Promotional & Pricing Cost Objectives
Promotional aims
Promotional Expenditure
PROMOTIONAL PERFORMANCE
Promotional Research & Methodology
Proofs of success
Publicity : P.R. : Exhibitions
Research objectives
Research post-testing
Research pre-testing
Sale Promotion Materials : Print
Sales & Marketing Cost Scenarios
SALES AS THE DEPENDENT VARIABLE
SALES CAMPAIGNS
Sales Personnel : Expenses : Materials
Sales Point-of-Sale Systems & Materials
SALES PROMOTION COSTS
SALES PROMOTION FINANCIAL SCENARIOS FORECASTS
SALES PROMOTION
SALES PROMOTIONS EVALUATION CRITERIA
SALES PROMOTIONS RESEARCH
Sales-force presentation
Selecting services and supplies
Selling Cost Objectives
Sponsorship. Variable Marketing Cost Objectives
Strategic below-the-line activities
TACTICAL AND STRATEGIC OBJECTIVES
Tactical below-the-line activities
THRESHOLD AND TARGET GOALS

SALES PROMOTION
Integrating the total marketing operation
Promotional aims
Co-ordination
Sales-force presentation
Budgeting
Frequency of promotions
Matching product to promotion
Different types of testing
Conditions and restrictions
Selecting services and supplies
Meeting deadlines
Continuity of interest
Evaluating campaigns
Emotional response
Increasing promotional activity
PROMOTION EVALUATION
PERCEPTION OF THE MARKET
SALES PROMOTIONS RESEARCH
Research pre-testing
Research post-testing
Constraints on research
METHODOLOGY
PROBLEMS OF EVALUATION OF SALES PROMOTION
Proofs of success
SALES PROMOTIONS EVALUATION CRITERIA
TACTICAL AND STRATEGIC OBJECTIVES
Tactical below-the-line activities
Strategic below-the-line activities
PERFORMANCE-EVALUATION CRITERIA
SALES AS THE DEPENDENT VARIABLE
MODEL RESEARCH BRIEF
Research objectives
Action criteria
Decision criteria
Action standards
THRESHOLD AND TARGET GOALS
HISTORIC FINANCIAL DATA
SALES PROMOTION FINANCIAL SCENARIOS FORECASTS
SALES CAMPAIGNS
Marketing Integration
Budgeting Efficiency
Campaign Performance
Campaign Monitoring & Evaluation Procedures
Campaign Flexibility
PROMOTIONAL PERFORMANCE
Promotional Research & Methodology
Promotion Evaluation & Monitoring
Promotion Performance & Efficiency
Promotion Targeting
Promotion Flexibility
Product Launch or Revision Marketing Scenario
SALES PROMOTION COSTS
Advertising : Mail : Media
Sales Personnel : Expenses : Materials
Sale Promotion Materials : Print
Sales Point-of-Sale Systems & Materials
Publicity : P.R. : Exhibitions
Base Forecast : Median Market Scenario
Marketing Expenditure
Variable Marketing Cost Objectives
Selling Cost Objectives
Advertising Cost Objectives
Promotional & Pricing Cost Objectives
Promotional Expenditure
Sales & Marketing Cost Scenarios