Quantifying Five Measures of Promotion Effectiveness In Sales

In this era of corporate advancement, Sales Promotion started getting considered as a commonly used tool to correlate with businesses spread all over the world. It is highly believed that sales promotion can in generating promotion effectiveness among the customers and in return, this can also help them to handle the financial risks -they often encounter. Thus, it is advisable to thoroughly evaluate the effectiveness of promotional strategies and determine whether the Sales Promotion will be profitable for the company or not? As it stands to be the most effective approach to minimize investment risk and raise revenue generation, this overall procedure ultimately helps in creating the brand appropriately.

Researchers have already confirmed that to establish a promotion effectiveness model, there should be a proper skimming over consumer goods to cite some of the benefits and challenges it holds in this digitized platform for measuring promotion effectiveness.

Promotional Effectiveness Series

Why is there a need to know one’s promotion ROI?

First, it is needed to gauge the accurate volume effects of promotion and then to cite the real ROI of promotions.

How to identify 30% of promotions that destroy the value of one’s company?

There should be a perfect measurement of various segments of promotions through performance, along with value destroyers.

How producers and retailers jointly build an attractive promotion proposition?

It should start by sorting the reasons behind expressions like excitement, trial, traffic and profit, and with these, there should also be a necessity about equating the competition duly existing in between promotions.

What are the 7 drivers of effective promotions?

The top 7 drivers of effective promotions should be listed which should also include the proper design of the best promotion which one requires.

Why do you need a digital platform for promotional management?

There is always a requirement for Data Eco-system to drive insight and there should be a promotion of impact predictability with the introduction of Machine Learning (ML).

How promotion changes the shopper’s behavior?

Promotion effectiveness can meet shopper’s expectations but along with that the promotional curse tends to challenge the market as well,

Moreover, it should always be mentioned that promotion effectiveness should be duly restricted in the changing behavior of consumers and thus effective promotional strategies can only be conducted through a microscopic view of the campaigns and evaluate whether they are bringing desired results or not?

Role of ROI in Promotional Effectiveness

Return of Investment (ROI) is regarded as the most important KPI to segregate between separate successful promotions and unsuccessful ones and the effective measurement of ROI of a promotional campaign involves a proper skimming of the data collection done from multiple sources and evaluating its effect on Sales Promotion.

Stages Involved in Sales Promotion Planning

  1. The proper establishment of objectives.
  2. The accurate selection of promotional tools.
  3. Structured planning of Sales Promotional Programmes.
  4. Pre-testing
  5. Implementation
  6. Evaluation

In 1963, Lee Adler was noted as the first one to mention the possibilities of measuring or predict Sales Promotions or Promotional Effectiveness in the most accurate way. His mode of approach towards the effectiveness of Sales Promotions was through various models where he succeeded in correlating with the objectives of each form of Sales Promotions by implementing a specific method of measurements.

The Kuehn-Rohloff Model

It is described as the brand-switching model which is primarily designed to evaluate promotion effectiveness in various ways:

The model first shows who is attracted by promotions and then the next step revolves around separating the ones who have acclamations over the highest pre-purchase probability.

The model even tends to demonstrate the proximities or relationships between types of deals, brands, and also a product to product purchases for new buyers and also existing ones.

Rao-Linnen Model

This model is duly developed on the baseline of franchise- retail environment and thus it holds an array of characteristics which can be cited as :

This model has the potential to deal with multiple simultaneous promotions and also shows how joint-effects of multiple simultaneous promotions can be handled.

This model is regarded as the first one to deal with joint competitive effects and the joint effects of several other promotions simultaneously.

Little’s Braided Promotional Model

This model is denoted as the marketing one developed by Little.

It duly holds two contracts – Promotional Time and Promotional Response Functions

It emphasizes on a trade promotion effectiveness where a consumer is aware of upcoming promotions and for which they likely tend to postpone their purchase for a while.

Listing out Five Important Metrics to evaluate the quality and promotion effectiveness

Total Sales Value and Volume

This metric enables marketers to determine the need to set up certain systems that will notify the marketers about the quality information of the outcomes of sales value and volume at length.

Total Customer Traffic

It is a metric implemented to measure in-store promotion’s quality and effectiveness.

Total Number of Purchases

This metric provides marketers with information about the quality and effectiveness of a particular sales promotion.

Average Value of Purchases

This metric can determine the effectiveness of shopper marketing based on the promotion of in-store traffic which reflects the target market primarily.

Total Profits Generated by In-Store Promotions

This metric ensures the marketers about the presence of complete data comprising the total investments done on promotion effectiveness.

Four Sales Volume Affects Promotion Effectiveness

Baseline

Marketers should be aware of the regular sales volume to ensure promotion effectiveness.

Future Purchase

A drop in sales is often encountered after promotions known as Consumer Stock-up and there the generation of additional sales often boils down to fewer sales in the coming days.

Cannibalization

Marketers should be aware of the impact which promoted products have on sales volume of the remaining products in the respective category.

Competitors’ volume

Marketers should be able to quantify the impact of the promotion effectiveness which got cast on the competition.

Conclusion

Thus, it can be concluded that sales promotion has a greater role to play in determining the trade promotion effectiveness and there are multiple models and methods to quantify that in a reliable and structured manner.

karthikvarma
Author: karthikvarma

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