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Week 6: Communication I - Promotion - Coggle Diagram
Week 6: Communication I - Promotion
Price promotions
Short- term
promotional objectives (p.3)
Baseline vs Incremental sales
baseline sales: expected sales in the
absence of marketing programs
(i.e: promotion)
incremental sales (or promotional lift): lift or increase in sales
in response to promotion
total sales = baseline sales + incremental sales
lift from promotion (%) = incremental sales/ baseline sales
brand sales = unit market share x category sales (units)
evaluating
profit contribute due to promotion
= contribution from
incremental sales
- contribution
foregone
from
baseline sales
(p.7 ??)
case 1
: no post- promotion effect (p.8)
case 2
: immediate post- promotion effect -
sales shortfall
(p.10-11)
case 3
: different duration (p.12)
case 4
: category expands
case 5
: long- run benefits: if price promotion
induces brand trial
or
increases usage of existing customers
Evaluating the long- run effect
Contribution per period in the long run = (
New - old baseline sales
) x Contribution per unit (price)
Downward spiral
Competitors react
Size of
price- offs
increase
Customers learn to wait for deals
Successful promotional cycle
Customers try product
Trade stock the successful product
Repeat purchases
Customers become loyal
Promotional gains
Incremental sales
Brand manufacturer (brand sales): switching from
competing brands
=> higher consumption rate and new
brand
users
Retailer (category sales): switching from
competing retailers
=> higher consumption rate and new
category
users
Sales shortfall in
immediate
post- promotional period
Brand manufacturer: switching from the
focal brand
Retailer: switching
within
the
focal retailer
Long term gain in sales
from higher consumption rate and new brand/ category users
Evaluating promotions in practice
Regression
: p.20 - 21