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Aim - To achieve long-term marketing objectives. Whatever the price, it must generate sufficient sales to earn profit for the business.
1) Cost-plus pricing (mark-up) - cost of production + profit percentage.
2) Psychological pricing -
Based on customers expectations. Creates a luxurious image for it. Setting prices below psychological barriers is also common e.g €1.95 instead of €2.
3) Premium pricing (price leadership) - Higher price than competitors to create impression of superior quality. (expensive packaging and stylish promotion). e.g Finches' initially set out 10-20% higher prices than competitors.
4) Price skimming - Very high price at new product launch to recover high development costs quickly.
5) Profit-maximising pricing - Setting price that will generate largest amount of profit asap.
6) - Penetration pricing -
Low price to capture market share fast. Generates economies of scale rapidly. e.g used in Ireland to promote sale of mobile phones.
7) Discriminatory pricing - Charging different prices to different customers for same product/service (different incomes). e.g Bus Éireann - students pay less.
8) Predatory pricing - Prices below cost to drive competitors out of market. Price war - When competing firms retaliate against the price cuts with further reductions. Downward cycle in prices as firms compete to attract customers.
9) Loss leader - product sold at or below cost price in hope of generating other, more profitable sales. e.g Used by retailers to attract customers into a store where they will most likely buy something else.

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Coca-Cola noticed declining sales for their products but increases in sales of water.
Introduced Dasani water to compete.
Found to be tap water.
Product was also contaminated with potentially lethal chemicals.
Huge ethical failing.
Waste of millions on advertising and production

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Creating an image for a product in the mind of consumers in the target market

Eg. Diet Pepsi was seen as a "girl's" drink, so many men did not buy it. Pepsi Max was launched to appeal to men, and sold well, despite being the same product, just with different branding

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small segment of a bigger market
Eg. C&C identified niche for high-quality soft drink for health-conscious young consumers

Effects:
less competition
higher prices
brand loyalty

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Demographic - Pepsi Max drinkers are young males under 25 from across different geographical areas
Psychological - Volkswagen segments the market into prestige (Audi), economy (Skoda), adventurous (SEAT) and conservative (Volkswagen)

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Plan that outlines how policies relating to the marketing mix are going to be implemented to achieve sales and profit targets

Steps:
1) Assess the market
2) Select target market
3) Undertake market research
4) Prepare marketing plan

Benefits:
impress investors
organised
establish priorities

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shows the amount of sales required to begin making a profit.

Contribution
Selling price - variable costs

Break-even point
Fixed costs/Contribution

Margin of safety
Amount by which a firm's profits can fall before they start making a loss

Limitations of break-even charts
-assumed that all goods will be sold
-fixed costs only remain the same if scale of production does not increase
-assumed that no other stock is available for sale

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Leaving cert & Junior cert Exam Revision | Studyclix makes exams easier

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Leaving Cert and Junior Cert exam paper questions and marking schemes listed by topic. Studyclix makes exam revision and study easier

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Sales promotion is a tool of promotion mix consisting to promote a product or service through incentives or activities such as offers, discounts, coupons, gifts, sweepstakes, contests, prizes and free samples.

These incentives are known as activities or sales promotions and often aim to promote the sale of the product or service, encourage, induce or encourage the consumer to decide on the purchase or acquisition.
The use of sales promotions is an effective strategy commonly used when launching a new product to market when you want to win market share from competitors, or just when you want to have a rapid increase in sales, but it has a cost disadvantage to be evaluated well before using.
Here are some examples of sales promotions classified by type of promotion they belong:

Offers

The offers are offers or proposals made to consumers to buy a product or acquire a service.
Examples of using offers:

When we offer consumers the possibility that they may be two similar products for the price of one (two for one offer).

When we offer consumers the possibility that they can be free by purchasing a product of a different one.

When we offer consumers the possibility of acquiring a second product at the half price for the purchase of the first.

We offer one of our services free of charge to people who visit us for the first time.

We offer one of our products or services for free to the first 10 people who buy us or visit way.

Discounts

Discounts are reductions regular price of a product or service that is performed for a period of time.
Examples of using discounts:

When we offer a discount on our services to customers who recommend us and bring us a friend who also wants to acquire another friend...

When we offer a discount on our products or services to the first 10 people who buy from us or visit us.

When we offer a discount on some of our products or services to people who visit us on a certain or specific day (This type almost used when a company wants to generate an income quickly cover their budget. Normally comapnies choose a weekday)

We offer a discount of 15% on all our products to the people who buy over the Internet.

We offer a discount of 10% on all our products to be the month of our anniversary or a special date for being related to the type of product we sell.

Coupons

Vouchers or coupons are bonds that give the person who has the ability to change them or exchange them for certain benefits.
Examples of using coupons :

When we published a coupon in a newspaper or in a magazine that lets people who cut and we present at the time of visit, the right to obtain a 20% discount on our products or services (coupon).

When we published a coupon on our website or send one via email, which gives the people who print and present at the time of visit, the right to obtain a 15% discount on our products or services.

When we give our customers a coupon for every $ 30 of consumption that gives them the right to consume US $ 10 in any of our products on a certain date (coupon consumption).

When we give our customers a coupon that gives them the right to obtain a 10% discount on our services at your next visit.

Gifts

The gifts consist of small gifts that are given to consumers or customers to show affection or to entertain them.
Examples of using gifts :

When we send a small gift to our major customers for their birthday or for a festive date.

When we give our customers a small gift for the purchase of a particular product or the acquisition of a particular service.

When they are giving you to all our customers merchandising articles such as pens, bottle openers and shirts that carry a logo or the name of our business.

Draws

The drawings consist of activities where it is chosen at random to one or more customers or clients to give them a prize.
Examples of the use of draws :

When all customers who visit us on the day we give a coupon to fill it, it deposited into an amphora, and participate in a raffle to be held before the closure of the premises.

When we give our customers a coupon for every $ 20 of consumption that gives them the right to participate in the draw for a car to be held on the day of our anniversary.

When we make a draw among the followers of our Facebook page they have given a "like" one of our publications, whose prize is one of our products.

Competitions

The competitions consist of competencies that are made with consumers or customers, and where it is given to the winner or winners a prize.
Examples of using contests :

When we create a competition among customers of our gym where we reward with two free months of membership to lift the heaviest weight on a given machine.

When we organized a competition among the followers of our Facebook page where we reward that tell the best story related to our type of product, or to publish the best photograph taken at the premises of our business.

Others

The following are examples of sales promotions that are not classified into types just mentioned:

When we do tastings of our products so that consumers can try before they buy

When we do exhibitions or demonstrations of our products so that consumers can appreciate its operation

When we send free samples of our products to potential customers so that they can meet the product

When small talk or provided free courses on something related to our products; for example, where each week we do a little workshop where we teach to make some sort of craft we sell in our business.

When we give to our main clients membership cards that allow them to access certain benefits such as special deals and discounts. (5%, 10%, 15 or more % off for visiting us more than 5 times a month or for those who visit us in a weekly or monthly bases.)

When we give our customers accumulative points cards with which they can accumulate points every time they buy our products and then, once accumulated a certain amount of points, redeem for products or discounts.

The examples we have just seen are sales and marketing promotions targeting consumers in order to encourage them to buy or acquire products or services; however, it should be noted that sales promotions may also be addressed to distributors, dealers or sellers in order to encourage to reach higher levels of sales of our products or services.

Examples of the use of these sales and marketing promotions are when we give them free products to our distributors to buy from us certain amount of products when we send gifts to our main intermediaries, or when we organized a contest among our sellers where we reward those who achieve the greatest achieve sales or sell a certain quantity of goods over a period of time.

Tips on using sales promotions

To end this article, here are some related to the use of sales promotions tips:
Make sure the sales generated will be higher than investment
Before launching a sales promotion make an estimate of the sales generated, it calculates your investment (including advertising necessary to make it known), and make sure the sales generated will be higher than the investment; and thus it reduces the risk that the end opposite happens.
Clearly defines the conditions
Before launching a sales promotion, clearly define the rules (terms) and conditions that consumers must meet in order to benefit from this, and thus avoid possible confusion, complaints or discomfort from consumer; for example, that you claim for a promotion is over.
Set a time duration
It sets a time duration for any sales promotion you make, which is recommended that not so very long periods, but it lasts long enough so that all consumers who make up your target market have access to promotion and can benefit from this.
Make sure everyone knows the promotion
For a sales promotion is effective make sure this is the knowledge of all consumers who make up your target market; for example, communicating through all your advertising. There is no point having a good promotion if few consumers know this.
Make sure that the promotion can be effective at all points of sale
Also make sure your sales promotion can be effective in all your outlets, and thus avoids the painful situation where a consumer goes to a retail outlet in order to benefit from a promotion, and is given with surprise in that outlet they can no longer give it or know anything about this.
Biding time
The effectiveness of a sales promotion may vary according to the time it is released, so always wait for the right time to launch, which may be, for example, when it starts to be a greater demand for your product type.
Search loyalty customer
Any sales promotion can be quite effective, but in general, tend to have better results, at least in the long term are those that seek to increase customer loyalty; for example, those based on membership or accumulative points.
Invest in sales promotions rather than advertising
Finally, if you hesitate about whether to launch a sales promotion or advertising, please note that simple sales promotions such as offering a gift by purchasing a product, tend to have a greater effect on the purchase decision of the consumer, and lower costs.

Want to know more, please comment and I will get back to you with more tips to help you on your request.

Image credit: rightanglecreative.co.uk

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Sales promotion - Definition & Examples | Must Know

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Sales promotion is a tool of promotion mix consisting to promote a product or service through incentives or activities such as offers, discounts, coupons, gifts, sweepstakes, contests, prizes and free samples. These incentives are known as activities or sales promotions and often aim to promote the sale of the product or service, encourage, induce or encourage the consumer to decide on the purchase or acquisition.

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-carry out market research to identify consumer requirements
-prepare sales forecasts for board of directors
-identify markets for the firm's products
-deciding on selling prices
-ensure that goods are attractively packaged
-plan the marketing campaign

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Finding out what customers want; producing and selling to such requirements profitably and more effectively than competitiors

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1) Product -
i) Factors concerning product (quality,packaging,design, size,
brand name and USP)
ii) Branding benefits -
Identifiable,
easier to introduce new products,
distinguished from competitors,
legal protection.
iii) Product life cycle -
Introduction - Launched into market. High expenditure on distribution and product promotion
Growth - Product becomes known; sales rise rapidly. Money may have to be invested to meet demand while ensuring quality
Maturity - Sales peak and level off. "Copy-cats" enter market. Sales promotion to increase sales
Saturation - Sales flatten and changes are necessary. Competitive advertising and sales promotion become common.
Decline - Sales fall and managers must decide to change mix, let product decline or take it out of market.
iv)Factors affecting the product life cycle:
Durability - durable goods don't need to be replaced as often, but results in market saturation very quickly
Fashion - trends go into decline quickly
Technological innovation - new inventions make older models obsolete quickly
Marketing - successfully redesigning the marketing gives them a new lease of life.
Eg. C&C expanded Finches product range to include Orange, Lemon, Orange Light, Rock Shandy - extends life cycle.

2) Price -
i) Factors -
Competitors' prices
Costs
Target market
Product life cycle position
Gov. legislation (alcohol, petrol, cigarettes)
ii) Strategies -
Cost plus pricing - Cost of goods + profit mark-up.
Premium pricing - High quality items eg. fashionable clothes, jewellery. Consumers expect to pay high prices.
Penetration pricing - New product, undercutting selling price of competitors to gain market share. Small profit eg. Vodafone new phone.
Competitive pricing -  Matching competitors' prices, If competitor reduces selling price by 10%, the firm must do the same eg. Airline, supermarket.

3) Place -
Ways manufacturers sell+distribute

Factors -
Size of market
Speed
Security
Cost

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management process of identifying, anticipating and satisfying customer requirements profitably

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collecting new information from the market - primary data

Methods:

Surveys - large sample group, concise and clear questions, incentives may be offered

Questionnaire - seek consumers' opinions, short and simple questions

Sampling - random sampling(where people are chosen at random - accurate and reliable), cluster sampling(where clusters of samples are chosen at random e.g people in new housing estates)

Observing - watching consumer behaviour, buying habits, reactions

Estimating - see how much of the market share the product will get

Feasibility studies - assessment of technical problems and potential profitability

Prototype - seeing production problems, consumer reactions and calculating costs

Test-Marketing - launching product in one area to gauge consumers' reactions

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1) Advertising -
Inform existing/potential customers in target market about the products/services price,features and where they can be bought.
Persuade new customers in target market.
Remind existing customers of the product/service. Customers gain confidence in the product.

TV(high cost), newspapers (well displayed as they're quickly disposed of), magazines (longer life than newspapers, colour, higher costs), radio (cheaper than Tv), internet (Irishtimes, Facebook, Google).

Regulation -
Advertising Standards Authority for Ireland - No form of illegality

2) Sales Promotion -
temporary techniques to increase sales by providing extra benefit. e.g. tokens, 2 for 1, reductions, vouchers, gifts.

Benefits - generates sales, attracts new customers, clear stock.

3) Public Relations -
Establish/maintain goodwill with public.
Press release, supporting locality, helping customers.

4) Sponsorship -
Sporting Events, Publicity.

5) Celebrity endorsement-
Beyonce - Pepsi.

6) Personal selling -
Sales people.

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Internal - employees(intrapreneurship), brainstorming, sales team

External -
competitors, research agencies, customers' feedback

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using secondary data (already collected)

Internal sources of info:
records, sales reports, financial information

External sources of info:
statistics, published reports, Household Budget Survey, census from Central Statistics Office, internet

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Raising Finance
1) How much is required?
2) Source of finance -
A) Short term (bank overdraft for salaries, insurance)
B) Medium term (leasing for computer,machinery)
C) Long term (rent/purchase premises)

Legal entity
1) Sole Trader
2) Partnership
3) Private Limited Company (Limited Liability)

Production Methods
1) Job - Single product with specific requirements eg. making a suit,building a bridge
2) Batch - Medium quantities, range of goods eg. Baking bread/cakes of different sizes, printing books.
3) Mass - Large quantities of the same product eg. Bic Pens

Employing staff
Business must be aware of skills required and employ suitable staff.

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*management process of gathering, recording and analysing of all the data concerned with the transfer of goods from the producer to the consumer

Reasons:

descriptive - know what is happening in the market

predictive - predict changes in customers' requirements

explanatory - explain marketing to public

exploratory - check size of new market

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1) Idea generation - brainstorming

2)Product screening - testing product potential

3)Concept development - developing idea into a product

4)Feasibility study - researching market + assessing profitability

5)Prototype development - testing market, finding problems with production, getting accurate financial information

6)Test marketing - launching product in one area e.g Guinness Light launched in Galway, didn't succeed, wasn't launched nationwide

7)Product launch - launching new product and advertising