The Need to Rationalize Promotions


Exhibit 27.6   Sales of a major brand reflecting the impact of promotions.

The promoted sales volume for a majority of FMCG brands accounts for a very substantial proportion of their total sales. In New Zealand, for instance, which is one of the most heavily promoted markets in the world, according to Nielsen, nearly 60% of grocery purchases in 2012 were promoted products.

Exhibit 27.6 plots the weekly sales trend of a market leading brand. The chart reveals that the on-promotion volume of this brand accounts for 43% of the total sales, and the gains resulting from the promotions constitute 26% of sales.

But how effective are these promotions? Considering that the proportion of on-promotion sales is so high, one would imagine that companies can barely afford not to understand their impact.

Some promotions work better than others; some items respond better than others; some promotions generate big gains, whereas others cannibalize; some promotions are profitable, others incur loss.

There is realization too that excess levels of promotions can impair a brand’s image and weaken its loyalty. Furthermore, the total cost of promotions is high and has been growing steadily over the years.

Their scale and significance leave us with no doubt of the need to rationalise promotions. Managers need to weed out less effective promotions and focus on those that yield superior results.

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Promotions Evaluation

Promotions Evaluation

Automated online solution for analysis of promotions.


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What they SHOULD TEACH at Business Schools


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Experiential Learning via Simulators | Best Way to Train Marketers

Experiential Learning via Simulators | Best Way to Train Marketers


Marketing simulators impart much needed combat experiences, equipping practitioners with the skills to succeed in the consumer market battleground. They combine theory with practice, linking the classroom with the consumer marketplace.


Online Apps for training on Promotions

Online Apps for training on Promotions


The Plannogrammer is an experiential learning facility for category managers, trade marketers, and retailers in consumer markets. Ideally suited for hybrid learning programmes, Plannogrammer imparts hands-on training in the planning and evaluation of promotions and merchandising.

It supports a collection of simulation and analysis platforms such as Promotions and Space Planner for optimizing space and promotions, Plannogram for populating shelves and merchandising, a Due To Analysis dashboard that decomposes brand sales into the factors driving sales, and a Promotion Evaluator to evaluate the volume, value and profit impact of promotion plans.