recommend and justify which method of sales promotion to use in a given situation

Link to the Marketing Mix (4 Ps) – Exam‑style Sentence Starters

• Product – “The promotion highlights the product’s key benefit by …”
• Price – “The promotion supports the price strategy because it offers a temporary discount without changing the list price, preserving perceived value.”
• Place – “Using POS displays ensures the promotion reaches customers at the point of purchase, increasing impulse buying.”
• Promotion – “The sales‑promotion activity complements advertising by reinforcing the same message and encouraging immediate action.”

Legal and Ethical Constraints – Checklist for the Exam

• ✓ ASA compliance – truthful, not misleading.
• ✓ Consumer Protection – clear terms, no hidden conditions.
• ✓ Gambling legislation – contests of chance require a licence.
• ✓ Data‑protection (GDPR) – obtain consent, store data securely.
• ✓ Ethical practice – avoid targeting vulnerable groups; no bait‑and‑switch.

Evaluating Sales‑Promotion Effectiveness

Examiners expect at least three measurable indicators and, where appropriate, a simple ROI calculation.

• Sales lift – increase in sales volume/value during the promotion compared with the same period in the previous month.
• Redemption rate – (Number of coupons redeemed ÷ Number issued) × 100 %.
• Market‑share change – difference in market share before and after the promotion.
• Cost‑to‑sales ratio – (Total promotion cost ÷ Sales generated) × 100 % (lower is better).
• ROI – (Net profit from promotion – Promotion cost) ÷ Promotion cost × 100 %

Numeric example:

If a promotion costs £500 and generates £2 000 of profit,

ROI = (2 000 – 500) ÷ 500 × 100 % = 300 %. A 300 % ROI indicates the promotion earned three times its cost.

Decision‑Making Flowchart (Sketch)

Business Objective
        ↓
Target‑Market Analysis
        ↓
Product & Price Considerations
        ↓
Budget Assessment
        ↓
Legal / Ethical Check
        ↓
Match with Promotion Methods (use table)
        ↓
Recommendation & Justification
        ↓
Evaluation Plan (indicators & ROI)
    

Example Scenarios & Recommendations

Scenario 1 – High‑Involvement, Moderate Budget

Situation: A mid‑size cosmetics company launches a new line of organic facial moisturisers aimed at 18‑30‑year‑old women. Objective: generate trial and build a loyal customer base. Budget: modest.

Recommended sales‑promotion:

1. Free sample sachets (included with online orders and displayed in store windows).
2. Loyalty card offering a 10 % discount after three purchases.

Justification (exam‑style):

• The free sample lets the target market experience the high‑involvement product risk‑free, supporting the product element.
• Samples can be bundled with existing orders, keeping distribution costs low – addressing the budget constraint.
• The loyalty card encourages repeat purchases, directly meeting the objective of building a loyal customer base and linking to the price element by rewarding future buying without permanent discounting.
• Both methods reinforce the “organic” positioning and comply with ASA rules on truthful claims.
• Evaluation: measure sales lift in the first month, track loyalty‑card redemption rate, calculate ROI using the formula above.

Scenario 2 – Low‑Cost Commodity, Tight Budget

Situation: A small retailer sells a basic household cleaning spray priced at £2. The aim is to increase market share in a highly price‑sensitive market. Budget: very limited.

Recommended sales‑promotion:

1. POS display with a “Buy‑One‑Get‑One Half‑Price” (BOGO‑50%) offer.
2. Simple paper coupons for a £0.20 discount on the next purchase, distributed with the receipt.

Justification (exam‑style):

• BOGO‑50% creates immediate perceived value, encouraging bulk buying and helping to increase market share – a price‑focused strategy.
• POS displays target impulse buyers at the checkout, maximising reach with minimal cost.
• Paper coupons are cheap to produce, fit the tight budget, and provide a measurable redemption rate.
• Both methods avoid breaching ASA rules because the price reduction is clear and transparent.
• Evaluation: compare weekly sales volume with the same week in the previous month (sales lift), calculate coupon redemption rate, and compute the cost‑to‑sales ratio.

Key Points to Remember for the Exam (AO4)

• Always link the chosen promotion method to the specific business objective.
• Weigh advantages and disadvantages in the context of the situation, explicitly stating any business risks.
• State any legal or ethical constraints that affect the choice and tick the checklist.
• Explain how the promotion supports the other three Ps using the provided sentence starters.
• Outline how success will be measured – at least three indicators and, where possible, a simple ROI calculation.
• Use a clear decision‑making flowchart or diagram if the question asks for visual interpretation.