Presenting the Sales Promotion section in your business plan

There are hundreds of sales promotion methods in South Africa, some low cost, some for free and some requiring a big budget. Your business plan will be incomplete without a convincing sales promotion plan.

To come up with effective promotional plan, the business must consider the following facets upon which sales promotion is based:

  • The product/service its nature and purpose
  • Current market information on product or service
  • The targeted sales volumes per given period
  • The size and geographical distribution of the market
  • The available business resources (budget, human and technical resources)
  • Available communication channels
  • Competition

These factors interact in whole or in part in determining the best course of action in setting up a promotional plan.

The size and geographical distribution of the market

The size and geographical distribution of the market must be considered when coming up with a promotional mix for your business plan. An entrepreneur must know from the start the geographical scope of the market they have targeted. The following matters have to be considered in this regard:

 

  • Is it a local, regional, national or international market?
  • What is its estimated size? (population of people and organisations targeted)
  • How is it distributed? (sparsely distributed, densely distributed etc.)

 

The above factors will assist in preparing the budget and the promotional mix that will adequately reach

out to the market in question.A promotional mix that is formulated without consideration of the size and distribution of the market will only manage to reach out to the whole market by coincidence.

The Budget and Resources

To a greater extent money determines and controls resource availability. A new business usually does not have as much money as it requires for promotion. The Promotional mix is therefore limited by available financial resources.

Promotional methods that matches the organisations financial capacity are most likely to be used regardless of their effectiveness for a particular promotional campaign. Be that as it may, an entrepreneur should be creative enough to ensure the most optimal use of the available resources to get the message to the market. The entrepreneur must remember that there are also various free and low cost promotional methods out there.

The targeted sales volumes per given period

Every business has a break-even point, the point at which the costs of undertaking a particular activity are just equal to its associated revenue. T

A business that requires large volumes to be moved before it reaches break-even point ought to do more in terms of sales promotion in comparison to one that breaks even at lower volumes for the same product.

In short the higher the sales required to attain a profit, the larger the promotional mix effort and budget.

Competition

Competition affects an entrepreneur’s market promotion campaign in several ways. The  intensity of competition or degree of rivalry amongst businesses influences the effort intensity and resource allocation of the promotional mix. There is need to keep up and even surpass competitors in sales and this is attainable through a competitive sales promotion budget.

Available communication channels

The media infrastructure available to the business and the target market groups plays a part in the organisations promotional mix. It is imperative for the business to choose methods that allow the market to access the information it is conveying. Thus the use of Internet might not be the best method to communicate with the rural elderly for example.

Current market information on product or service

There is a concept referred to as the AIDA.This was put forward as a customer behavior sequence in response to the business market communication efforts. It is an acronym for Awareness, Interest, Desire and Action.

A potential customer first has to be aware of the business and its products or activities. They may chose to have no interest or may chose to be interested. From there they get a desire to act and if this desire is strong enough it may turn into an action which is buying a business or a service.s

At any point in time, various member of the targeted market groups are at various stages of this sequence. Promotional activity intensity will theoretically depend on the most common stage of the sequence within a given market. If the market is still getting to know the product, a rigorous marketing campaign may be necessary. If interest and desire are already there, strong incentives are needed to turn these into the actual buying action.

To conclude

The entrepreneur’s promotional plan must convince the investors’/financiers for whom the business proposal has been prepared. It can only achieve this if it is detailed enough to make sense and is considerate of the market nature as discussed above. A whole section of your business plan must therefore articulate the methods that will be used to reach the market, justifying these methods where possible. A budget must also be set and it must be adequate for the selected promotional methods.