Since promotion is an important means for enterprises to participate in competition and achieve set goals, it is necessary to plan promotion from a strategic height. The primary task of promotion planning is to clarify the purpose of promotion, as different purposes require different promotion policies. Only by formulating corresponding promotion policies and plans based on clear promotion purposes can set goals be successfully achieved. Looking at the various promotional activities around us, how many are truly strategic, purposeful, planned, and creative?
Promotion targets can be end consumers or channel members. Different targets require different promotional methods. Promotion targeting channel members (agents, wholesalers, retailers, etc.) is an important part of a company's channel promotion strategy. Typically, there are six objectives for channel promotion: achieving distribution rate targets; expanding sales; launching new products; clearing inventory; seasonal adjustment; and responding to competition. This article will discuss the channel policies corresponding to these six objectives.
- Achieving Distribution Rate Targets
A key indicator of product promotion success is the "distribution rate." During the product launch stage, a certain distribution rate plays a crucial role in product promotion, advertising coordination, and market stabilization. To ensure the achievement of distribution rate targets, companies need to build, expand, or adjust their distribution networks according to plan. Typically, companies can adopt the following practices (see Table 1):
Table 1: Achieving Distribution Rate Targets
- Expanding Sales
After achieving a high "distribution rate" in the corresponding market, the main goal is to increase market share. At this point, the promotion objective shifts from achieving distribution rate targets to expanding sales (i.e., increasing distributors' order quantities to obtain expected profits). Common methods to achieve this goal include the following (see Table 2):
Table 2: Expanding Sales
- Launching New Products
Due to the trend of diversified and changing customer demands, companies often need to launch new products in a timely manner. During the new product launch process, companies need to conduct extensive publicity and formulate corresponding sales policies. In the process of launching new products, it is necessary to handle the relationship (contradictions and competition) between new and old products. Common methods for handling the relationship between new and old products are as follows:
Table 3: Relationship Between New and Old Products
- Handling Inventory
Due to constraints such as production scale, transportation, and warehousing, companies need to regularly clear inventory. Large-scale inventory clearance may disrupt the market price system and reduce company profits. On the other hand, if channel resources are cleverly utilized during inventory clearance, it can expand market share.
For example, Ting Hsin Group once conducted a large-scale promotion for "Master Kong" instant noodles to handle inventory. At that time, to transfer large amounts of inventory to distributors and simultaneously push distributors' inventory to retail stores, Ting Hsin Group counted distributors' inventory and offered discounts to entice retailers to stock up, thereby reducing wholesalers' inventory and prompting wholesalers to order in large quantities. This promotion not only rapidly increased "Master Kong" sales but also avoided a huge inventory cost.
Common approaches for handling company inventory are as follows (see Table 4):
Table 4: Handling Inventory
Changing current sales policies is generally adopted when competitors hold a large market share and have significant influence over the channel and the entire market. Companies are forced to adjust to maintain their competitive advantage.
Keeping existing sales policies unchanged is generally adopted when competitors hold a small market share and have little influence on the channel and market. At this time, the company's market position is relatively high, and its control over the channel is relatively strong.
- Seasonal Adjustment
Sales of products in some industries are affected by seasonal factors (typical examples include air conditioning, cold drinks, gifts, etc.), due to product characteristics and changes in consumer demand. Different products have different peak and off-peak seasons. Companies must not only analyze the seasonal trends of their own products but also analyze trends in competitive products and the industry. Seasonal sales adjustment can be analyzed from four stages: peak season to off-season; off-season; off-season to peak season; and peak season (see Table 5).
Table 5: Seasonal Adjustment
★ Off-season to Peak Season
A typical example is the cold drink industry. Sales of cold drink products are highly seasonal. In the early stage of entering the off-season, distributors often stop ordering early, causing a rapid decline in product sales. At this time, conducting channel promotions can slow the decline in sales, extend the cold drink sales period, and even encourage distributors to "stock up" in large quantities. This allows companies to recover funds, reduce inventory pressure, and occupy channel resources to prevent competitors from entering; additionally, it prepares for "distribution" so that products can "sell well" when the peak season arrives.
★ Peak Season to Off-season
A typical example is the air conditioning industry. Air conditioners are highly seasonal goods. To achieve market share targets, companies often adopt various preferential policies for the channel. For example, to encourage distributors to "stock up" before the peak season, companies often use a "monthly incremental" discount policy (i.e., increasing the discount rate month by month as the peak season approaches, to stimulate distributors to increase orders).
- Responding to Competition
Competitors' market behavior is an important factor that companies must consider when formulating promotion policies. When there are few manufacturers in an industry, a few companies hold most of the market share (high market concentration), product differentiation is low, and consumers have considerable recognition ability and understand the market, analyzing competitors' market behavior becomes particularly important. The following are competitor behaviors and corresponding policies (see Table 6):
Table 6: Responding to Competition
It should be noted that the purpose of channel promotion must be consistent with the company's overall marketing strategy. Promotion is a double-edged sword—"killing one thousand enemies, losing three thousand of your own." When promoting, it is essential to adhere to the principle of "no harm to the overall strategy (brand strategy, channel strategy, etc.)" and grasp the "degree" of promotion, using this "marketing weapon" cautiously. In any case, it is not worth damaging brand image or overall strategy for a slight increase in sales.
The above content covers the six major objectives (motivations) of channel promotion and introduces some common approaches for companies to carry out channel promotion. This article does not delve into specific promotional methods, as different companies, products, and strategies require different promotional methods.
Additionally, before determining specific promotional methods, companies should conduct thorough market research and promotion planning, and communicate fully with distributors before implementation. Only in this way can promotions proceed orderly and receive cooperation and support from distributors, and only then can all predetermined goals be achieved.
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