Examples for measuring the effectiveness of promotions

In times of recession, it is a good idea to support strong brands with budgets concentrated on the most effective promotional tools. Measuring the effectiveness of promotional activities has become a key issue for manufacturers. Analysis of the promotion is based on two values: what sales would have been generated without the promotion and on incremental sales generated as a result of the promotion. First, it is calculated by Nielsen what sales would have been generated in three weeks without the promotion (baseline), then the volume of incremental sales is determined on the basis of actual figures. It can be seen from the table that incremental sales were equal to 78 percent of the baseline. Furthermore, the effects of different promotional tools are also determined. The third element of the analysis is calculating the loss incurred as the result of simultaneous promotions completed by our competitors. The promotional campaigns of competitors can also be analysed further, focusing on the extent the effectiveness of our promotion is diminished as a result of different campaigns conducted by our competitors. This can help in working out an effective defensive strategy. Data from completed promotions can also be used for simulating future promotions in a model. For example, it is possible to identify the key tools for an effective campaign. Synergies can appear as a result of the combined use of several promotional tools. It is also possible that a manufacture wants more shelf space.