A promotion plan covers all phases of communication between a seller and potential customers. It addresses advertising, sales tactics and other promotional activities with the primary objective of increasing traffic and sales.

The Promotions Plan is an integral component of a traditional marketing plan which addresses the “bigger picture” of the business as a whole, covering the product mix, distribution channels and pricing structure. The promotional mix is the area most commonly underdeveloped by small business and sole traders as, not surprisingly, they focus the majority of their time and efforts on running their business. It is also the area that, with focus, can deliver results quickly and cost-effectively.

The three basic components of a Promotion Plan.

Although proportions vary depending on the nature of your business, there are three basic components of a promotions plan:

• Advertising 
•  Personal selling
• Sales Promotion

Publicity can be considered a fourth component.

Advertising

This includes newspapers, magazines, radio, television, billboards, direct mail, flyers, websites and the like. Several components can be incorporated into a clear promotional campaign with defined objectives. Avoid spending on random advertising - it may increase short term sales, but it is not effective in developing market awareness or cultivating a positive image and distinct brand for your business.

When advertising in any format, you should follow the ODaC formula - Open by grabbing attention, Develop by injecting desire and Close by promoting action.

Personal Selling

For retailers, personal selling begins once a customer enters the store. However, for service, manufacturers and wholesalers, customers have to be found and prospecting outside your company is necessary. Phone, internet & face to face enquiries all provide personal selling opportunities and a system of initial response and follow up should be developed.

Sales Promotion

Sales promotion is a composite of activities that round out the advertising and personal selling components of your company’s promotion mix. Sales promotion aids include catalogues, reprints of advertisements, special displays & display fixtures, banners and signs appearances at tradeshows etc.

Publicity

Publicity is news about you, your product or service that appears in a public medium. It can be considered advertising, good or bad, that you don’t pay for. It is more desirable than any other form of advertising because of the credibility it can deliver. Press releases can be submitted to a broad range of general media or to outlets with a specific focus on your industry.

Why develop a Promotion Plan?

A Promotion Plan is needed to:

• Acquaint customers with new products 
• Capitalise on the seasonal nature of products  
• Change or establish a company image  
• Emphasise quality of products & services 
• Increase store traffic 
• Inform customers of special services available such as delivery service, alterations or credit plans 
• Introduce new employees to the public  
• Keep the business name and location before the public  
• Offer get-acquainted incentives  
• Promote customer awareness of the business and its products or services  
• Promote special events such as a clearance sale, a change in location or the opening of a new outlet  
• Stimulate sales

A well-developed annual promotion calendar helps multiply the impact of dollars spent on promotion and advertising. By comparing past promotional calendars with their corresponding sources of funds statements, the effectiveness of campaigns can be ascertained.

How much should you spend?

In general a new business should be prepared to spend about 5 percent of projected gross revenue on a rounded promotion plan. An established business should budget 2 to 3 percent of gross revenue. Other issues that will influence the budget include:

• Are funds available from suppliers for prepared ads? Are there any co-operative advertising options?  
• How large is the community? Merchants operating in large communities will generally spend more than those targeting a small community  
• Is the business in a good location? If it is in a poor location, more activity will be required to encourage people to go out of there way to go there  
• Is the competition aggressive? What do you need to do to match or overwhelm them?  
• Is the business new? The newer the business, the higher the spend that will be required

Tracking the effectiveness of your Promotional Activity

It is essential that you keep records of the promotional activity that you run with and the ensuing results so that you can make comparisons, repeat your successes and dump those that do not work for you.

This can be as simple as keeping copies of all advertisements, flyers, newsletters that promoted a particular offer in a scrapbook and detailing the direct responses you received. If you have a website, it involves gaining an understanding of your site statistics, seeing where your visitors come from, which pages they visit and whether or not they request further information.

And of course, every time you receive an enquiry in any form, make sure you ask the million dollar question “How did you hear about us?” This, more than any other, will guide where you place your promotional emphasis in the future.