The process of promotional planning in the fast moving goods industry

Abstract

There has been much interest and discussion on the fast moving consumer goods industry in recent years. This is mainly due to the rapidly changing environment and increasing intense competition. One of the most significant changes has been the increasing proportion of brands promotional budgets being allocated to sales promotion. This is often at the expense of advertising expenditure. There have been a number of reasons given in the recent literature for the increase in sales promotion expenditure, such as the increasing media costs and media clutter, managerial short term focus, the increasing demand for managerial accountability, and changes in consumer decision making. However possibly the most significant reason for increasing sales promotion expenditure is the change in the balance of power from manufacturer to retailer. There are a number of well documented negative effects which the increase in sales promotion activity has on the long term strength of a brand. However it has also been suggested that the promotional planning process itself is equally responsible for many problems associated with sales promotions. The objective of the research in this thesis is to analyse the promotional planning process of product managers in the fast moving goods industry in New Zealand, and to determine the impact of a number of key factors on the process of promotional planning. This includes a breakdown of the planning of individual relevant promotional elements, including advertising, consumer promotions, and trade promotions. A number of influencing factors including organisational factors, product related factors, and external factors were also analysed. A qualitative study was undertaken with fifteen brand and/or marketing managers from a number of large fast moving goods companies. The results of this qualitative study support the view that while there are a number of uncontrollable external and product related factors which impact on the promotional planning process requiring a firm to be reactive (ie increase sales promotion activity), there are also a number of organisational and product related factors which are not uncontrollable and can be utilised in such a way that makes the planning processes and its outcome more effective. These findings have a number of implications for brand managers and marketing managers and their planning processes in the fast moving goods industry, and in the development of theories on promotional planning.