ROMI-Driven Sales Promotions: How The Biggest Coca-Cola Bottler Outside Of The U.S. Learned How To Measure The Impact Of Their Sales Promotions

Abstract

As part of the arsenal of marketing, sales promotions are strategies wherein an incentive is offered to the final consumer or customer to impact sales in the short term (not to exceed three months). Also part of the family are trade promotions that have the same objective, but whose incentives are targeted to the channel of distribution or the POP owners instead of the final consumer.

By this definition, one would suppose it is one of the tools of marketing that is the easiest to measure in financial terms because of its short-term nature and specific aim to impact hard metrics, such as sales vs. other campaigns, that try to impact soft metrics, such as brand consideration of purchase intent.

Sadly, as the market study presented indicates, few marketing executives, well knowing the exact costs related in each promotion, bother to estimate the required resulting sales to obtain an attractive return on investment and few and far between do a post-mortem examination to quantify the real returns.

As such, the objective of this paper is to present an easy methodology to evaluate, before and after, in financial terms, sales promotions of all different types and of all verticals, whether they are B2C or B2B.

Also, an in-the-field assessment of the methodology will be presented inside the promotional division of FEMSA, the biggest Coca-Cola Bottler in the world (outside of the US) which performs over 300 promotions per year. The example will serve to illustrate how to implement and replicate this methodology inside of other companies, as well as give evidence of its impact.