We can define sales promotions as marketing activities usually specific to a time period, place or customer group, which encourage a direct response from consumers or marketing intermediaries,through the offer of additional benefits.
Selecting Promotional Tools
A marketer must do the following while planning and sending communications to a target audience: ->Identify the Audience Individuals, groups, special publics or the general public. Intermediaries vs Consumer
2. Identify the Stage of Product Life Cycle Introductory Inform Publicity/Advertising/Sales force (interm.)/Sales promotion (free samples) Growth Persuade Differentiate from competitors offering Maturity Remind Reminder advertising, Sales promotion (coupons) Decline Cut budget
3. Product Characteristics
y Complexity How much information must be communicated.
The more complex the message, the greater the need to use personal selling. y Risk Greater risk, greater need for personal selling
4. Stages of Buying Decision In many cases the final response sought is purchase, but purchase is the result of a long process of consumer decision making. Need to know where the target audience now stands (in the process), and what state they need to be moved to.
Objectives of Sales Promotion
You have learnt that the main objective of sales promotion is to increase sales. However, there are also some other objectives of sales promotion. The objectives are: (i) To introduce new products: Perhaps you know that many companies distribute free samples while introducing new products. The consumers after using these free samples may develop a taste for it and buy the products later for consumption.
(ii) To attract new customers and retain the existing
ones: Sales promotion measures help to attract or create new customers for the products. While moving in the market, customers are generally attracted towards the product that offers discount, gift, prize, etc on buying. These are some of the tools used to encourage the customers to buy the goods
(iii) To maintain sales of seasonal products: There are some products like air conditioner, fan, refrigerator, cooler, winter clothes, room heater, sunscreen lotion, glycerin soap etc.,which are used only in particular seasons. To maintain the sale of these types of products normally the manufactures and dealers give off-season discount. For example, you can buy air conditioner in winter at a reduced price. Similarly you may get discount on winter clothes during summer.
(iv) To meet the challenge of competition: New products frequently come to the market and at the same time improvement also takes place. So sales promotion measures have become essential to retain the market share of the seller or producer in the product-market
Tools of Sales Promotion
To increase the sale of any product manufactures or producers adopt different measures like sample, gift, bonus, and many more. These are known as tools or techniques or methods of sales promotion. Let us know more about some of the commonly used tools of sales promotion.
Free samples: You might have received free samples of shampoo, washing powder, coffee powder, etc. while purchasing various items from the market. Sometimes these free samples are also distributed by the shopkeeper even without purchasing any item from his shop.These are distributed to attract consumers to try out a new product and thereby create new customers. Some businessmen distribute samples among selected persons in order to popularize the product. For example, in the case of medicine free samples are distributed among physicians, in the case of textbooks, specimen copies are distributed among teachers.
(ii) Premium or Bonus offer: A milk shaker along with Nescafe, mug with Bournvita, toothbrush with 500 grams of toothpaste, 30% extra in a pack of one kg. are the examples of premium or bonus given free with the purchase of a product. They are effective in inducing consumers to buy a particular product aswellas rewarding the consumers
(iii) Exchange schemes: It refers to offering exchange of old product for a new product at a price less than the original price of the product. This is useful for drawing attention to product improvement. Bring your old mixer-cum-juicer and exchange it for a new one just by paying Rs.500 or exchange your black and white television with a colour television are various popular examples of exchange scheme.
(iv) Price-off offer: Under this offer, products are sold at a price lower than the original price. - Rs. 2 off on purchase of a lifebouy soap - Rs. 15 off on a pack of 250 grams of Taj Mahal tea - Rs. 1000 off on cooler etc. are some of the common schemes. - This type of scheme is designed to boost up sales in off-season and sometimes while introducing a new product in the market.
(v) Coupons: Sometimes, coupons are issued by manufacturers either in the packet of a product or through an advertisement printed in the newspaper or magazine or through mail. These coupons can be presented to the retailer while buying the product. The holder of the coupon gets the product at a discount. For example,coupons like, show this and get Rs. 15 off on purchase of 5 kg. of Annapurna Atta. The reduced price under this scheme attracts the attention of the prospective customers towards new or improved products.
(vi) Fairs and Exhibitions: Fairs and exhibitions may be organised at local, regional, national or international level to introduce new products, demonstrate the products and to explain special features and usefulness of the products. Goods are displayed and demonstrated and their sale is also conducted at a reasonable discount. International Trade Fair in New Delhi at Pragati Maidan, which is held from 14th to 27th November every year, is a well known example of Fairs and Exhibitions as a tool of sales promotion.
(vii) Trading stamps: In case of some specific products trading stamps are distributed among the customers according to the value of their purchase. The customers are required to collect these stamps of sufficient value within a particular period in order to avail of some benefits. This tool induces customers to buy that product more frequently to collect the stamps of required value.
(viii) Scratch and win offer: To induce the customer to buy a particular product scratch and win scheme is also offered. Under this scheme a customer scratch a specific marked area on the package of the product and gets the benefit according to the message written there.In this way customers may get some item free as mentioned on the marked area or may avail of priceoff, or sometimes visit different places on special tour arranged by the manufacturers.
(ix) Money Back offer: Under this scheme customers are given assurance that full value of the product will be returned to them if they are not satisfied after using the product. This creates confidence among the customers with regard to the quality of the product. This technique is particularly useful while introducing new products in the market.
X)Point of Purchase Display:
Outside signs, window displays, counter pieces, display racks. 90% of retailers believe that point of purchase materials sell products. It z Essential for product introductions. Also with 2/3 of purchasing decisions made in the store, they are important.
NEED FOR SALES PROMOTION
1. Increasing Competition : Due to increase in competition, companies are finding it increasingly difficult to compete on quality. They are therefore resorting to more innovative methods of sales promotion. In order to have a competitive advantage over its competitors like Levis, Pepe, Killer and others, Spykar Jeans, once a year has a grand sale of upto 50%.
2. Customers Have Become More Price Sensitive: This increased price sensitivity is a direct result of rampant inflation. Economic recession is likely to fuel this trend further, as consumers and dealers become more sensitive towards prices. If the customers get branded jeans at half the actual price, then they are definitely going to make huge purchases of Spykar Jeans because they want value for their money, as they are price sensitive.
3. Sales Promotions Generally Create An Immediate Positive Impact On Sales: Advertising, personal selling and other methods of promotion produce slower sales response compared to sales promotion. Sales promotions are mostly for short duration, for a specified period, leading to a sense of urgency in consumers to buy now. This creates an immediate positive impact on sales.
4. Products have become more standardized: As a result of perceptions of similarity among brands, marketers have no way but to compete on the basis of extra benefit offered through sales promotion. Competing companies struggle to capture market share by using every tool likely to bring sales success. There are many unbranded jeans sold at shopping malls and places like linking road, bandra which are bought at half the price of actual branded jeans. People who are money conscious buy such jeans. Therefore, Spykar Jeans comes up with such discounts, which helps them in increasing their sales and also in stock clearance, if any.
5. Consumer Acceptance: y As competition intensifies and promotions proliferate, consumers have learnt to earn the rewards of being smart shoppers. Over a period of time, they have also learnt that brands on promotion are not necessarily of lower quality.
vertisi Has ec e re x e sive ess ffective: y ll t e a vertisi e ia ave ec e ite ex e sive. i -vis al e i , ic is c si ere as t e st effective f r s rt- rati a s, ay c st i excess f s. 1 ex s re ri ri e ti e. la f r a 10 sec yI a y cases, c s ers ave reac e a i t f re e t excessive a vertisi V. e c s ers eve c si er a vertisi as a i tr si i t t eir rivacy, lea i t za i (s rfi c a els). y ir s it s all ets ca t c ete it i c a ies, ic s e e s s f ey a vertisi . r t ese s all et fir s, sales r ti is a re c st-effective r ti et t r ce sales res lts. 6.
7.Trade Has Become More Powerful: y Retailers and wholesalers have become powerful and find themselves in a position to demand extra facilities from the companies. They Channel members demand more incentives to get the desired results. Manufacturers do not seem to have any alternatives but to concede to their demands, keeping in view the competitive market conditions. y In shopping malls like Globus and Lifestyle, decent margins have to be paid to them in order to have shelf visibility for your brand.
Scope of sales promotion:
c s ere istribute 1993 nati nally annually (3,200/ use l ), only 2.3% are re ee e . y 9000 tra e s s c ntaining 10 ex ibits r re/year. e Y r aut s , el i aut s attracts re t an a illi n pe ple per year. y $15-20 billi n/year spent n point of purc ase aterial in stores.
y 323 billi
y companies are looking to get a competitive edge y quick returns are possible for short term profits y more consumers are looking for promotions before
purchase y channel members putting pressure on mf. for promotions y advances in tech. make SP easier (ie coupon redemption)
Importance of Sales Promotion
The business world today is a world of competition. A business cannot survive if its products do not sell in the market. Thus, all marketing activities are undertaken to increase sales. Producers may spend a lot on advertising and personal selling. Still the product may not sell. So incentives need to be offered to attract customers to buy the product. Thus, sales promotion is important to increase the sale of any product. The importance of sales promotion from the point of view of manufacturers and consumers.
From the point of view of manufacturers
Sales promotion is important for manufacturers because i. It helps to increase sales in a competitive market and thus, increases profits; ii. It helps to introduce new products in the market by drawing the attention of potential customers; iii. when a new product is introduced or there is a change of fashion or taste of consumers, existing stocks can be quickly disposed off; iv. It stabilizes sales volume by keeping its customers with them.
From the point of view of consumers
Sales promotion is important for consumers because i. The consumer gets the product at a cheaper rate; ii. It gives financial benefit to the customers by way of providing prizes and sending them to visit different places; iii. The consumer gets all information about the quality, features and uses of different products;
iv. certain schemes like money back offer creates confidence in the mind of customers about the quality of goods; and v. it helps to raise the standard of living of people. By exchanging their old items they can use latest items available in the market. Use of such goods improves their image in society
Consumer sales promotion methods
y Price discounts or price-off deals:
Price deals are probably the most commonly used promotional techniques. y A price deal for a customer means a reduction in the price of the promoted product and the consumer saves money on purchase. Example: Colgate fresh energy ice blue gel (Colgate India) 50 gm pack, Rs. 5.50 off on normal price, now available at Rs. 12.50 only. -Price discounts are communicated through POP advertising, window displays, sales people, advertising in newspapers, magazines and T
Price packs: Price pack deals are also called value packs. They can take any of the two forms: 1.Bonus pack and 2.Banded pack. In case of a bonus pack, an additional quantity of the same product is offered free when the standard pack size of the product is purchased at the regular price. Example: -Godrej Colour Gloss triple action shampoo, offers 20% extra free. 100ml +20ml. -Sunsilk shampoo (HLL) 400ml bottle gives 33% more free.
The Banded pack is when the marketer develops special packs of the product containing more quantity but the price is proportionately low. This is a method to load the consumer up with the product. This technique is often used to introduce a new large size of the product or to encourage continued usage and also to increase consumption. -The offer is termed as banded pack when 2 or more units of the products are sold at a reduced price compared to the regular price. -Another variation of this technique is buy 1 get 1 free or some similar offer, it could be same for less or more for the same. Example: Fairglow soap buy 3 get 1 free,
2. Refunds And Rebates: -Refund is the repayment of total money paid for purchase, while the rebate represents repayment of only part of the money paid for the purchase. -Refund offers seems to work very well in guaranteeing the trial of a product or service since there is no risk involved for the customer because of the promise of total refund of the purchase amount Example: Taj mahal Tea guaranteed its taste by openly telling the public of its offer that agar chai pasand nahi aaie, toh pure paise vaapas !
3.Coupon: A coupon entitles a buyer to a designated reduction in price for a product or service. Coupons bear an expiry date and cannot be redeemed after the cut off date. The main Advantages of coupons are: 1.Encourage brand switching 2.Stimulate trial for a product 3.Take off the attention from price -Fair and Lovely dark circle removal cream to create more product trials has coupons in the newspapers and magazines which avail you of Rs.10/- off on a 40 gm pack.
y 4. Contests And Sweepstakes:
A contest has consumers compete for prizes based on skill or ability. Winners in a contest are determined by a panel of judges or based on which contestant comes closest to a predetermined criterion for the contest. Contests were very often used earlier where people has to write slogans, poems, stories etc. generally I like the product because and the best ones won prizes. y But off lately, contests are becoming less and sweepstakes increasing. People are more willing to play on luck rather than participate by showing their abilities.
A sweepstake is a promotion in which winners are determined purely by chance.Consumers need only to enter their names in the sweepstakes as a criterion for winning. Some popular types of sweepstakes also use scratch-off cards . -Example:Britannia khao world cup jao campaign has taken the market by a swing. Under the offer you collect points available on Britannia biscuit packets and exchange 100 points for a scratch card, which has various gifts and the 100 world cup tickets. There was an increase in the sales by 25%, claims the company.
5.Sampling: Getting consumers to simply try a brand can have a powerful effect on future decision-making. Sampling is a sales promotion technique designed to provide a consumer with an opportunity to use a brand on a trial basis with little or no risk.Sampling is particularly useful for new products& It can also be used for established brands with weak market share in specific geographic areas.
Consumer sales promotion techniques
y Price deal: A temporary reduction in the price, such as Happy hour y Loyal Reward Program: Consumers collect points,or credits for
purchases and redeem them for rewards.
y Cents-off deal: Offers a brand at a lower price. Price reduction may be a
percentage marked on the package.
y Price-pack deal: The packaging offers a consumer a certain percentage
more of the product for the same price (for example, 25 percent extra). y Coupons: coupons have become a standard mechanism for sales promotions.
y Loss leader: the price of a popular product is
temporarily reduced in order to stimulate other profitable sales inserted into the local newspaper for delivery.
y Free-standing insert (FSI): A coupon booklet is y On-shelf couponing: Coupons are present at the shelf
where the product is available.
y Checkout dispensers: On checkout the customer is
given a coupon based on products purchased.
y On-line couponing: Coupons are available on line. Consumers print them out and take them to the store. y Mobile couponing: Coupons are available on a mobile phone. Consumers show the offer on a mobile phone to a salesperson for redemption. y Online interactive promotion game: Consumers play an interactive game associated with the promoted product. See an example of the Interactive Internet Ad for tomato ketchup.
Example Ad For Online Games 7'UP Dancing Allu Arjun.
y Rebates: Consumers are offered money back if the receipt and barcode
are mailed to the producer.
y Contests/sweepstakes/games: The consumer is automatically entered
into the event by purchasing the product. Point-of-sale displays:y Aisle interrupter: y y y y y y y
A sign that juts into the aisle from the shelf. Dangler: A sign that sways when a consumer walks by it. Dump bin: A bin full of products dumped inside. Glorifier: A small stage that elevates a product above other products. Wobbler: A sign that jiggles. Lipstick Board: A board on which messages are written in crayon. Necker: A coupon placed on the 'neck' of a bottle. YES unit: "your extra salesperson" is a pull-out fact sheet.
y AISLE INTERRUPTOR
y YES UNIT:
y Kids eat free specials: Offers a discount on the total dining bill by offering 1 free kids meal with each regular meal purchased.
Trade Sales Promotion Techniques
y Trade allowances: short term incentive offered to induce a
retailer to stock up on a product.
y Dealer loader: An incentive given to induce a retailer to
purchase and display a product.
y Trade contest: A contest to reward retailers that sell the
y Point-of-purchase displays: Extra sales tools given to
retailers to boost sales. y Training programs: dealer employees are trained in selling the product. y Push money: also known as "spiffs". An extra commission paid to retail employees to push products. y Trade discounts (also called functional discounts): These are payments to distribution channel members for performing some function .