SALES PROMOTION

• WHAT IS SALES PROMOTION ?• Sales promotions refers to diverse tools used—usually as a short term

measure– to stimulate sales or ensure greater purchase of a particular product or service

• WHY THE HUGH SURGE IN RECENT TIMES?• While promos have always been an integral part of marketing, there has been a

tremendous increase in promos in recent times.

• Presently, with any article we buy, there is another one--- free.

• The world over, promotions spend has been increasing exponentially, while the ad spend has been going down.

• As per A G Nielson’s study, not only have promotions been increasing, but the nature of promotions has also become more complex.

• Till 90s, promos were relatively simple—recipe books, measuring jars, jugs, pans

• i.e. low value items with low incentivsation

• This has given way to coupons, big contests, in-magazines samples, on-line schemes

• Additionally, in .earlier times promos were applied for certain limited product category—largely consumer goods

• Presently, it is being applied to all product categories---consumer goods, industrial goods, cars, entertainment, travel, hospitality, medical, insurance &…..education.

EXAMPLES OF PROMOS• --Buy a chocolate; get a crayon free

• --Buy a pack of cooking oil; get a pack of atta

• --Buy a toothpaste; get a bottle of Listerine free

• --Clearance sale; rock bottom prices

• --Get cash back on credit card usage

• --Easy loans ;zero interest loans; lowest EMI

• --Exchange your old car; get loyalty bonus

• --Scratch & win

• --Rewards for withdrawing cash from ATMs

• --Buy Park Avenue trousers; get a belt free

• --Buy from our retail stores ;get bonus points

• --Buy a CD player; get two tickets to World Soccer

• --Buy one; get one free

• --Rewards for transferring funds

• Apart from above factors, the media costs are also rising and the media is getting increasingly fragmented

• Hence, advertisement is becoming costlier and it is losing its edge as far as impact is concerned. The cos, therefore, find promos an easy way out.

• The consumers inclination towards impulse purchase has also increased over the last several years. This propensity gets compounded when goods are available at reduced prices.

• Small scale fringe players find promos an easy way to get market share from established players. They cannot afford to advertise on a big scale.

• • Small retailers have switched to self-service.

WHY SUCH HEAVY DEPENDANCE ON PROMOS?

• This is a natural response to the development in present times.

• As society opens up, as competition increases, as people become more aware, as purchasing goes up the choices available to the consumer increases exponentially

• In such a situation over-production is inevitable and, because the consumers have a vast choices, their lack of interest and enthusiasm is bound to compel the manufacturers to offer price discounts.

• The marketing personnel are also under tremendous pressure to deliver on quaterly targets.

• In some cos the incentives and compensation is linked directly to the sales.

PROMOS COMMUNICATE VALUE• Like advertising and personal selling promos also communicate a

‘value proposition’

• Promos not only communicate value but also change ‘price-value’ equation in favour of consumers.

• The consumer, who had so far assigned a particular value to the offer, now find extra value in it.

• Thus promos serve the dual function of enhancing the value as well as communicating the value.

• Difference between advertisement and sales promotion Advertisement gives a reason for purchasing a product

• Sales promotion gives an incentive for purchasing a product

• The incentive is invariably MONETARY

• The impact of advertising is long lasting; the impact of sales promotion is limited to shorter period.

• The objectives are very different.

• Advt—Strong positioning, brand building, loyal consumers,

• Promos----increasing sales within a specified time period.

• Advt can build loyalty, promos cannot.

• Advt builds strong value proposition, promos change the value proposition.

• to increase thec sales performance.

PURPOSE OF SALES PROMOTION • Sales promotions measure vary in their objectives:

• Sales promotions yield more reliable and quicker results than advertising.

• Sales promotions tend to attract deal prone customers who switch among brands when the deal becomes attractive.

• Sales promotion enhances the co-operation amongst channel partners.

• Small competitors, with low market share, tend to rely heavily on sales promotion as they cannot afford heavy advertising budgets.

• In fact, they find it very difficult to place their stocks on the shelf without resorting to sales promotions.

TYPES OF PROMOTION• Consumer Promotion

• Trade promotion

• Business promotion

• Sales Force promotion

• Manufacturers, distributors, wholesalers, service providers, trade associations, non-profit organizations---all use sales promotions.

• Like advertising, sales promotion too, is becoming a clutter. The companies are therefore under increasing pressure top devise innovative promotions to rise above the clutter.

CONSUMER SALES PROMOTION• --Coupons

• --Premium Offers

• --Bonus Packs/Multiple packs

• --Hyundai offers free petrol

• --Free offers by tour operators

• --Introductory offer on Maruti Swift

• --Temptation prices : Deccan airways

• --Freebies on credit card

• --Free samples

• Demonstration• --Door-to-door demos --Demos at retail store• --School demos --Demos to key people

• Trade Fair & exhibitions

• Contests

• Visual Merchandising/Display

• Sales promotion on the internet

• Historically, sales promotion and advertisement have been used in a particular proportion.

• For last two decades sales promotions have played an increasingly important role The reasons are:

• INTERNAL

• Promotion is now accepted by the top management as a legitimate and necessary tool to achieve the sales objective.

• There are qualified managers to manage sales promotion as a sophisticated marketing measure

• Pressure on product managers and regional heads

• EXTERNAL FACTORS

• Increase in number of competing brands

• Increase in competitors activities

• Price oriented customers

• Low differentiation among brands

• Rising costs amd media clutter

• Legal issues

SALES PROMOTIONDEFINE SALES PROMOTION OBJECTIVEInvariably, the sales promotion objective are a part of a larger marketing objective

FOR CONSUMERS-The objective for consumers is to achieve larger consumption, inducing trials among non users, attracting customers prone to switching ,etc FOR TRADE- the objective for retailers is to carry higher levels of stock, a larger variety of stock, newer variety of products, divert their capital into your business, increasing wider distribution, building brand loyalty

FOR SALES FORCE- Increasing trade relations, support to newer or slow moving products, increasing distribution, finding new prospects, newer markets

PROMOTIONS/Contd

• SELECTING THE PROMOTION TOOLS• While selecting the promotion tools, the co should take into account

the objectives, market, consumers, time period, duration, completive situation etc

• MAIN TOOLS USED ARE• Lucky Draw, contests, Quantity discount, Prizes, Discounts, points on

purchase, cash refund

• Sales promotion• a) General type b) Franchise Building type

• Franchise building type aim at building the preference of the consumers towards the brand-impart a message along with a deal

PROMOTIONS Contd/-

• Sales Promotions and Advertising• It has been seen generally that sales promotion is more

effective when launched with an advt campaign.

• A stand alone promotion does not produce the desired results as effectively as with advt campaigns

• THE SALES PROMOTION MUST BE A PART OF AN OVERALL MARKETING PLAN

PROMOTIONS/Contd

• SELECTING TRADE PROMOTION TOOLS• Trade support is very necessary for success of a promotion

campaign• Manufacturers need trade support • -- For wholesalers and retailers to carry their stocks• --For wholesalers and retailers to lift additional quantity• --To induce the wholesalers and retailers to push their brands• --For wholesalers to increase their distribution

• Earnings from promotions constitute a major source of income for the trade.

PROMOTIONS Contd/-

• DRAWBACKS

--How does co ensure control over its stocks—pricing and distribution?

--How does a co avoid dumping?

-- How does a co ensure inventory control?

-- How does a co avoid cross-territory distribution?

PROMOTIONS Contd/-

• The cos must also consider

• a) The size of incentive

• b) The target group for incentives

• c) Geographical territory chosen for promotions

• d) Duration of promotion

• e) Terms and conditions of participations