Sales Promotion

RRK -2018
 Sales Promotion
• Is a process of persuading a potential
customer to buy the product
• It is used as a short term tactic
• It refers to short term use of incentives or
other promotional activities that seek to
stimulate interest, trial or purchase by
customer
 Objectives
(i) To introduce new products: Have you ever heard about
distribution of free samples? 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. Thus, it helps to
retain the existing customers, and at the same time it also
attracts some new customers to buy the product.
 Objecties
(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: Today’s business
faces competition all the [Link] 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.
 Importance of Sales Promotion
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. In the
age of competition it is quite much possible that a customer may
change his/her mind and try other brands. Various incentives under
sales promotion schemes help to retain the customers.
 Importance of Sales Promotion
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.
 Importance of Sales Promotion
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.
 Sales Promotion is of three types
• Trade Promotion
• Consumer Promotion
• Buisiness to Buisiness Promotion
 SALES PROMOTION STRATEGY

SALES PROMOTION consists of various

incentives, mostly short term, intended to
stimulate quicker and/or greater purchase of
particular goods/services by end-user
consumers or value chain organizations.

The strategy process is similar to the design

of advertising strategy.
 Channels of Sales Promotions

MANUFACTURER

Trade
Push Promotions

Consumer
RETAILER
Promotions

Retail Pull
Push
Promotions

CONSUMER
 Consumer Promotion

Consumer-Promotion Consumer-Promotion Tools

Objectives

Entice Consumers to
Try a New Product Samples Advertising
Specialties
Lure Customers Away Coupons
From Competitors’ Products Patronage
Patronage
Rewards
Rewards
Get Consumers to “Load Up’ Cash Refunds
on a Mature Product Contests
Hold & Reward Loyal Price Packs
Customers Sweepstakes
Consumer Relationship
Building Premiums Games

Point-of-Purchase
Displays
 Trade Promotions

Trade-Promotion Tools
Trade-Promotion Objectives

Persuade Retailers or Price-Offs Premiums

Wholesalers to Carry a Brand
Give a Brand Shelf Space Allowances Patronage
Displays
Rewards
Promote a Brand in Buy-Back
Advertising Guarantees Discounts

Push a Brand to Consumers Push Money

Free Goods
Specialty
Advertising
Contests
Items
Business-to-Business Promotion

Business-Promotion
Objectives
Business-Promotion Tools

Generate Business Leads

Conventions
Stimulate Purchases
Trade Shows
Reward Customers

Motivate Salespeople Sales Contests

 Sales Promotion Activities and
Targets
Activities include trade shows, specialty
advertising, contests, displays, coupons,
recognition programs, and free samples.
SALES
PROMOTION
TARGETS
Consumer Salespeople
Buyers
Business Value Chain
Buyers
 Trade promotion
• Liquidating heavy inventories
• Persuade retailers to carry stock, carry more
than usual stock, promote brand franchise
 Forms of trade promotion
• Bulk discounts
• Free materials
• Display windows
• Shelf hiring
• Lucky draws
• ‘Mystery’ customer
• Redistribution incentives
• Shop salesmen incentives
 Consumer promotion
• Stimulate purchase
• Induce trial
• Create new users
• Increase repurchase from occasional
customers
• Reward loyal customers
 Forms of consumer promotion
• Free samples
• Free gifts
• Coupons
• In-packs
• Price packs
• Price-offs
• Sweepstakes
• Bundling offers
 Forms of consumer promotion
• Price reduction and discounts
• Increase Product quantity
• Complementary products
• Discount coupons vouchers
• Contests, Prizes, Samples, Gifts
• Increase the number of consumers,
• Increases purchases per consumer,
• Introduce other products
• Induce product trials
• Facilitate the sale of new products
• Foster brand loyalty
• Boost brand switching
 The Promotion Mix

• Combinations of methods used to promote a product

(includes ideas)
– Advertising
– Public Relations
– Sales Promotion
– Personal selling
Consumers Price reduction and •Increase the number of
discounts consumers,
Increase Product quantity •Increases purchases per
Complementary products consumer,
Discount coupons •Introduce other products
vouchers •Induce product trials
Contests, Prizes, Samples, •Facilitate the sale of new
Gifts products
•Foster brand loyalty
•Boost brand switching
 Methods of Sales Promotion
• Money of coupons
• Competitions
• Discount vouchers
• Free Gifts
• Point of sale materials
• Loyalty cards
 Rebate
Under it in order to clear the excess stock
products are offered at some reduced price
• Rs 1000 less than usual price
• Product available at Rs. 8 instead of Rs 10
 Discount
• Under this method customers are offered
certain percent of discount by price reduction
than the listed price
• Up to 40% off
• Discount sale of products upto 80%
• Special discount on Khadi goods on Gandhi
Jayanti
 Refund
Under this method some portion of the price of
the product is returned to the customer on
showing the proof of purchase.
• Rs 5 refund on producing empty wrapper of
the product
• Rs 10 refund on production of a coupon
inserted in the product package
 Product Combination
Along with the main product a small quantity of
some other product is enclosed for promotion
as a gift
• A toothbrush placed inside a toothpaste
package
• Spoon free with tea package
• Free toys in chocolate and Chips packet
 Quantity Gifts
Some extra quantity of product is passed to the
customers as a gift
• Buy three soaps get one free
• 15% extra with the product
 Instant draw and assigned gift
Under this method a customer is asked to
scratch a card on purchase of certain product
and name of the product is inscribed there
upon which is immediately offered to the
consumer as a gift.
• Scratch cards
• Burst a cracker
• Computer coupon
 Lucky Draw
Under this method consumers of a product are
offered gifts on a fixed date and the winners
are decided by the draw of lots
• Offer of a bathing soap to win a gold coin
• Lottery against purchase of electronic goods
to win a Car
 Usable Benefit
Coupons or vouchers are given to consumers
which provide some gifts to customers
although they can not be converted to cash
directly

• Purchase of goods worth rs 30000 and get a

holiday pack discount coupon worth 2000.
• A discount voucher for 10% on purchase of
goods worth more than 5000
 Full finance 0%
The product is sold and money is paid in
installments at 0% rate of interest
• Electonic equipment marketers offering 24
easy installments on purchase of TV, fridge etc
• Eight installments upfront and remaining 16
installments by post dated cheques
 Sampling
Producer distributes free samples among
customers to introduce the products
• Free medicines to doctors
• Free sample copy of the books to teachers
• Free samples of the product
 Contest
Consumers taking part in the contest are asked
to answer some simple questions on a form
and forward the same to the company
• Drawing competion by harvest gold bread
• Consumers can purchase only after showing
the proof of purchase
 Promotion at different stages of the PLC
• Introduction – wise to use heavy promotion to
induce trials and promote brand franchise
• Growth – promotion should be limited ,if any
• Maturity – Higher promotions required since the
brand is under attack from competitors or product
quality or advertising effectiveness is tapering off
• Decline – Heavy promotions. Used only to retain a
set of loyal customers. Prior to withdrawal of the
product, it could be used as a one time stock
clearance from the trade
Target Audience Promotional Activities Objectives
Intermediaries Exhibitions, Fairs, •Expand product range
Competitions, Contests, •Increase quantity per order
Discounts, Bonus, Free •Boost Brand popularity,
products, samples, Point of •Improve stock turnover
sale advertisements,
Cooperative Promotion and
Advertising
Salesman Bonus Schemes •Increases the sales of a Product,
Contest,Prizes, Awards •Increases customer sales
•Effective sales force
Opinion Leaders Free samples •Information about Products
Technical Documentation, •Implement Brand
Gifts recommendation
Sponsoring Congress •Create Brand Image
Attendance
Why the increase in Sales Promotion?
• Growing retailer power
• Declining brand loyalty
• Increased promotional sensitivity
• Brand proliferation
• Fragmentation of consumer market
• Short-term focus
• Increased managerial accountability
• Competition
• Clutter