Introduction
o Sales Promotion is a key ingredient in Marketing campaigns,
consists of collection of incentive tools, mostly short term, designed
to stimulate quicker or greater purchase of particular products or
services by consumer or trade.
o Sales Promotion includes tools are:
consumer promotion (Samples, coupons, cash refund offers, Price
offs, Premiums, prizes, patronage rewards, free trials, warranties, tie in
promotions, cross promotions, POP displays, and demonstration ;
Trade Promotion (Prices offs, Advertising and display allowances
and free goods) and
Business and sales force promotion(Trade shows and conventions,
contest for sales representatives and specially advertising). Sales
promotions can be directed either at the customer, sales staff, or
distribution channel members (such as retailers)
Definition
o According to American Marketing Associations, Sales promotion is
defined as, “those marketing activities, other than personal selling,
advertising and publicity that stimulates consumer purchasing and
other dealer effectiveness measures such as displays, shows,
expositions, demonstrations and various other non-recurrent selling
efforts not in ordinary routine”.
o It may also be defined as “any steps taken for the purpose of
obtaining or increasing sales.
Objectives of Sales promotion
o The main objective of sales promotion is to bring about change in
the demand pattern of products and services.
o The specific objectives of sales promotion are as follows:
To introduce new products or services: Sales promotion is often
used to motivate prospective consumers to try new products and
services. Dealers are also induced to introduce new products and
services in the market.
To attract new customers: Sales promotion measures also play an
important role in attracting new customers for an organization.
To induce existing customers to buy more: Sales promotions
devices are most often used to induce the existing customers of a
firm to buy more.
Cont.
Helps the firm to remain more competitive: Most of the
companies undertake sales promotion activities in order to
remain in the competitive market.
To increase the sales in off season: Many products like air
coolers, fans ,refrigerators, air-conditioners, cold drinks, room
heaters etc. have seasonal demand. Manufacturers
and dealers dealing with such types of goods make every
effort to maintain a stable demand throughout the year.
To add the stock of the dealers: Dealers like wholesalers and
retailers usually deal with a variety of goods. Their selling
activity becomes easier when the manufacturer supplements
their efforts by sales promotion measures
Types of Sales Promotions
Types of Sales Promotions:
1. Consumer Promotions
2. Trade Promotions / Dealers’ Sales Promotions
3. Sales Force Promotion
4. Internet promotions
1. Consumer Promotions
1. Consumer Promotions: Sales promotions directed at end users are
called consumers sales promotions. Some of the commonly used
consumer promotions are:
Price Discounts (Also called cents-off): The customers pay certain
amount less than the regular price of the product or service if
purchased within a specified period.
There are three types of price-off promotions such as :
Reduced Price Pack
Multiple Packs
bonded pack
Bonus–Pack: An additional quantity of the purchased product is
offered free with standard pack.
Samples: It is an offer of some amount of a product or service free or
at a nominal price.
The distribution of samples can be undertaken as:
I. Through retail stores
II. As premium products
III. Door to door distribution and
IV. Through mail
Premiums: A premium (gift) is a reward given to the consumers
for performing a particular act, generally purchasing a product or
service. Premiums are of four types:
An In-Pack/on-Pack premium
A free in the mail premium
Self liquidating premium
Reusable-container premiums
Refund or Rebate (the terms are used interchangeably):Rebate
offer refers to some amount of money repaid to customers
sometime after the purchase when the customer submits the
special proof of purchase to manufacturers.
Frequent-user reward: These are incentives to reward those who
frequently purchase the products or service such as frequent flier
incentives to air passengers.
Coupons: Coupons can be viewed as certificates offered by the
manufacturers or retailers that entitle the owner to some stated savings
or claim on the specified thing.
Contests: Contest offers are made to consumers to participate in
contests and win cash prizes, holiday tours or goods.
Sweepstakes: Sweepstakes are adopted to increase the demand of a
product by creating consumer interest.
Games: A game offers something to consumers such as missing
numbers or letters to complete a certain numbered digit or product or
brand.
Money return offer: Under this promotional scheme, the consumers are
provided with the option of money back, if they are not satisfied with
the product
Exchange or buy-back offer: To encourage such consumers to replace
their old products with a new one, companies or their authorized
dealers offer buyback or exchange offers.
Point-of-purchase displays: In-store presentations and exhibitions of
products along with relevant information fall under this category
Demonstration: This is one of the important sales promotion devices
most frequently used by the sellers of products and services.
Buy more save more: This kind of deal entices the customer to buy
more of your stock, so it is a kind of a win, win.
Flash Sale: A flash sale is basically an offer that only lasts for a
limited time and it’s a great way to create a sense of urgency for the
customer to buy.
Loyalty cards: Loyalty cards have recently become an important
form of sales promotion.
Tie-in-Promotions: Under this scheme two or more brands or
companies team up on coupons, refunds and contests to increase
pulling power.
Cross-promotions: Under this scheme, company uses one brand
to advertise another non-competing brand.
Loss leader strategy: A loss leader pricing strategy is a common
term in marketing which refers to an aggressive pricing strategy
in which a store prices its goods below cost to stimulate sales of
other profitable goods.
Trade promotions / Dealers’ sales
Promotions
Trade promotions are directed at the resellers (Distributors,
wholesalers and the retailers).
Trade sales promotions are part of “Push” strategy of producers.
The objectives of trade sales promotions are different from consumer’s
sales promotions.
They are in the final contact in distribution chain and can influence
customers in more ways.
Following are some of the important dealer’s aid for sales promotions:
Trade allowance: The purpose of trade allowance is to offer financial
incentives to resellers in order to motivate them to make a purchase.
Buying allowance: A producer pays a reseller some fixed amount or
money or discount for purchasing a certain minimum quantity of
product within the specified period of time.
Free goods: Reseller is required to buy a certain number of product
cases and for each case purchased, a certain amount of free quantity
of the same product is offered.
Buy-back allowance: The buy-back allowance is paid at the first
purchase of the goods by the dealers.
Advertising Allowance: The manufacturer pays the dealer or retailer a
certain amount of agreed upon money to advertise the producer’s
products.
Display allowance: This is a direct payment of money or free goods
to
the retailers for each item purchased, if the party agrees to setup a
POP display, or running in-store promotional program as specified by
Contests and incentives: Manufacturers sometimes use trade contests
and special incentives to stimulate greater support and selling effort
from dealers and salespeople and achieve the sales targets and other
objectives.
Co-operative advertising: When a producer agrees to pay advertising
allowance to the dealer for the product purchased, it is known as co-
operative advertising.
Sales contests: In this sales promotion device, the dealers are invited
to participate in sales contests which are specially conducted for them.
Free foreign tours: Wholesalers and retailers who are able to achieve a
specific volume of sales within a stipulated period are offered free
foreign tours as an incentive.
Training program: Manufacturers impart training about their own
brands to the sales staff of the wholesalers or the retailers at their
(wholesaler’s or retailer’s) locations.
Sales force promotions
Sales force promotions: Like consumers and dealers sales promotion,
sales force promotion also attempts to increase the sales by boosting
the performance of the sales force through various promotional
schemes.
The important tools of sales force promotion are:
Bonus: Bonus is the most popular form of incentive offered to the sales
force that is able to sell in excess of their allotted quota. Sales force
contests: Sales force contest is another form of sales
forces promotion which stimulates the efforts of the salesmen. Sales
conventions and conferences: Sales conventions and conferences are
also arranged for the purpose of educating and inspiring the sales force.
Internet promotions
Internet promotions: The number of companies using Internet
promotions is
increasing.
Advantages/ Disadvantages of Sales
promotion
Advantages of sales promotion:
Sales promotion activities generally stimulate the purchasing
activities of consumers.
Sales promotion devices get direct and immediate response as it
is undertaken at the point of sale.
Sales promotions can be utilized to boost sales at any stage; new
product Introduction stage, existing product improvement stage,
old product sales improvement stage and so on.
Sales promotional activities help the organizations to increase
sales in intense competitive situations.
Sales promotion necessarily supplements the personal selling
and advertising activities undertaken by and organization.
The manufacturer with the help of sales promotion activities can
easily achieve a rapid turnover of stocks.
Cont.
Disadvantages of sales promotion:
The success of sales promotion activities largely depends on
the nature of the prospective buyers and product
characteristics.
Many promotional measures have limited and short-run
impact on the consumers. The benefits of these activities for
the seller in most cases are limited and short lived.
Sales promotion is a costly form of enhancing sales. It requires
a heavy promotion budget. Hence it is not feasible for small
organizations.
Sales promotion activities become counter-productive when
they are used to promote defective and poor quality of goods
and services.
