• 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
• 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
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
The marketing personnel are also under tremendous pressure to
deliver on quaterly targets.
In some cos the incentives and compensation is linked directly to
PROMOS COMMUNICATE VALUE
Like advertising and personal selling promos also communicate a
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.
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
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
--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
--Demos at retail store
--Demos to key people
• Trade Fair & exhibitions
• Visual Merchandising/Display
• Sales promotion on the internet
Historically, sales promotion and advertisement have been used in a
For last two decades sales promotions have played an increasingly
important role The reasons are:
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
Pressure on product managers and regional heads
Increase in number of competing brands
Increase in competitors activities
Price oriented customers
Low differentiation among brands
Rising costs amd media clutter
DEFINE SALES PROMOTION OBJECTIVE
Invariably, 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
FOR SALES FORCE- Increasing trade relations,
support to newer or slow moving products, increasing
distribution, finding new prospects, newer markets
SELECTING THE PROMOTION TOOLS
While selecting the promotion tools, the co should take into account
the objectives, market, consumers, time period, duration, completive
MAIN TOOLS USED ARE
Lucky Draw, contests, Quantity discount, Prizes, Discounts, points
on purchase, cash refund
a) General type
Franchise building type aim at building the preference of the
consumers towards the brand-impart a message along with a deal
b) Franchise Building type
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
SELECTING TRADE PROMOTION TOOLS
Trade support is very necessary for success of a promotion
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
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
-- How does a co avoid cross-territory
The cos must also consider
a) The size of incentive
b) The target group for incentives
c) Geographical territory chosen for
• d) Duration of promotion
• e) Terms and conditions of participations