A

GRAND PROJECT REPORT
ON

“ROLE OF SALES PROMOTION ON FMCG”
A grand Project report submitted in Partial Fulfillment of award of MBA Degree

PROJECT GUIDE:
PROF. SHARIF MEMON PROF. BHARGAV MODI

SUBMITTED BY:
VISHAL PATEL (08077) JITENDRA RAJAI (08080) SUBMITTED TO:

N.R.INSTITUTE OF BUSINESS MANAGEMENT AHMEDABAD

Role of sales promotions in FMCG sector

This is to certify that Mr. Vishal Patel and Mr. Jitendra Rajai the students of MBA 2nd year of N.R. Institute of Business Management, Ahmedabad have completed their Grand Project “Role of sales promotions in FMCG” in the year 2008-2010 in partial fulfillment of Gujarat University requirements for the award of the degree of Master of Business Administration.

Director Prof. Dr. Hitesh Ruparel

Grand Project Guide Prof Sharif Memon Prof Bhargav Modi

Date:

GLS N.R.I.B.M/M.B.A-2nd Year/Marketing/20-3-2010 2

Role of sales promotions in FMCG sector

PREFACE
In this age of globalization hyper competition has become a regular feature. Today the markets are no less then battlegrounds and one has to strive very hard for survival and growth. Due to very rapid industrialization all over the world the demand for the managerial personnel and the administrative personnel has increased. The perfect study of Management involves both the theoretical as well as practical aspects. To survive in this highly competitive market “Practical Knowledge” is as relevant as the Theoretical. The significance of MBA Degree is that the Theoretical aspects, which a student learns throughout the year in the class sessions, can be practically applied through different projects, which one undertakes. Keeping in tune with this doctrine, we have tried to apply theoretical aspects through out the project, which we learned under the course of management. In this project more emphasize given to the various tools of sales promotion and its impact on consumers buying decisions. Actually in recent trend to some extent this technique also become victim of clutter, even though it can be eliminated by generating innovative and more attractive tools to lure the customers. Now a day most of the FMCG companies considering sales promotion as an important part of their marketing strategy. From the analysis of survey it becomes clear that consumers do response to the sales promotion campaign, but there are customers who strongly prefer to stick to brand name.

GLS NRIBM Gujarat University Ahmedabad

Jitendra Rajai Vishal Patel

GLS N.R.I.B.M/M.B.A-2nd Year/Marketing/20-3-2010 3

Role of sales promotions in FMCG sector

.

ACKNOWLEDGEMENT

Every study requires a guidance of someone who is working in that field. Firstly we would like to thank Director Sir Dr. Dr Hitesh Ruparel for providing an opportunity of preparing a Grand Project Report and allowing us to use the resources of the institution during this project. We are extremely thankful to our Project Guide, Prof Sharif Memon and Prof
Bhargav Modi of NRIBM for their precious guidance regarding the preparation of

the Project Report. Their guidance has proved to be useful and without them, the preparation of this report might not have been possible. We are also thankful to the other faculty members of NRIBM for extending their valuable support for this project. We also extend our sincere thanks to the Respondents, who helped us during the course of our project and for their gracious attitude. We would like to take this opportunity to extend our warm thoughts to those who helped me in making this project a wonderful experience. Last but not the least; we would also like to thank our family for their support and encouragement.

GLS N.R.I.B.M/M.B.A-2nd Year/Marketing/20-3-2010 4

Role of sales promotions in FMCG sector Executive Summary As a part of our study curriculum it is necessary to conduct a grand project.I. It includes the analysis and results of survey which was focuses on consumer’s behavior towards sales promotion campaign.R. findings and suggestions was given based on study of secondary source as well as primary research. GLS N. At last conclusion of report. Promotion is one of the pillars of marketing mix and same way sales promotion is also one of the elements of promotion. Then after concentration is given to the primary research. My topic for the grand project is titled as “Study of consumer oriented sales promotion in FMCG sector” in which emphasis given to the effect of sales promotion on buying habits of consumers.B. To start with we will give brief information regarding FMCG sector then moving to the main topic we will explain what is topic is all about. The survey was conducted with the help of structured questionnaire. Based on secondary source certain theoretical aspects are also included as a part of study.A-2nd Year/Marketing/20-3-2010 5 .M/M. It provides us an opportunity to understand the particular topic in depth and which leads to through to that topic.B. With respect to consumer oriented sales promotion there are certain theories narrated as operant conditioning and projective theory.

3.B. 4. 6. 5.Role of sales promotions in FMCG sector INDEX Sr.A-2nd Year/Marketing/20-3-2010 6 .I. No. TOPICS Research Methodology of the study Introduction Introduction to the topic Sales promotion strategies SWOT Analysis Data Analysis of the survey Findings of the report Recommendations Limitations Emerging Trends Conclusion Bibliography Annexure: Questionnaire Page No.M/M. 13. 8.R. 9. 10. 7.B. 6 8 10 24 29 30 61 63 65 66 67 68 69 GLS N. 2. 1. 11. 12.

To examine tradeoffs. To study the effect of sales promotions in FMCG sector esp.  Type of questionnaire: Open ended and closed ended. To study consumer preferences with respect to sales promotion in FMCG sector. in soaps and detergent industry. Data collection Method: (a) Primary Data Collection Method:  Survey method was used for primary data collection. To study consumer behavior in purchase of soaps and detergent Product categories under study DETERGENTS: TOILETERIES Washing Powder for Clothes Soaps Research Design Research design selected for this project is Descriptive.Role of sales promotions in FMCG sector RESEARCH METHODOLOGY Research Objectives: 1.B.M/M. 3.B.A-2nd Year/Marketing/20-3-2010 7 .  Structured questionnaire.R.I. Internet. 2. 4. (b) Secondary Data Collection method:   Reference books.  We used questionnaire as an instrument for survey method. relative importance of different attributes while responding to a sales promotion offer. GLS N.

A-2nd Year/Marketing/20-3-2010 8 . 4. 100 consumers 100 retailers.B. Sampling unit: 3. Sample size: In this study the sampling unit is individual consumer. 2. The sample is selected by using convenience-sampling method. Target population: The population for this research study consists of the residence of Ahmedabad. Sampling method: GLS N.M/M.I.B.Role of sales promotions in FMCG sector Sampling Detail 1.R.

Role of sales promotions in FMCG sector Introduction FMCG Concept and Definition: The term FMCG (fast moving consumer goods). the purchase cycle for the same product tend to vary across population segments. or monthly? One of the factors on which the turnaround depends is the purchase cycle.I. Should the turnaround happen daily. Further. should the inventory turnaround threshold be universal. Most Indians. however. weekly.B. This is in sharp contrast with what happens in most western countries. difficulties crop up when attempts to devise a definition for FMCG.R. The moot question therefore. typically. the term refers to relatively fast moving items that are used directly by the consumer. Similarly. a significant gap exists between the general use and the conceptual meaning of the term FMCG. cultural and behavioral nuances? GLS N. the purchase cycle also tends to vary because of cultural factors. Many low-income households are forced to buy certain products more frequently because of lack of liquidity and storage space while relatively high-income households buy the same products more infrequently. Conceptually. although popular and frequently used does not have a standard definition and is generally used in India to refer to products of everyday use. The problem arises because the concept has a retail orientation and distinguishes between consumer products on the basis of how quickly they move at the retailer’s shelves.A-2nd Year/Marketing/20-3-2010 9 . is what industry turnaround threshold should be for the item to qualify as an FMCG.B. Thus.M/M. where the practice of buying and socking foods for relatively longer period is more prevalent. Thus. prefer fresh food articles and therefore to buy relatively small quantities more frequently. or should it allow for income. However.

B. These products cater to necessities.R. The consumer keeps limited inventory of these products and prefers to purchase them frequently.I. The consumer spends little time on the purchase decision. Rarely does he/she look for technical specifications (in contrast to industrial goods).Role of sales promotions in FMCG sector Characteristics of FMCG Products: • • • Individual items are of small value. Brand loyalties or recommendations of reliable retailer/dealer drive purchase decisions. brand switching is often induced by heavy advertisement. They meet the demands of the entire cross section of population.A-2nd Year/Marketing/20-3-2010 10 .M/M. Many of these products are perishable. Price and income elasticity of demand varies across products and consumers. as and when required. • • Trial of a new product i. But all FMCG products put together account for a significant part of the consumer's budget. GLS N.B. comforts as well as luxuries. recommendation of the retailer or neighbors/friends.e.

Companies spend considerable time in planning such activities. The study here pertains to consumer’s perceptions regarding sales promotion. Promotion is one of the important elements of marketing mix. increased quality and convenience as well as hedonic benefits such as entertainment. This is because promotions provide utilitarian benefits such as monetary savings. Most of the marketing strategies are built on the basis of these criteria. There are so many elements of promotion such as … Advertising Direct Marketing Public Relations Sales Promotion GLS N.M/M. However.R. Broadly speaking most of the companies using Marketing Mix which includes… Price Place (Channel of Distribution) Product Promotion These are the four basic pillar of marketing mix. Some past researches have suggested that promotion itself has an effect on the perceived value of the brand.I. added value. manufacturers should understand consumer and retailer interpretations of their promotional activities.Role of sales promotions in FMCG sector Introduction to the topic Introduction: The importance of consumer sales promotion in the marketing mix of the fast moving consumer goods (FMCG) category throughout the world has increased.B. exploration and self-expression.B. in order to enhance the effectiveness of these activities.A-2nd Year/Marketing/20-3-2010 11 .

we can be sure that the trend is up. The second purpose of promotion is persuasion. From these elements Sales Promotion is the element which is in the focus of this project. channels of distribution take more time in creating awareness because a product has to pass through many hands between a producer and consumers. Therefore. As we know. For this reason. sales Promotions have been used by marketer to increase sales in the short term. Even the most useful product or brand will be a failure if no one knows that it is available.R. persuades and reminds prospective customers about a company and its products.Role of sales promotions in FMCG sector Traditionally.A-2nd Year/Marketing/20-3-2010 12 .I. in the last few decades this communication tool has evolved and now is considered from a strategic point of view.B. However. The third purpose of promotion is reminding consumers about products availability and its potential to satisfy their needs. Further Sales Promotion is quite broad term it includes … Consumer Oriented Sales Promotion Trade Oriented Sales Promotion GLS N. Sales promotion serves three essential roles: It informs.B. Although an accurate estimate for total sales promotions expenditures does not exist. a producer has to inform channel members as well as ultimate consumers about the attributes and availability of his products. Sales promotions have grown in both importance and frequency over the past few decades. it is necessary to realize new studies in this area and study how consumers evaluate sales promotions.M/M. The cut throat competition among different products puts tremendous pressure on their manufacturers and they are compelled to undertake sales promotion activities.

Role of sales promotions in FMCG sector GLS N.M/M.I.A-2nd Year/Marketing/20-3-2010 13 .B.R.B.

Refunds. Definition: For the purpose of this study. Kotler defines sales promotion as: “Sales promotion consists of a diverse collection of incentive tools. any forms of incentives (price cut or value added nature) offered for short period either to trade or consumers are considered as sales promotion activities.R.” Hence. Marketer’s uses consumer oriented sales promotion tools for the following reasons: • • • • • • • To increase short term sales To induce trial To reduce inventory To establish a brand name To make cross selling To cope up with competition To avoid advertising clutter GLS N. mostly short-term designed to stimulate quicker and/or greater purchase of particular products/services by consumers or the trade.B. Contest. Rebates. Bonus Pack’s.A-2nd Year/Marketing/20-3-2010 14 . Price-off.I. Here emphasize is given to motivate consumer to increase sales.Role of sales promotions in FMCG sector Consumer Oriented Sales Promotion Consumer Oriented Sales Promotion is the main topic of this project. Consumer Oriented Sales Promotion includes Sampling.e.” Roger Strang has given a more simplistic definition i.M/M. Premiums. following definitions of sales promotion were kept in mind.B. “sales promotions are short-term incentives to encourage purchase or sales of a product or service. Event marketing etc. Couponing.

Lucky Draws 6. Price-off: A price-off is simply a reduction in the price of the product to increase sales and is very often used when introduction a new product. It is mostly used by packaged goods. time. These tools are as under… 1. A reduction in price always increases GLS N. Bundling Offer 7. 2. competitors.R.A-2nd Year/Marketing/20-3-2010 15 . Coupons 2. Freebies 4. These tools should be used considering all other factors affecting such as cost.I. Non users can try a product which may leads to regular sales.B. It is worthwhile to use coupon as a promotion tool because data shows that market for packaged goods increased from 16 billion in 1968 to 310 billion in 1994. Coupons have been used since 1895. Coupons: Coupon is the oldest and most widely used way of sales promotion. To boost up the sales not only manufacturer but retailers personally can also used. A coupon leads to price reductions so as to encourage price sensitive customers.M/M. Scratch Cards 5. Price-Off 3.Role of sales promotions in FMCG sector Tools of Consumer Oriented Sales Promotion: There are so many tools or technique available to the marketers for achieving objective of sales promotion. Extra Quantity Let’s have look at each tool… 1.B. availability of goods etc.

B. 5. Price-off reductions are typically offered tight on the package through specially marked price packs. 4. where one or more areas contain concealed information: they are covered by a substance that cannot be seen through. At different times.A-2nd Year/Marketing/20-3-2010 16 . scratchit. scratch game.B. Scratch Cards A scratch card (also called a scratch off. Krack Jack offers 30% Price-off. I am a bargain freebie shopper. The definition of freebies is products or services given away for free at no cost to the consumer. Not only that but it also cause large increase in sales volume.g. Often it’s in the pursuit of more customers or a larger fan base and it often works. Bundling Offers Product bundling is a marketing strategy that involves offering several products for sale as one combined product. usually made of cardboard. basic cable in the United States generally GLS N. big and small companies often give away prizes and money which is too good to be true.M/M. in the cable television industry (for example. This strategy is very common in the software business (for example: bundle a word processor. Freebies Freebies are a popular form of modern marketing and are some of the best things about the internet. scratchie. 3. Price-off is the most preferred sales promotion technique because consumers response very positively to this scheme. but can be scratched off.R. scratch ticket.Role of sales promotions in FMCG sector sales but the use of this technique should be carefully considered in the current market situation. Well that’s the definition we came up with. scratcher. and a database into a single office suite). pretty much going for any free product and informing everyone about it. a spreadsheet. E. scratch-and-win or instant game) is a small token.I.

otherwise there is no use of all effort because it leads to no where. Target Market: While doing sales promotion. Sales promotion scheme differ for products like its durability. A target market can be in any of the stages of buying hierarchy i. 3.e.B. mass marketing requires mass sales promotion schemes. Each stage defines a possible goal of promotion. awareness. preferences. conviction and purchase.B. knowledge. A bundle of products is sometimes referred to as a package deal or a compilation or an anthology. 2.I.A-2nd Year/Marketing/20-3-2010 17 . and in the fast food industry in which multiple items are combined into a complete meal. > Target market > Nature of product > Stage of product life cycle > Budget available for promotion 1. perishable goods etc.M/M.Role of sales promotions in FMCG sector offers many channels at one price). Therefore. Nature of the product: There are various product attributes which influence sales promotional strategy.R. marketer must know who their target market is. Stage of product Life Cycle: GLS N. liking. When the unit price is low the manufacturer as well as the customer has low risk but he can get the benefit of mass marketing. Factors Influencing Consumer Oriented sales promotion: Mainly four factors should be taken into account while determining the sales promotion program.

if a product becomes successful.A-2nd Year/Marketing/20-3-2010 18 . and Budgeting by objective.B. Later. GLS N. When a new product introduced.I.R.B. A business with ample funds can make more effective use of sales promotion programme than a firm with limited financial resources. prospective buyers must be informed about its existence and its benefits and middlemen must be convinced to stock it. competition intensifies and more emphasis is placed on sales promotion to increase its sales. The budget for sales promotion can be prepared by the following methods… Percentage of Sales Fixed funds available for sales promotion Following the competition. 4. Budget Available for Promotion: The funds available for promotion are the ultimate determinant of the promotional programme.Role of sales promotions in FMCG sector Sales promotion strategies are influenced by the life cycle of a product.M/M.

Perceived Quality: Majority of respondents had a perception that the quality of the promoted brands remained the same during promotion.B. while some of them felt that it was inferior than before.I. these groups might be lured through innovative and lucrative sales promotion offer. it could be inferred that promotions in this category (low involvement products) might encourage trial and brand switching but not long term loyalty.Role of sales promotions in FMCG sector Sales Promotion from the Consumers point of view Willingness to buy on sales promotion offer Sixty per cent of the sample did not show willingness to buy a brand due to promotion while 30% showed willingness and 10% were not sure.A-2nd Year/Marketing/20-3-2010 19 . respondents were asked about continuity of purchase of a brand after the withdrawal of promotion.R.B. This indicates that when 30% showed willingness and 10% consumers who were not sure. Long-term impact In order to understand ability of the promotions to increase long-term sales.M/M. Preference of Schemes: Price off was the most preferred type of scheme. Maximum customers’ ranked price-offs as number one or two. Thus. It can be inferred that promotions were not leading to negative brand quality GLS N. Ability to induce trial Forty per cent of the respondents had said that sales promotion had the ability to induce trial which reinforces the above inference. Eighty per cent of the respondents indicated that they would not continue. But 20% said they would.

B. GLS N. While providing value to customers” and “To reinforce company image” were ranked lowest.I. their perceptions regarding providing consumer behavior are likely to be accurate. It is found that some customer strongly preferred to buy their regular brand and said that sales promotion would not weaken their loyalty towards the brand. Perceptions regarding underlying company motivations On tapping perceptions’ regarding underlying company motivations for sales promotion. The retailers had the perception that those schemes which were announced through mass media had better response. This indicates that consumers believed that companies were undertaking such activities only for their own benefit and not for the benefit of consumers.M/M. Thus both viewed that companies were using sales promotion activities mainly to increase short term sales or encourage switching or selling excess stock and not really to give value benefit or enhance/reinforce brand/company image.Role of sales promotions in FMCG sector perceptions. “to increase sales” was ranked highest followed by “to attract switchers” and “to sell excess stocks”.A-2nd Year/Marketing/20-3-2010 20 . Retailers’ prediction of companies’ motivation for offering sales promotion were matching with the consumer perception regarding the same. Since retailers observe consumers in store behavior were frequently and directly.B. it is evident that there was a matching of perceptions regarding nature of scheme (price offs as most preferred type of scheme mentioned by consumers and retailers’ perceptions about consumer preferences).R. Findings from retailer and consumer perception studies. This was reinforced by the consumer survey which showed that recall in case of heavily promoted schemes on TV was found to be very high. Such inputs from the retailers would be useful to companies.

Trade Oriented Sales Promotion includes dealer contest and incentives. head of the family).M/M. trade allowances. It could be inferred that visibility and awareness about the scheme were the critical success factors so that pull could be created. son. Contests etc.Role of sales promotions in FMCG sector Trade Oriented Sales Promotion Trade Oriented Sales Promotion aimed to motivate channel member of the company and to encourage them to push company’s product.R. sales training programs.B. It could be inferred that visibility of information about the sales promotion activity at the point of purchase could result into the purchase of a promoted brand. Point-of-purchase displays. Price offs in their opinion had relatively a greater impact compared to any other form of sales promotion activity like Bonus packs. Perceptions about Buying Roles Retailers viewed that the person who came to the shop (who may be a maid. then bonus pack. in order of importance. trade shows.B. and other programs designed to motivate distributors and retailers to carry a product and make an extra effort to push it to their customers Sales promotion from the retailer’s point of view: Perceptions on Scheme Preference It was found that retailer perceived price offs as a better form of sales promotion activity. Retailers preferred price offs the most.I. Perceptions about their role in decision-making Retailer had relatively very low influence in affecting choice. GLS N.g.A-2nd Year/Marketing/20-3-2010 21 . cooperative advertising. premium. daughter. contests. Premium. daughter-in-law and child) was the decider of a toilet soap brand and not the Income provider (e.

A-2nd Year/Marketing/20-3-2010 22 . and sought/looked for or asked whether there were any) sales promotion schemes running on any toilet soap at the time of purchase. In fact these retailers preferred to stock variety of brands and wanted payment for shelf and window display to increase traffic into their store. However. Dealer-Retailer Dynamics At the time of sales promotion activities. margins. dealers had tendency to push unwanted stocks onto the smaller retailers.R. GLS N.M/M.B. amenable to trying new brands.Role of sales promotions in FMCG sector Perceptions about Response to Sales Promotion Offers They believed that younger age-groups were more experimental in nature. information about sales promotion activities from the dealers.I. supermarkets and big retailers were pampered and given special services and given better margins and better allowances.B. small format store) retailers received relatively less support compared to supermarkets in terms of servicing. Variations in Information Flow Smaller (non-supermarket. Perceptions about Communications of Sales Promotion Schemes Retailers perceived that role of word of mouth and television advertising played an important part in providing information inputs to consumers regarding sales promotion activities. Many a times small retailers were only informed verbally about sales promotion schemes by the dealer salesmen during the scheduled weekly visits.

quantity ordered by him etc. Perceptions about terms and conditions Retailers were not found to be happy with sales promotion schemes where their margins were cut on the pretext of just fast movement of inventory of the brand being promoted.Role of sales promotions in FMCG sector Margins It was found that in sales promotion schemes margins varied from 6 to15% depending of the size of the retail outlet. smaller retailers had to wait for replenishment of stocks till the next scheduled weekly visit by the dealer salesman but big retailers were serviced on telephonic request for replenishment of stocks. Thus it could be inferred that company’s follow up was not adequate.A-2nd Year/Marketing/20-3-2010 23 .B. Mostly margins were linked to size of the volumes that were ordered.R.M/M. This clearly indicated the disparity in treatment.I.B. In case of bonus packs scheme. Also if additional incentive was offered it was subject to minimum performance requirement. GLS N. Servicing during duration of Scheme In stock-out situation during the running of the sales promotion schemes. bargaining power of a retailer. Nature of POP Retailers indicated that most of the POP (Point of Purchase) materials were meant for brand advertisement and not for giving information regarding the schemes. leftover stock was often dismantled (cut open buy one get one free) and sold them individually as a regular soap. Problem of left-over A leftover stock at the end of any scheme was required to be sold by the retailers before they ordered fresh stocks.

it created pull and they were more than willing to stock such brands. While Lux Gold Star which was heavily promoted on T. Gifts for Retailer motivation Companies at times were rewarding retailers by giving free gifts like thermos flasks or clocks if they sold more than certain quantity in a given period.M/M.Role of sales promotions in FMCG sector This approach of the company leads to misappropriation which in turn could result in adverse brand image. is recalled even today. Companies were making a half-hearted effort to motivate retailers.I.A-2nd Year/Marketing/20-3-2010 24 .B. For example Medimix and Dettol contest was not advertised on TV. Perceptions about mass media announcements Retailers viewed that whenever sales promotion scheme was announced on TV. GLS N.R.V.B. Post Promotion Behavior Retailers observed that in most cases sales promotion scheme on a brand might encourage a buyer to switch a brand temporarily but he would revert back to original brand after promotion. Remembering each offer and handling was a problem especially for a small retailer which was often an as one-man show. hence there was very little awareness leading to unsold stock till 6 months. Handling Problems Many a time’s retailers had to handle various sales promotion offers simultaneously in a category and also across categories and there was no formal communication planning either from the dealer or the company.

I. Finally.B. First.B. Second. consumer’s total consumption of the product category is increased by the promotion.R. consumers are inducing to purchase another brand different from the one they would have purchased when there is no promotional incentive.A-2nd Year/Marketing/20-3-2010 25 .M/M. However.Role of sales promotions in FMCG sector Why do Sales promotion schemes affect sales? There are three mechanisms behind these facts. consumer can increase the quantity they buy just because the product is on sale. Brand switching and Category expansion. in the long term this positive effect may be diluted because a promotional campaign has no permanent effect in the sales of the firm GLS N. It is Purchase quantity.

therefore it is very important that if a business wants to succeed. it should have a sales promotion strategy in mind. A sales promotion strategy is an activity that is designed to help boost the sales of a product or service. a trading stamps campaign. and through door-to-door sales. When developing a sales promotion strategy for your business. • • • • • Consumer attitudes and buying patterns Your brand strategy Your competitive strategy Your advertising strategy Other external factors that can influence products availability and pricing.I. This can be done through an advertising campaign. through temporary price cuts.R. public relation activities. The importance of a sales promotion strategy cannot be underestimated. Sales promotion is very important as it not only helps to boost sales but it also helps a business to draw new customers while at the same time retaining older ones.A-2nd Year/Marketing/20-3-2010 26 . through demonstrations and exhibitions. GLS N. through prize giving competitions.B. and emails. it is important that you keep the following points in mind. a free gift campaign. telemarketing. There are a variety of sales promotional strategies that a business can use to increase their sales. however it is important that we first understand what a sales promotion strategy actually is and why it is so important.Role of sales promotions in FMCG sector Sales Promotion Strategy Sales are the lifeblood of a business.B. without sales there would be no business in the first place.M/M. This is because a sales promotion strategy is important to a business boosting its sales. a free sampling campaign. personal sales letters. The primary objective of a sales promotion is to improve a company’s sales by predicting and modifying your target customer’s purchasing behavior and patterns.

loyalty programs and rewards. Typical pull sales promotion strategies include. wholesalers and distributors to carry your brand.A-2nd Year/Marketing/20-3-2010 27 . Typical push sales promotion strategies include. This pull strategy is often used when distributors are reluctant to carry or distribute a product.B.Role of sales promotions in FMCG sector There are three types of sales promotion strategies: • • • A push strategy A pull strategy or A combination of the two A Push Strategy: A ‘push’ sales promotion strategy involves ‘pushing’ distributors and retailers to sell your products and services to the consumer by offering various kinds of promotions and personal selling efforts.R. and ultimately ‘push’ it forward to the consumer. free trials. and point-of-purchase displays. coupons. samples. buy-back guarantees. contests.I. and specialty advertising items. A Combination of Two Strategies: GLS N. A Pull Strategy: A ‘pull’ sales promotion strategy focuses more on the consumer instead of the reseller or distributor. cash refunds or rebates. discounts. sweepstakes.M/M. promote it by advertising. What happens here is that a company promotes their product/services to a reseller who in turn promotes it to another reseller or to the consumer. contests. give it shelf space. This strategy targets its marketing efforts directly on the consumers with the hope that it will stimulate interest and demand for the product. The basic objective of this strategy is to persuade retailers. This strategy involves getting the consumer to ‘pull’ or purchase the product/services directly from the company itself. games.B.

The economic rationale for the promotional response is clear – temporary price cuts increase the value of the product to the consumer and it leads to immediate action. The key findings across the studies are discussed below.I.A-2nd Year/Marketing/20-3-2010 28 . Sales boost can be quantified on the basis of brand switching. During a promotion. It offers consumer incentives side by side with dealer discounts. the week or the month when the promotion was being run.B.Role of sales promotions in FMCG sector A ‘combination’ sales promotion strategy is just that.e. GLS N. Studies on brand switching have shown that brand switching effects within a category are asymmetric such that promotions on higher quality brands impacts weaker brands disproportionately.B. The Short term Impact of Promotions: Let’s have look at the impact of promotions on purchase behavior during the promotional period i.M/M. Studies have consistently reported high sales effects and high price elasticity of brands which are on promotion. Temporary price reductions (price off) substantially increase sales: There is ample evidence to show that promotions lead to dramatic increases in sales of promoted brand in the short term. higher quality brands induce a large number of consumers to switch to them as compared to lower quality brands. It focuses both on the distributor as well as the consumers. purchase time acceleration and stockpiling. Sales Promotion leads to brand substitution with the product category: The sales ‘bump’ during the promotional period into sales due to brand switching. primary demand expansion and consumer stockpiling during a promotion. The majority of the empirical studies have focused on the impact of promotions in the short term.R. One explanation advanced for this finding by researchers is that large share brands have higher brand equity and attract switchers more than low share brands. it is a combination of a push and a pull strategy. targeting both parties directly.

g.A-2nd Year/Marketing/20-3-2010 29 . There was negligible difference in the acceleration propensities of high versus low income groups. When a primary demand expansion occurs. Purchase acceleration was more likely to be exhibited in increased purchase quantity than in shortened inter purchase times. Thus purchase acceleration is demonstrated through A lengthening of inter purchase times after a promotion.M/M. Results indicated that heavy users tended to accelerate purchases more than light users.B. detergent and paper towels exhibited stockpiling only.R. in categories such as bacon. soft drinks and yogurt exhibited primary demand expansions as a result of promotion while bathroom tissue. Also found that retail price promotions create significant complementary and substitution effects within the store.I.Role of sales promotions in FMCG sector Sales Promotion leads to purchase acceleration/stockpiling effects: In response to a promotion. Sales Promotion leads to primary demand expansion for a category: While it was traditionally assumed that consumption rates remain fixed during and after a promotion. Sales Promotions affect sales in complementary and competitive categories: From this project it is found that promotion not only increases sales of main product but it also lead to increase in sales of complementary categories. Results showed that consumers mostly made up for the large quantity purchased by waiting longer until purchasing again. GLS N. coffee. They stated that retail price promotions work as a form of implicit price bundling whereby the consumer surplus is transferred from the promoted item to non promoted items. Found strong cross relationships between products of the promoted product category indicating brand substitution behavior. but from this project I came to know that promotions also have a primary demand expansion effect. thus indicating that there has been an increase in consumption promotions induced consumers to buy more and consume faster. then they are not in the market to buy products once the promotion is over.B. salted snacks. If consumers buy extra quantity during a promotion or earlier than normal. It is found that promotion induced inventory temporarily increased consumption rates within the category e. consumers may buy more quantity of the product category or buy at an earlier time than usual (purchase acceleration effect). promotion induced increase in purchase quantities does not significantly extend the time till the next purchase in the category occurs.

4-6 months or even a few years after a sales promotion campaign. same is true in sales promotion strategies. It is found that although the short term effects of promotions are strong. They found that the combined short and long-term elasticity of promotions was zero.g.B. The extra sales of a brand while promoted came virtually all from the brand’s existing long-term customer base for which the experience of buying the promoted brand was nothing new.R. It is observed that each sales component generally lacked a permanent effect and the effect of promotion was short lived and increase in promotions affected consumers’ stockpiling decisions in the long run. Let us see impact of promotions effort and study the impact over a longer time period e. The stockpiling induced by a promotion was essentially offset by reduced demand in the long term.B.Role of sales promotions in FMCG sector The Long term Impact of Promotions: Strategies are builds to reap the benefits for longer period of time. these promotions rarely exhibit long term effects.A-2nd Year/Marketing/20-3-2010 30 .I. Thus increased sales were more a result of sales borrowed from the future than increased consumption GLS N. The result showed that consumer promotions for leading brands of established packaged products had no after-effects on the brand’s sales or repeat buying loyalty.M/M.

Increasing income levels will result in faster revenue growth.R.B.. Several "me-too’’ products.M/M.A-2nd Year/Marketing/20-3-2010 31 . • Opportunities: • • • Large domestic market. Small-scale sector reservations limit ability to invest in technology and achieve economies of scale. Threats: • • • Imports.I. GLS N.Role of sales promotions in FMCG sector SWOT Analysis of FMCG Sector Strengths: • • • Well-established distribution network extending to rural areas. Export potential. Weaknesses: • • Low export levels. Strong brands in the FMCG sector. Slowdown in rural demand. Low cost operations. Tax and regulatory structure.B.

M/M.Role of sales promotions in FMCG sector DATA ANALYSIS GLS N.R.B.I.A-2nd Year/Marketing/20-3-2010 32 .B.

A-2nd Year/Marketing/20-3-2010 33 .B.I.B.M/M.Role of sales promotions in FMCG sector Consumers GLS N.R.

Lifebuoy. GLS N. Nima). Which brand of Soap / Detergent do you use? Bathing –soaps Lux Hamm Lifebuoy Nima Others Respondents 41 3 14 8 34 Bathing soaps 50 40 30 20 10 0 Respondents Lux 41 Hamam 3 Lifebuoy 14 Nima 8 Others 34 Interpretation: The above question has been formed to know the soaps and detergents at the top of the mind of the customers. Form the above result it is clear that out of 100 customers more than 40 are consumers are having the same brand as the image in their mind.A-2nd Year/Marketing/20-3-2010 34 .B. It shows those consumers’ purchase and use of that particular brand. It will help to the company to know the market scenario and the major brands in the market. whereas others category is also showing the higher graph than these 3 major players(Hamam.M/M.Role of sales promotions in FMCG sector Q1.B.I.R.

A-2nd Year/Marketing/20-3-2010 35 .B.Role of sales promotions in FMCG sector GLS N.M/M.R.I.B.

B.R.A-2nd Year/Marketing/20-3-2010 36 . GLS N. whereas all others are on same level.I.B.M/M.Role of sales promotions in FMCG sector Detergent powder Nirma supper Wheel Surf Ariel Others Respondents 19 14 35 18 14 Detergent Powder 40 35 30 25 20 15 10 5 0 Respondents Nirma sup 19 Wheel 14 Surf 35 Ariel 18 Othres 14 Interpretation: Form the above result it is clear that out of 100 customers 35 are purchasing the same brand of detergent.

Role of sales promotions in FMCG sector Q2. The above figure shows that on 56% of the respondents are loyal to their brands of detergent/soap.A-2nd Year/Marketing/20-3-2010 37 .B. Do you always buy the same brand of Soap / Detergent? Particulars Yes No Respondents 56 44 Brand loyal 60 50 40 30 20 10 0 Respondents Yes 56 No 44 Interpretation: The objective behind the formation of this question is to know the level of brand loyalty of the consumers towards the brands of soaps available in the market. GLS N. FMCG are such a market where the level of loyalty remains low and this is because of many reasons.R.I.B.M/M.

If we look at the graph of the soaps and detergent it shows quality as the most influencing factors in the purchase decision while price is also an important for purchase decision. quality which players an important role in the purchase decision of the soaps and detergents both.A-2nd Year/Marketing/20-3-2010 38 . GLS N.I.B.B.powder 18 36 13 19 11 3 Factors affecting purchase behavior 40 30 20 10 0 Fragrance Bathing soap Det.powder 19 18 Quality 33 36 Company image 16 13 Price 23 19 Packaging 6 11 Others 3 3 Interpretation: The objective behind this question is to know the effect of influencing factors in the purchase decision of the soaps and detergent powders.Role of sales promotions in FMCG sector Q3. Which factors do you normally consider while purchasing a particular brand of Soap / Detergents? Factors Fragrance Quality Company image Price Packaging Others Bathing soap 19 33 16 23 6 3 Det.R. It mainly contains the factors like.M/M.

Simultaneously it gives idea about the factors which consumers look most in the product before they make final decision. Effect of schemes purchase behavior 100 80 60 40 20 0 Respondents Yes 78 No 22 Interpretation: Answer of this question will give idea about the effect of promotional schemes in the purchase decisions. Do you consider promotional schemes while purchasing a particular brand of Soap / Detergent? Particulars Yes No Respondents 78 22 H0: Promotional schemes have a significant effect on the purchase of brand. GLS N.A-2nd Year/Marketing/20-3-2010 39 .B.M/M. H1: Promotional schemes do not have an effect on the purchase of brand.B.R. Such types of schemes always attract more and more consumers towards particular brand.Role of sales promotions in FMCG sector Q4.I. Here H0 is accepted as the graph shows that 78 out of 100 consumers are looking for such schemes before they make purchase.

It will help the manufacturers and marketers too how too launch their new products in the market with which schemes. Which of the following promotional schemes you have come across so far? Promotional schemes Coupons price off Freebies scratch cards lucky draw Bundling extra qty. GLS N. Respondents 16 84 24 12 9 31 44 Familiarity of promotional Schemes 100 80 60 40 20 0 Coupons Respondents 16 price off 84 Freebies 24 scratch cards 12 lucky draw 9 Bundling 31 extra qty.B.M/M.A-2nd Year/Marketing/20-3-2010 40 . The results show that price off and extra quantity is the two main offers/schemes which consumers have came across at the time of purchase.B.Role of sales promotions in FMCG sector Q5. 44 Interpretation: The above stated question clearly states the awareness of promotional schemes offered in the market by the marketers to attract more and more consumers.R.I.

M/M. On the second place it shows news papers as the media to promote the product in the market.B.R. The above result shows TV as the best media to market the product which will cover majority of the viewer ship.Role of sales promotions in FMCG sector Q6.I.B. GLS N.ppr 43 Hoarding 15 Others 12 Interpretation: This question gives stress on the media habit of the people and through which the product should be launch or they think it would be better than other Medias.A-2nd Year/Marketing/20-3-2010 41 . Which medium do you feel is suitable to promote the various promotional schemes? Source Radio TV Newspaper Hoarding Others Respondents 11 69 43 15 12 Mediums to promote the promotional schemes 80 60 40 20 0 Respondents Radio 11 TV 69 News.

Is there any existing scheme on the Soap / Detergent you are currently using? Particulars Yes No Respondents 58 42 Existing scheme on the Soap / Detergent 70 60 50 40 30 20 10 0 Respondents Yes 58 No 42 Interpretation: The answer of the respondents give idea about the awareness of the promotional schemes offered in the market on their existing soaps and detergents. It shows that people are not much aware of the schemes which continue in the market it may be because of the present stock of the product at their place.Role of sales promotions in FMCG sector Q7.B.M/M.B.I. In this situation more then 40% of the people are not aware or having vague idea about the promotional schemes running into the market.A-2nd Year/Marketing/20-3-2010 42 . GLS N.R.

The result shows that 1+1 or 2+1 or other free schemes are more demanded and more aware schemes in the market. If yes. please specify? Particulars 3+1/Other Free Discount No idea No answer Respondents 36 22 6 36 40 35 30 25 20 15 10 5 0 Series1 3+1/Other Free 36 Discount 22 No idea 6 No answer 36 Interpretation: This question supports the above question.M/M. It enlists the answers of those customers who are aware of the present schemes offered in the market and also those schemes which are more demanded in the market. GLS N.B.Role of sales promotions in FMCG sector Q8.A-2nd Year/Marketing/20-3-2010 43 .B.I.R.

73 people are ready to switch over to another brand if they find better promotional schemes which suits their budget means more qyt + less cost + quality. The result clearly shows that out of 100. Q9.I.B. Combination of all these schemes will run better in the market. If you get an attractive promotional offer in the product other then of your choice will you switch over? Particulars Yes No Respondents 73 27 Switching behavior 80 70 60 50 40 30 20 10 0 Respondents Yes 73 No 27 Interpretation: It shows the level of brand loyalty among the consumers.Role of sales promotions in FMCG sector So manufacturers may go for the same at the time of launching their product.M/M. GLS N.B.A-2nd Year/Marketing/20-3-2010 44 .R.

quality and other factors influence consumers to switch over too other brands.I. It shows that extra quantity with less or same price.B. GLS N. Give reason for the same? Particulars Cost+qty Quality Satisfaction Brand loyal More benefit/budget Season change No answer Respondents 16 17 2 5 22 2 36 Reason 40 30 20 10 0 Cost+qty Respondents 16 Quality 17 More Satisfaction Brand loyal Benefit/bud 2 5 22 Season change 2 No answer 36 Interpretation: Above question it gives specific reasons for switching too other products.M/M.A-2nd Year/Marketing/20-3-2010 45 . more satisfaction.R.B.Role of sales promotions in FMCG sector Q10.

I.B.B.Role of sales promotions in FMCG sector GLS N.M/M.R.A-2nd Year/Marketing/20-3-2010 46 .

It shows consumers demand which the manufacturers have to meet. GLS N. Give suggestions about futuristic promotional schemes? This show the consumers’ future expectations from the whether company to come with new schemes or continue with present one.I.Role of sales promotions in FMCG sector Q11.M/M.B.A-2nd Year/Marketing/20-3-2010 47 .B.R.

I.R.B.Role of sales promotions in FMCG sector Retailers GLS N.M/M.A-2nd Year/Marketing/20-3-2010 48 .B.

A-2nd Year/Marketing/20-3-2010 49 .B.B. Since how long are you in this business? Particulars 1-5 Years 5-10 Years More than 10 years Respondents 24 27 49 60 50 40 30 20 10 0 Series1 1-5 Years 24 5-10 Years 27 More than 10 years 49 Interpretation: This question gives idea about the benefit to the retailers who are on the market from long period of time and the benefits they are getting more as compare to others.R.Role of sales promotions in FMCG sector Q1. GLS N.I.M/M. It also gives idea about the benefits they are gaining for wholesalers and direct from the company. It also shows their experience in the field and the services they are providing too their new and regular customers.

I.R.M/M.Role of sales promotions in FMCG sector GLS N.B.A-2nd Year/Marketing/20-3-2010 50 .B.

B. GLS N.R.Role of sales promotions in FMCG sector Q2.A-2nd Year/Marketing/20-3-2010 51 . Name the Soap / Detergent (Company) you stock for.M/M. It will also make clear the demand of the goods in their stores and the selling of the product in market. Most of the retailer stocks all types of soap and detergent. Companies Nirma HUL P&G Godrej Others Respondents 96 100 90 94 68 Soap / Detergent in stock 120 100 80 60 40 20 0 Series1 Nirma 96 HUL 100 P&G 90 Godrej 94 Others 68 Interpretation: It gives idea about the capacity of the retailers to stock the goods and also the variety of the products they are stocking.I.B.

Role of sales promotions in FMCG sector

Q3. Rank the following factors that customers look for in the purchase of Soap / Detergent. (Rank from 1 to 6)
Factors Fragrance Quality Company Image Price Packaging Others 1 3 66 9 17 4 1 2 24 23 18 28 5 2 3 33 7 34 24 2 0 4 22 3 24 16 27 8 5 10 1 11 6 38 34 6 8 0 4 9 24 55

Bathing Soap
70 60 50 40 30 20 10 0 Fragrance Quality Company Image Price Packaging Others 1 3 66 9 17 4 1 2 24 23 18 28 5 2 3 33 7 34 24 2 0 4 22 3 24 16 27 8 5 10 1 11 6 38 34 6 8 0 4 9 24 55

Interpretation: It gives an idea about the priority the influencing factors too the consumers and also the weight age of that factor over other factors. In the above result people are more quality and price oriented. On the other hand people are also conscious about the company image. Because sometimes the consumer remember that name of the product by the company name and also from the past GLS N.R.I.B.M/M.B.A-2nd Year/Marketing/20-3-2010 52

Role of sales promotions in FMCG sector

performance of that company. Fragrance and packaging are not influencing factor as per the respondents.

Factors
Fragrance Quality Company Image Price Packaging Others

1
11 43 13 27 6 0

2 17 34 16 28 5 0

3 41 16 27 14 2 0

4 21 6 26 9 33 5

5 7 1 11 6 43 32

6 3 0 7 16 11 63

Detergent
70 60 50 40 30 20 10 0 Fragrance Quality Company Image Price Packaging Others 1 11 43 13 27 6 0 2 17 34 16 28 5 0 3 41 16 27 14 2 0 4 21 6 26 9 33 5 5 7 1 11 6 43 32 6 3 0 7 16 11 63

Interpretation :
It gives an idea about the priority the influencing factors too the consumers and also the weight age of that factor over other factors.

GLS N.R.I.B.M/M.B.A-2nd Year/Marketing/20-3-2010 53

Role of sales promotions in FMCG sector

In the above result people are more quality and price oriented. On the other hand people are also conscious about the company image. Because sometimes the consumer remembers that name of the product by the company name and also from the past performance of that company. Fragrance and packaging are also play important role for purchasing detergent powder.

Q4. Do you suggest customers to purchase a certain brand?
Particular Yes No Respondents 33 67

Suggestion
80 70 60 50 40 30 20 10 0 Series1 Yes 33 No 67

Interpretation:
This could be a very help question to understand the role of retailers in the purchase decision. In above graph 67% of retailer are not suggest to purchase particular brand because of personal relation or that customer are brand loyal. While 33% of the retailer are suggesting the consumers to buy particular brand. There could be many reasons like, extra margin, relations with consumers and quality of the products which retailer may get the benefit of the same. GLS N.R.I.B.M/M.B.A-2nd Year/Marketing/20-3-2010 54

Role of sales promotions in FMCG sector

Q5. If Yes why?
Particular High margin Quality Relationship No reason Respondents 9 17 7 67

If yes
80 70 60 50 40 30 20 10 0 Respondents High margin 9 Quality 17 Relationship 7 No reason 67

Interpretation:
it gives idea about the reasons why retailers suggest the consumers to buy particular brand. In above graph and table it is clear that for margin and of better relations with consumers and too provide quality product to consumers they suggest consumers too bye particular brand. For the company it may be helpful to target such retailers to sell their product in the market easily. GLS N.R.I.B.M/M.B.A-2nd Year/Marketing/20-3-2010 55

The above result shows that only 8 out 0f 100 didn’t go for the promotion otherwise all are looking for any type of the promotions on the product.A-2nd Year/Marketing/20-3-2010 56 .M/M.B.I. GLS N.Role of sales promotions in FMCG sector Q6. Do customers look for various schemes in the product? Particular Yes No Respondents 92 8 Customers look for various schemes 100 80 60 40 20 0 Respondents Yes 92 No 8 Interpretation: This gives a real helpful data for checking the effect of sales promotions in the market and how seriously consumers follow the promotions before they go for purchase particular brand.R.B.

B.B.Role of sales promotions in FMCG sector Q7.I. If yes which schemes? Promotional Schemes Coupons Price Off Freebies Scratch Cards Lucky Draws Bundling Offer Extra Quantity Respondents 11 82 35 2 19 65 79 Which schemes 100 80 60 40 20 0 Coupons Respondents 11 Price Off 82 Freebies 35 Scratch Cards 2 Lucky Draws 19 Bundling Offer 65 Extra Quantity 79 Interpretation: The above stated results show the demand of various types of promotional schemes in the market by the consumers.A-2nd Year/Marketing/20-3-2010 57 .R.M/M. Almost all types of schemes are being demanded by the GLS N.

Exp. 8 Interpretation: GLS N.B. product bundling and extra quantity are more demanded by the consumers over others schemes. Price off.M/M. Which Trade Promotions do various companies offer? NIRMA Promotions Extra Margin Extra Units credit facility Gifts promo. Trade Promotions by Nirma 60 50 40 30 20 10 0 Series1 Extra Margin 46 Extra Units 34 credit facility 55 gifts 24 promo. Exp.B.Role of sales promotions in FMCG sector consumers in the market but there are three major schemes which consumers generally look at the time of purchase or before that. Q8. H1: Effect of trade promotions for all four brands is not similar.A-2nd Year/Marketing/20-3-2010 58 . Respondents 46 34 55 24 8 H0: Effect of trade promotions for all four brands is similar.R.I.

R.A-2nd Year/Marketing/20-3-2010 59 . and units with occasional gift with their schemes.I.M/M. It is also providing extra margin.B. NIRMA is mainly offering credit facility which is offered by all major players it may differ in the time limit of the credit.B.Role of sales promotions in FMCG sector From the above graph shows the trade promotions offered by the NIRMA Ltd to the retailers to attract them towards stocking their goods and also stop them switching them too other major players in the market. GLS N.

Exp. So this may help it to attract more retailers.I.R. such as display of the product.M/M.B. banners etc. Exp. GLS N. 22 Interpretation: The advantage of HLL over NIRMA is that it bare promotional expenses which NIRMA is not doing. It may because of its less cost of production in other segments in which nirma is not operating. Respondents 47 34 58 25 22 Trade Promotions by HUL 70 60 50 40 30 20 10 0 Series1 Extra Margin 47 Extra Units 34 Credit facility 58 Gifts 25 Promo. It attracts more consumers through such promotions.A-2nd Year/Marketing/20-3-2010 60 .Role of sales promotions in FMCG sector HUL Promotions Extra Margin Extra Units Credit facility Gifts Promo.B.

Respondents 40 33 55 20 12 Trade Promotions by P&G 60 50 40 30 20 10 0 Series1 Extra Margin 40 Extra Units 33 Credit facility 55 Gifts 20 Promo. GLS N. Exp.B.B. It is also providing all the facilities which others are providing to retailers.I. Exp.R.M/M.Role of sales promotions in FMCG sector P&G Promotions Extra Margin Extra Units Credit facility Gifts Promo. 12 Interpretation: P&G is also a big player in the FMCG market.A-2nd Year/Marketing/20-3-2010 61 .

But it is lacking in bearing expenses which HUL is providing to maximum number of retailers.M/M.B. Exp.R. Respondents 46 32 57 19 18 Trade Promotions by Godrej 60 50 40 30 20 10 0 Series1 Extra Margin 46 Extra Units 32 Credit facility 57 Gifts 19 Promo. GLS N.A-2nd Year/Marketing/20-3-2010 62 .Role of sales promotions in FMCG sector GODREJ Promotions Extra Margin Extra Units Credit facility Gifts Promo. It is also providing all the facilities which others are providing to retailers.I. 18 Interpretation: Godrej is a big player in the FMCG market. Exp.B.

A-2nd Year/Marketing/20-3-2010 63 .R. wipro but their products are not in demand like other players but still they are providing all the facilities to retailers to attract towards stocking their products. Exp.B. as well as we established players like. 7 Interpretation: Others include local players. Respondents 30 18 38 15 7 Trade Promotions by Others 40 35 30 25 20 15 10 5 0 Series1 Extra Margin 30 Extra Units 18 Credit facility 38 Gifts 15 Promo. GLS N.M/M.I.B.Role of sales promotions in FMCG sector OTHERS Promotions Extra Margin Extra Units Credit facility Gifts Promo. Exp.

R.2 4645. Exp.Role of sales promotions in FMCG sector GODREJ Extra Margin Extra Units Credit facility Gifts Promo.A-2nd Year/Marketing/20-3-2010 64 . it is clearly seen that there is a effect of trade promotion on various brands and are similar too.4 33.08460 9 285.825 GLS N.B. As p> 0.2 32 Variance 289.3 339.M/M.4 HUL 47 34 58 25 22 37.2 P&G 40 33 55 20 12 32 Anova: Single Factor SUMMARY Groups Column 1 Column 2 Column 3 Column 4 ANOVA Source Variation Between Groups Within Groups Total of SS 72. 46 32 57 19 18 34.B.238872 24.5 df 3 16 19 MS F P-value 0.05.I.96745 7 F crit 3.18333 0. Interpretation: from the one factor anova analysis.55 4573.7 5 All the big players provide promotion to the retailers due to cut throat competition.8 229.4 37. it is the evidence that the null hypothesis is accepted Count 5 5 5 5 Sum 172 167 186 160 Average 34.7 284.4 NIRMA 46 34 55 24 8 33.

R.B. GLS N.B.A-2nd Year/Marketing/20-3-2010 65 .I. Retailer stocks all types of soap and detergent because of competition.M/M.Role of sales promotions in FMCG sector Q9 Give reasons for not stocking a particular brand.

Role of sales promotions in FMCG sector Q10 Any Suggestions. GLS N.A-2nd Year/Marketing/20-3-2010 66 .I.B.R. to encourage sales during certain periods the company should provide priceoff or extra quantity because that influences directly to the consumer.B. Retailer suggested that packaging should be further improved and used as promotional tool.M/M.

R. 1+1 or 2+1 or other free schemes are more demanded and more aware schemes in the market.B.A-2nd Year/Marketing/20-3-2010 67 • • • • .Role of sales promotions in FMCG sector Findings of the report: Sales Promotion.M/M. Consumer remember that name of the product by the company name and also from the past performance of that company GLS N. a short-term inducement.I. Extra quantity with less or same price. Quality as the most influencing factors in the purchase decision while price is also an important for purchase decision. Retailer stocks all types of soap and detergent because of competition. On the second place it shows news papers as the media to promote the product in the market People are not much aware of the schemes which continue in the market it may be because of the present stock of the product at their place. It represents nearly three fourth of the marketing budget at most consumer product companies. Simultaneously it gives idea about the factors which consumers look most in the product before they make final decision Price off and extra quantity is the two main offers/schemes which consumers have came across at the time of purchase TV as the best media to market the product which will cover majority of the viewer ship.B. • • • • • People are ready to switch over to another brand if they find better promotional schemes which suits their budget means more qyt + less cost + quality. offered to a consumer or trade has gained momentum as a promotional tool world over. more satisfaction. quality and other factors influence consumers to switch over too other brands. People are more quality and price oriented. Sales promotions can enhance consumers’ self-perception of being “smart” or a “good” shopper • • • FMCG are such a market where the level of loyalty remains low and this is because of many reasons. Schemes always attract more and more consumers towards particular brand.

A-2nd Year/Marketing/20-3-2010 68 . Price off.B. Customers are looking for any type of the promotions on the product before them going to purchase.B. HUL attracts more consumers through such promotions. product bundling and extra quantity are more demanded by the consumers over others schemes.R. such as display of the product. GLS N.M/M. NIRMA is mainly offering credit facility which is offered by all major players it may differ in the time limit of the credit.I.Role of sales promotions in FMCG sector • • • • • • • Consumer remembers that name of the product by the company name and also from the past performance of that company Retailers are not suggest to purchase particular brand because of personal relation or that customer are brand loyal Margin and of better relations with consumers and too provide quality product to consumers they suggest consumers too bye particular brand. banners etc.

Also the person going to the shop for the purchase of soap is the final decision maker of the brand. While both retailers and consumers preferred price offs.A-2nd Year/Marketing/20-3-2010 69 . Hence it is essential that companies need to design attractive.I. FMCG products are low involvement products characterized by switching behavior. Clearly this shows that managers need to invest into brand building exercise so that his/her brand appears in the consideration set of the target consumers. Repetitive use of the same premium for a prolonged period may have negative effect on the loyal customers. When the company is giving its own product free as premium.R. Sales promotion should not be used in isolation but need to be integrated with other tools and in line with the overall positioning of the brand. What it implies is that companies need to use sales promotion GLS N.B. So it is necessary that the perceived value of a free gift has to be appealing and high for the target consumers. the finding suggested that premium (free gift) was popular with companies. Companies need to create sufficient awareness about sales promotion schemes through mass media in order to create awareness. Only after this should he spend time.M/M. it needs to ensure the quality of the product from it as it is likely to jeopardize the image of both its products. sales promotion by itself is unlikely to have any major impact. Also the importance of the role of mass media came out clearly in the study. striking. The findings exhibited that both the retailers and consumers perceived that sales promotion activities carried out by the companies for increasing sales in short term and clearing excess stocks.Role of sales promotions in FMCG sector Recommendation: The findings of the empirical study indicate that unless the brand to be promoted is in the consideration set of the consumer. With respect to nature of scheme. visible POPs for scheme announcements.B. money and energy on sales promotion activities.

particularly when additional handling. GLS N.B.M/M. accounting was required on the part of a retailer without compensatory margins.Role of sales promotions in FMCG sector synergistically and communicate so that they provide value to the target audience and enhance brand quality/image perceptions. Companies need to systematize information flow regarding sales promotion activities particularly at dealer and retailer level. In order to build trust and commitment companies should tap preferences.A-2nd Year/Marketing/20-3-2010 70 . companies keep in touch with the market. It can be seen that the retailer and consumer perceptions matched with respect to preferences of schemes. From the study it was found that smaller retailers felt neglected and not enthused to implement the schemes. As retailing is fragmented. stocking.I. Developing a system to tap such responses from time to time both at retailer and consumer level would be helpful for planning future sales promotion activities.B. direct reach by companies is next to impossible. Ensuring proper information flow and devising checks and measures to reduce misappropriations and implementation flows should be considered critical aspects for the success of sales promotion activities by the companies. underlying motivations and role of mass media. perceptions of retailers as well as consumers. Through dealers and proper feedback mechanism.R. This implies that the retailer would be a rich source of information about the consumer and the likely response to sales promotion activities.

• Findings of the study are based on the assumption that the respondents have given correct information. GLS N.B. • Respondent may give biased answer due to some lack of information about other brands.I. which is not very large.A-2nd Year/Marketing/20-3-2010 71 . Due to this. All the respondents could not fill their questionnaire on their own due to language problem and also problem of time and lack of positive behavior.M/M.Role of sales promotions in FMCG sector Limitations of the study • • • We considered Ahmedabad region only because of limited time duration.B. our sample size is only 100.R.

A-2nd Year/Marketing/20-3-2010 72 .B. Classification of joint sales promotion: • • • • • • • • • • Use complementarily due to natural use New use catering complementary relationships Commonality of need due to use time Tie-up of a new /slow moving brand with an established brand Target market commonality Seasonal demand Distribution commonality Targeting new segment Derived demand Countering competitive joint sales promotions GLS N.Role of sales promotions in FMCG sector Emerging Trends So far as FMCG market is concern there is new trend is emerging known as Joint sales promotion. it is referred as joint sales promotion or horizontal co-operative sales promotion or cross promotion or umbrella sales promotion.M/M. When any sales promotion scheme either for trade or consumer is announced by more than one company and /or more than one brand of the same company. Actually it is old concept but it was more prevailing in durable products now it is coming intro non durable goods also.B.I.R.

e. Sales of small pack goods are quite high.A-2nd Year/Marketing/20-3-2010 73 .B. As a result now marketers have to find out some innovative ways of sales promotion to differentiate from competitors. Future holds lot of promise for such schemes across wider range of productmarkets.I. So in such stores. It had low cost or say price.M/M. Sales Promotion has ceased to be major differentiator at least in the metros. These types of promotional schemes should be consistent and changed from time to time depending upon season and competitor’s schemes. We have noted that these kind of promotional tools are useful for short term increase in sales and to induce first trial. the branded packaged goods work as silent sales person. One of the very important facts we came to know from this project is that sale of goods which contain large quantity and having big packaging e. Currently Price off and Bye one get one free offers are very effective to attract the consumers towards the products. With the Increasing number of supermarket.Role of sales promotions in FMCG sector Conclusion of the Survey The study reflects that the use of sales promotion undeniably has increased over the years in India.R. with almost all companies offering similar freebies and gifts. the reasons are: small pack goods reduce risk of bad quality. mentality to purchase just to try first.g. and last but important factor i. detergent are stagnating because consumer prefer to buy small pack goods. but from GLS N. sales promotion plays a more effective role in stimulating consumers’ demands.B.

Kothari.I.co.  C.2nd edition. “Research Methodology methods & techniques”. “Marketing Management”.publishers.co.New Age International(p)ltd.in_files  http://www.in_files  http://www.R.R.B.godrej_files GLS N. 11th edition.B. Pearson education Asia Publication.M/M.nirma.Role of sales promotions in FMCG sector the company’s point of view small pack goods is less profitable compare to large pack goods. WEBSITES  http://www.pg-india_files  http://www. Bibliography BOOKS  Philip Kotler. So here marketer tries to increase sales of large pack goods by using sales promotion tactics like price off and percentage extra.hul.A-2nd Year/Marketing/20-3-2010 74 .

M/M.Role of sales promotions in FMCG sector Annexure GLS N.B.A-2nd Year/Marketing/20-3-2010 75 .I.B.R.

R. Which of the following promotional schemes you have come across so far? Promotional schemes Respondent GLS N.A-2nd Year/Marketing/20-3-2010 76 . Your identity would not be revealed and information will only be used for academic purpose.M/M. Do you always buy the same brand of Soap / Detergent? Particulars Respondent Yes No Q3. Which factors do you normally consider while purchasing a particular brand of Soap / Detergents? Bathing Factors soap Det. Q1.B. So please fill this questionnaire. Which brand of Soap / Detergent do you use? Bathing –soaps Lux Hamam Lifebuoy Nirma Others Respondent Detergent powder Nirma supper Wheel Surf Ariel Others Respondent Q2. Do you consider promotional schemes while purchasing a particular brand of Soap / Detergent? Particulars Respondent Yes No Q5.B.Role of sales promotions in FMCG sector Questionnaire Customers We are students of MBA studying in GLS NRIBM AHMEDABAD and carrying out a survey for our academic project to“Role of sales promotions in FMCG”.powder Fragrance Quality Company image Price Packaging Others Q4.I.

If you get an attractive promotional offer in the product other than of your choice will you switch over? Particulars Yes No Q10. Give reason for the same? Particulars Cost+qty Quality Satisfaction Respondent Respondent GLS N. Is there any existing scheme on the Soap / Detergent you are currently using? Particulars Yes No Q8.I.B. Which medium do you feel is suitable to promote the various promotional schemes? Source Radio TV Newspaper Hoarding Others Respondent Q7. If yes.M/M.R. please specify? Particulars 3+1/Other Free Discount No idea No answer Respondent Respondent Q9.B. Q6.A-2nd Year/Marketing/20-3-2010 77 .Role of sales promotions in FMCG sector Coupons price off Freebies scratch cards lucky draw Bundling extra qty.

I.A-2nd Year/Marketing/20-3-2010 78 . GLS N.R.M/M.B. Give suggestions about futuristic promotional schemes.Role of sales promotions in FMCG sector Brand loyal More benefit/budget Season change No answer Q11.B.

If Yes why? Particular High margin Quality Relationship No reason GLS N. Do you suggest customers to purchase a certain brand? Particular Respondent Yes No Q5.I. So please fill this questionnaire. Since how long are you in this business? Particulars 1-5 Years 5-10 Years More than 10 years Respondent Q2.R.Role of sales promotions in FMCG sector Retailers We are students of MBA studying in GLS NRIBM AHMEDABAD and carrying out a survey for our academic project “Role of sales promotions in FMCG”. (Rank from 1 to 6) Factors 1 2 3 4 5 6 Fragrance Quality Company Image Price Packaging Others Q4. Name the Soap / Detergent (Company) you stock for.M/M.A-2nd Year/Marketing/20-3-2010 79 Respondent . Your identity would not be revealed and information will only be used for academic purpose. Rank the following factors that customers look for in the purchase of Soap / Detergent. Companies Respondent Nirma HUL P&G Godrej Others Q3.B. Q1.B.

M/M. Which Trade Promotions do various companies offer? HUL NIRMA Promotions Respondent Promotions Respondent Extra Margin Extra Margin Extra Units Extra Units Credit facility credit facility Gifts Gifts P Promo. Q9 Give reasons for not stocking a particular brand. Promo. GLS N. Exp.R. Exp. Q10 Any Suggestions. & G Promotions Respondent Promotions Respondent Extra Margin Extra Margin Extra Units Extra Units Credit facility Credit facility Gifts Gifts Promo. If yes which schemes? Promotional Schemes Coupons Price Off Freebies Scratch Cards Lucky Draws Bundling Offer Extra Quantity Respondent Respondent Q8.B.A-2nd Year/Marketing/20-3-2010 80 . OTHERS Promotions Respondent Extra Margin Extra Units Credit facility Gifts Promo.Role of sales promotions in FMCG sector Q6. Exp. Exp. Exp. Do customers look for various schemes in the product? Particular Yes No Q7.I.B. GODREJ promo.

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