1.

SALES PROMOTION:- Sales promotion refers to many kinds of incentives and techniques
directed towards consumers and traders with the intention to produce immediate or short-
term sales effects.

2. REASONS FOR RAPID GROWTH OF SALES PROMOTION: -

There are a number of reasons that are favourable to the growth of sales promotion:

(i) Increasing Competition- Due to increase in competition, companies are finding it

increasingly difficult to compete on quality. They are therefore resorting to more and
innovative methods of sales promotion. .

(ii) Customers Have Become More Price Sensitive-Customers in general have become
more concious about the prices.This increased price sensitivity is a direct result of rampant
inflation. Economic recession is likely to fuel this trend further, as consumers and dealers
become more sensitive towards prices.

(iii) Products have become more standardized:- Most brands are being perceived by
consumers to be more or less similar within a given price range because of the inability of
manufacturers to develop truly differentiated products. Under these condition, advertising
messages are unable to strongly influence the consumers’ perceptions . As a result of these
perceptions of similarity among brands, marketers have no way but to compete on the basis
of extra benefit offered through sales promotion.

(iv) Sales Promotions Generally Create An Immediate Positive Impact On Sales:-

Advertising, personal selling and other methods of promotion produce slower sales
response compared to sales promotion. Sales promotions are mostly for short duration, for
a specified period, leading to a sense of urgency in consumers to buy now. This creates an
immediate positive impact on sales.

(v) Consumer Acceptance:- As competition intensifies and promotions proliferate,

consumers have learnt to earn the rewards of being smart shoppers. Over a period of time,
they have also learnt that brands on promotion are not necessarily of lower quality.

(vi) Expectations Of Price Decrease:- With the entry of many different brands of
consumer durable products in the same product category, consumers anticipate that the
prices of durable goods will come down. This encourages them to postpone their
purchases. To speed up the purchase in this segment of consumers, sales promotions are an
effective and attractive method.

(vii) Trade Has Become More Powerful:- Retailers and wholesalers have become
powerful and find themselves in a position to demand extra facilities from the companies.
They do not hesitate and play off one manufacturer against another.In bigger cities,retailing
has become more sophisticated and competitive.

3. OBJECTIVES OF SALES PROMOTION:-

a. To introduce new products

b. To attract new customers and retain the existing ones
c. To maintain sales of seasonal products
d. To meet the challenge of competition

(a)To introduce new products: Many companies distribute free samples while
introducing new products. The consumers after using these free samples may develop a
taste for it and buy the products later for consumption.

(b) To attract new customers and retain the existing ones: While moving in the market,
customers are generally attracted towards the product that offers discount, gift, prize, etc
on buying. These are some of the tools used to encourage the customers to buy the goods.
Thus, it helps to retain the existing customers, and at the same time it also attracts some
new customers to buy the product.

(c) To maintain sales of seasonal products: There are some products like air
conditioner, fan, refrigerator, cooler, winter clothes, room heater, sunscreen lotion, glycerin
soap etc., which are used only in particular seasons. To maintain the sale of these types of
products normally the manufactures and dealers give off-season discount. For example,
you can buy air conditioner in winter at a reduced price. Similarly you may get discount on
winter clothes during summer.

(d) To meet the challenge of competition: Today’s business faces competition all the
time. New products frequently come to the market and at the same time improvement also
takes place. So sales promotion measures have become essential to retain the market share
of the seller or producer in the product-market.
4. TYPES OF SALES PROMOTION:-

The sales promotions can be classified into three main areas:

I. Consumer Market-Directed

II. Trade Market-Directed

III. Business-to-Business Market-Directed

I. Consumer Sales Promotions

There are various types of consumers sales promotion. They are as follows:-

1. Coupons
2. Rebates
3. Promotional Pricing
4. Trade-In
5. Loyalty Programs
6. Sampling and Free Trials
7. Contests and Sweepstakes
8. Demonstrations
9. Personal Appearances
10. Free products
11. Premiums

1. Coupons:- Sometimes, coupons are issued by manufacturers either in the packet of a

product or through an advertisement printed in the newspaper. These coupons can be
presented to the retailer while buying the product. The holder of the coupon gets the
product at a discount.

2. Rebates:- Rebates, like coupons, offer value to purchasers typically by lowering the
customer’s final cost for acquiring the product. While rebates share some similarities with
coupons, they differ in several keys aspects also.

3. Promotional Pricing:- One of the most powerful sales promotion techniques is the
promotional pricing. Lowering a product’s selling price can have an immediate impact on
demand, though marketers must exercise caution since the frequent use of this technique
can lead customers to anticipate the reduction and, consequently, withhold purchase until
the price reduction occurs again.
4. Trade-In:-Trade-in promotions allow consumers to obtain lower prices by exchanging
something the customer possess, such as an older product that the new purchase will
replace.

5. Loyalty Programs:- Promotions that offer customers a reward, such as price discounts
and free products, for frequent purchasing or other activity are called loyalty programs.

6. Samples, Free Product and Premiums:- Sampling and free trials give customers the
opportunity to experience products, often in small quantities or for a short duration,
without purchasing the product. Today, these methods are used in almost all industries and
are especially useful for getting customers to try a product for the first time.

7. Contests and Sweepstakes :-

Contests are special promotions awarding value to winners based on skills they
demonstrate compared to others.

Sweepstakes or drawings are not skill based but rather based on luck. Winners are
determined by random selection. In some cases the chances of winning may be higher for
those who make a purchase if entry into the sweepstake occurs automatically when a
purchase is made. But in most cases, anyone is free to enter without the requirement to
make a purchase.

8. Demonstrations and Personal Appearances:- Demonstrations are very expensive to

produce. Costs involved in demonstrations include paying for the expense of the
demonstrator, which can be high if the demonstrator is well-known and also paying for the
space where the demonstration is given.

9. Personal Appearances:- Personal appearance by someone of interest to the target

market, such as an author, sports figure or celebrity, is another form of sales promotion
capable of generating customer traffic to a physical location.

10. Free Products:- Some promotional methods offer free products but with the condition
that a purchase be made. The free product may be in the form of additional quantities of
the same purchased product (e.g., buy one, get one free) or specialty packages (e.g., value
pack) that offer more quantity for the same price as regular packaging.
II. Trade Sales Promotions

A trade sales promotion aimed at retailers may encourage them to instruct their employees
to promote a marketer’s brand over competitors’ offerings.

These approaches include:

1. Point-of-Purchase Displays
2. Advertising Support Programs
3. Short Term Allowances
4. Sales Incentives or Push Money
5. Promotional Products
6. Trade Shows

1. Point-of-Purchase Displays :- Point of purchase (POP) displays are specially designed

materials intended for placement in retail stores. These displays allow products to be
prominently presented, often in high traffic areas, and thereby increase the probability the
product will standout.

2. Advertising Support Programs:- In addition to offering promotional support in the

form of physical displays, marketers can attract channel members’ interest by offering
financial assistance in the form of advertising money. These funds are often directed to
retailers who then include the company’s products in their advertising. In certain cases the
marketer will offer to pay the entire cost of advertising, but more often, the marketer offers
partial support known as co-op advertising funds.

3. Sales Incentives or Push Money:- A marketer may offer sales promotions to their
reseller’s sales force and customer service staff where they are used as incentives to help
sell more of the marketer’s product. Sometimes called push money, these promotions
typically offer employees cash or prizes, such as trips, for those that meet sales
requirements.

4. Promotional Products:- Among the most widely used methods of sales promotions is
the promotional product; products labeled with the brand or company name that serve as
reminders of the actual product.

5. Trade Shows:- Trade shows are organized events that bring both industry buyers and
sellers together in one central location. Spending on trade shows is one of the highest of all
sales promotions.
III. Business-to-Business Sales Promotions:- The use of this type of sales promotion is
not limited to consumer products marketing. In business-to-business markets sales
promotions are also used as a means of moving customers to action. However, the
promotional choices available to the B-to-B marketer are not as extensive as those found in
the consumer or trade markets.

4. TOOLS AND TECHNIQUES FOR SALES PROMOTION:-

To increase the sale of any product manufactures or producers adopt different measures
like sample, gift, bonus, and many more. These are known as tools or techniques or
methods of sales promotion.

(i) Free samples: Sometimes free samples are also distributed by the shopkeeper even
without purhasing any item from his shop. These are distributed to attract consumers to
try out a new product and thereby create new customers.

(ii) Premium or Bonus offer: These are effective in influencing consumers to buy a
particular product. This is also useful for encouraging and rewarding existing customers.

(iii) Exchange schemes: It refers to offering exchange of old product for a new product at
a price less than the original price of the product. This is useful for drawing attention to
product improvement.

(iv) Price-off offer: Under this offer, products are sold at a price lower than the original
price. This type of scheme is designed to boost up sales in off-season and sometimes while
introducing a new product in the market.

(v) Coupons: Sometimes, coupons are issued by manufacturers either in the packet of a
product or through an advertisement printed in the newspaper. These coupons can be
presented to the retailer while buying the product. The holder of the coupon gets the
product at a discount.

(vi) Fairs and Exhibitions: Fairs and exhibitions may be organised at local, regional,
national or international level to introduce new products, demonstrate the products and to
explain special features and usefulness of the products.

(vii) Trading stamps: In case of some specific products trading stamps are distributed
among the customers according to the value of their purchase.

(viii) Scratch and win offer: To induce the customer to buy a particular product ‘scratch
and win’ scheme is also offered. Under this scheme a customer scratch a specific marked
area on the package of the product and gets the benefit according to the message written
there.
(ix) Money Back offer: Under this scheme customers are given assurance that full value of
the product will be returned to them if they are not satisfied after using the product. This
creates confidence among the customers with regard to the quality of the product.

5. MERITS AND DEMERITS OF SALES PROMOTION:-

MERITS:-------

(i) Price discrimination: Producers can introduce price discrimination through the use of
sales promotions. 

(ii) Effect on consumer behaviour: As sales promotions are mostly announced for a short
period, customers may feel a sense of urgency and stop comparing the alternatives.  They
are persuaded to act now rather than later.

(iii) Effect on trade behaviour: Short-term promotions present an opportunity and

encourage dealers to forward buy. This forward buying ensures that retailers won’t to go
out of stocks.  As dealers have more than the normal stocks, they think it advisable to
advertise in local media, arranged displays and offer attractive promotion deals to
consumers.  These actions help in increasing the store traffic.

DEMERITS:---------

(i) Increased price sensitivity:- Consumers wait for the promotion deals to be announced
and then purchase the product.  This is true even for brands where brand loyalty exists. 
Customers wait and time their purchases to coincide with promotional offers on their
preferred brands. Thus, the routine sales at the market price are lost and the profit margin
is reduced because of the discounts to be offered during sale-season.

(ii) Quality image may become tarnished: If the promotions in a product category have
been rare, the promotions could have a negative effect about its quality image. Consumers
may start suspecting that perhaps the product has not been selling well, the quality of the
product is true compared to the price or the product is likely to be discontinued because it
has become outdated.

(iii) Short-term orientation: Sales promotions are generally for a short duration.  This
gives a boost to sales for a short period.  This short-term orientation may sometimes have
negative effects on long-term future of the organization.  Promotions mostly build short-
term sales volume, which is difficult to maintain.  Heavy use of sales promotion, in certain
product categories, may be responsible for causing brand quality image dilution.