MM II Notes

Fundamentals of Sales Promotion
Sales Promotions are a marketing communication tool for stimulating revenue or providing
incentives or extra value to distributers, sales staff, or customers over a short time period. Sales
promotion activities include special offers, displays, demonstrations, and other nonrecurring
selling efforts that aren’t part of the ordinary routine. As an additional incentive to buy, these
tools can be directed at consumers, retailers and other distribution partners, or the manufacturer’s
own sales force.

Companies use many different forms of media to communicate about sales promotions, such as
printed materials like posters, coupons, direct mail pieces and billboards; radio and television
ads; digital media like text messages, email, websites and social media, and so forth.

Companies use sales promotions to increase demand for their products and services, improve
product availability among distribution channel partners, and to coordinate selling, advertising,
and public relations. A successful sales promotion tries to prompt a target segment to show
interest in the product or service, try it, and ideally buy it and become loyal customers.

Advantages of sales promotions

The main advantages in using sales promotional activity, either alone or to support mainstream
marketing activity and communications, are:

(i) Very flexible and adaptable in terms of tackling specific problems or supporting mainstream
marketing communications Bata national or local level

(ii) Capable of specific action through specific focus and structure

(iii) Relatively short lead times to design and implement (compared with media communications)

(iv) Often more easy to monitor the effect or tangible results

(v) Economical and cost saving, possibly with economies of scale

(vi) Can be adapted to large and small markets, major or minor products or brands.

11 Important Techniques of Sales Promotion

1. Rebate

Under it in order to clear the excess stock, products are offered at some reduced price. For
example, giving a rebate by a car manufacturer to the tune of 12,000/- for a limited period of
time.

2. Discount

Under this method, the customers are offered products on less than the listed price. For example,
giving a discount of 30% on the sale of Liberty Shoes. Similarly giving a discount of 50% + 40%
by the KOUTONS.

3. Refunds

Under this method, some part of the price of an article is refunded to the customer on showing
proof of purchase. For example, refunding an amount of 5/- on showing the empty packet of the
product priced 100/-.

4. Product Combination

Under this method, along with the main product some other product is offered to the customer as
a gift. The following are some of the examples:

5. Quantity Gift
Under this method, some extra quantity of the main product is passed on as a gift to the
customers. For example, 25% extra toothpaste in a packet of 200 gm tooth paste. Similarly, a
free gift of one RICH LOOK shirt on the purchase of two shirts.

6. Instant Draw and Assigned Gift

Under this method, a customer is asked to scratch a card on the purchase of a product and the
name of the product is inscribed thereupon which is immediately offered to the customer as a
gift. For example, on buying a car when the card is scratched such gifts are offered – TV,
Refrigerator, Computer, Mixer, Dinner Set, Wristwatch, T-shirt, Iron Press, etc.

7. Lucky Draw

Under this method, the customers of a particular product are offered gifts on a fixed date and the
winners are decided by the draw of lots. While purchasing the product, the customers are given a
coupon with a specific number printed on it.

On the basis of this number alone the buyer claims to have won the gift. For example, ‘Buy a
bathing soap and get a gold coin’ offer can be used under this method.

8. Usable Benefits

Under this method, coupons are distributed among the consumers on behalf of the producer.
Coupon is a kind of certificate telling that the product mentioned therein can be obtained at
special discount.

It means that if a customer has a coupon of some product he will get the discount mentioned
therein whenever he buys it. Possession of a coupon motivates the consumer to buy the product,
even when he has no need of it.

Such coupons are published in newspapers and magazines. Some companies distribute coupons
among its shareholders. Sellers collect the coupons from the customers and get the payment from
the company that issues the same.

9. Full Finance @ 0%

Under this method, the product is sold and money received in installment at 0% rate of
interest. The seller determines the number of installments in which the price of the product
will be recovered from the customer. No interest is charged on these installments.

10. Samples or Sampling

Under this method, the producer distributes free samples of his product among the
consumers. Sales representatives distribute these samples from door-to-door.
This method is used mostly in case of products of daily-use, e.g., Washing Powder, Tea,
Toothpaste, etc. Thus, the consumers willy-nilly make use of free sample. If it satisfies
them, they buy it and in this way sales are increased.

11. Contests

Some producers organize contests with a view to popularizing their products. Consumers
taking part in the contest are asked to answer some very simple questions on a form and
forward the same to the company. The blank form is made available to that consumer who
buys the product first.

Public Relations
 

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Public relations (PR) is nothing but the practice of protecting as well as enhancing the
reputation of any particular organization/firm or for that matter any individual. In today’s world
of fierce competition, where every organization strives hard to work toward its brand image,
public relations has become the need of the hour. It is essential for every organization to
communicate well with its public/target audience. The correct flow of information is essential.
Here comes the importance of public relations.

What is Public Relations ?

The practice of maintaining a healthy relationship between organization and its
public/employees/stakeholders/investors/partners is called public relations. Public relation
activities ensure the correct flow of information between the organization and its public also
called its target audience. Public relations goes a long way in maintaining the brand image of an
organization in the eyes of its audience, stake holders, investors and all others who are associated
with it.

For schools, the target audience would be students and their parents/guardians, for retailers the
target audience would be customers and so on.
 In the above examples, Public Relations ensures a smooth two way communication between the
school authorities and its target audiences (students and their parents).Retailers must address
their customers well for a positive word of mouth and a strong brand positioning. It is really
important to create a positive image of any particular brand in the minds of consumers for it do
well. Public relations experts not only help in the flow of information from the organization to its
public but also from the public to the organization.(Two way communication).The flow of
information from the public to the organization is generally in the form of reviews,
feedback(positive/negative),appreciation and so on. Public relations strengthens the relationship
between the organization and its target audience, employees, stakeholders, investors etc.

Public Relation Activities

Here are some ways of enhancing an organization’s brand image:

 Addressing the media

 Speaking at various press conferences, seminars.
 Advertisements to correctly position the brand, Pamphlets, Brochures, magazines notices,
newsletters and so on.
 Corporate Social responsibility (CSR Activities)
 Introducing various loyalty schemes for customers like membership cards, premium clubs so as
to retain the customers.
 Various events, shows and activities.

Effective Public Relations

Public Relations is said to be effective under all the below circumstances:

 Awareness: To create a positive image of an organization, the message must reach the public.
Information must reach in its desired form for effective public relation.
 Acceptance: The audience must understand what the message intends to communicate. They
ought to agree with the message.
 Action: The audience ought to give feedback to the organization accordingly.

To conclude public relations is nothing but an effort to present one’s organization in the best
light.
Types of Public Relations
According to the functions of the public relations department/agencies, public relations can be
divided into 7 types. These are:

(i) Media Relations: Establishing a good relationship with the media organizations and acting as
their content source.

(ii) Investor Relations: Handling investors events, releasing financial reports and regulatory
filings, and handling investors, analysts and media queries and complaints.

(iii) Government Relations: Representing the brand to the government with regard to fulfilment
of policies like corporate social responsibility, fair competition, consumer protection, employee
protection, etc.

(iv) Community Relations: Handling the social aspect of the brand and establishing a positive
reputation in the social niche like environment protection, education, etc.

(v) Internal Relations: Counselling the employees of the organization with regard to policies,
course of action, organization’s responsibility and their responsibility. Cooperating with them
during special product launches and events.

(vi) Customer Relations: Handling relationships with the target market and lead consumers.
Conducting market research to know more about interests, attitudes, and priorities of the
customers and crafting strategies to influence the same using earned media.

(vii) Marketing Communications: Supporting marketing efforts relating to product launch,

special campaigns, brand awareness, image, and positioning.

Direct Marketing
 

Direct Marketing is a form of advertising in which companies provide physical marketing

materials to consumers to communicate information about a product or service. Direct marketing
does not involve advertisements placed on the internet, on television or over the radio. Types of
direct marketing materials include catalogs, mailers and fliers.

Direct marketing removes the “middle man” from the promotion process, as a company provides
a message directly to a potential customer. Companies with smaller advertising budgets typically
use this type of marketing since they cannot afford to pay for advertisements on television and
often do not have the brand recognition of larger firms.
How Direct Marketing Works?
Direct-marketing messages generally include a call to action, encouraging the recipient to
respond via a toll-free phone number or a reply card or by clicking on a link in an email
promotion. Companies are able to measure the effectiveness of their direct-marketing campaigns
by tracking responses. Direct marketing is more effective when companies use targeted lists of
prospects developed using available marketing data that can segment them into identifiable
groups that are likely to have an interest in a product or service.

Over the years direct marketing has developed a bad reputation for cluttering up people’s mail
boxes with junk mail or generating spam in email inboxes. Many companies engage in opt-in or
permission marketing, which limits their mailing or emailing to only those willing to receive it.
Companies select communication channels they consider most effective for a particular market.
For instance, a new gym may find more success distributing flyers, while a new grocery store
prefers to mail promotional coupons to the residents of nearby neighborhoods.

Pros and Cons of Direct Marketing

Companies that use direct marketing benefit from being able to focus limited resources on a
targeted promotion, which also allows them to personalize the marketing message. Because it is
easy to measure responses, companies can test different marketing messages for improving the
response rate. Direct marketing can be cost-effective if the customer database is well-managed.
 The downside of direct marketing is that response rates can vary widely making the flow of
prospects unpredictable. Ineffective campaigns can be costly, especially if they occur frequently.
Companies that send blanket direct mail or email promotions have to overcome the negative
image of junk mail and email spam. The key to effective direct marketing is an accurate
database, which can be expensive to maintain.

28.3.20

Recent Trends in Marketing

 Virtual Reality

Technology is on a mission to blur the lines between real and virtual. Virtual Reality (VR) is
a huge leap in this direction. VR takes engagement to the next level by making it emotional
i.e. by dropping the user in an environment created by you. This is used in a bevy of ways.
A few examples of VR in marketing are Samsung: Do what you can’t do, Volvo: A Swedish
Moment and Thomas Cook: Try Before you Fly.

VR is used to convey a strong message through immersive and telling visuals, case in
point, “The Displaced” a VR piece by the New York Times which gives readers a startling
insight into the horrors experienced by refugees in war-torn areas. Other notable examples
of VR in marketing are McDonald’s Sweden: Happy Goggles, Ford: Fasten your seatbelts
and Haagen Dazs: Save the honeybees.

2. Voice Search
50% of all online searches will be voice-based by 2020. Marketers now need to tweak their
approach to attract devices rather than humans with the arrival of Alexa, Google Assistant
et al. This is can also bring changes in the SEO process. As voice search gets more
popular, it’s become more important to use conversational, long-tail keywords to boost your
SEO.

It is more important now than ever to use content to address common questions posed by
users. The reason? Voice search results are now snippets from the source article. Context
and action intent also play a huge role in voice searches, for eg. there’s an increased
incidence of “What’s the nearest X?” queries in voice searches. In such instances the user
is primed to take prompt action, here SEO can be used to drive foot traffic.

3. Interactive Content
81% of respondents of a survey conducted by CMI(Content Marketing Institute) agreed that
interactive content grabs attention better than static content. There’s a trend towards more
personalized and engaging content. Ergo the content balance is shifting in favor of videos,
stories, polls, and quizzes. This is changing the face of content marketing. There are a lot of
examples such as NYT dialect quiz.
 Interactive content is a way of quickly answering common customer questions in a more
engaging way than static content. Many brands are making interactive content a part of their
marketing strategy.

4. Personalisation
75% of consumers are more likely to buy from a retailer that recognizes them by name and
recommends options based on past purchases. This is the reason why Amazon has the
best customer retention rate due to its superior personalization algorithms.

An ad campaign that has grabbed a lot of eyeballs due to personalization in recent times is
Coca-Cola’s #Shareacoke campaign where common names were printed on to Coke cans
instead of the brand name. Consider this, in a country with a population of 24 million
(Australia) Coca-Cola sold 250 million personalized coke cans. This shows the power of the
simplest form of personalization, just adding the name.

Apart from personalized video campaigns, quizzes are also used as a medium to deliver
personalized content. Thus, the values of personalization and increased engagement can
be easily imbued in marketing campaigns through interactive content.

Personalization can be as simple as a personalized email or as elaborate as Marketo’s

personalized video invite to the Marketing Nation Summit. Remember when you think of
personalization, the sweetest sound to any person is his/her name.

5. Chatbots
They provide instant responses and handle FAQs on social media sites such as Facebook.
The primary objective of marketing is always to deliver the right product to the right
customer. However, before this process is consummated, a series of interactions take place
between both parties.

Chatbots handle such interactions now. They can provide instant responses to queries that
can improve customer experience pre and post-purchase, thus playing a pivotal role in
sales and marketing.

Here are two examples: The Starbucks chatbot within the Starbucks app makes it very easy
to order snacks and beverages through text and voice commands. Ben is another fine
example, this chatbot helps beginners learn about bitcoins and sell them online. Unlike their
human counterparts, chatbots won’t call in sick or ask for a hike even though they work
24*7*365.

6. GDPR Compliance and Data Rights

In the wake of the Cambridge Analytica brouhaha and GDPR, there is a louder claim to
institute data rights. This will impact data collection and the use of data to craft custom
 experiences, campaigns et al in a huge manner. Under GDPR, you need to obtain customer
consent before utilizing the data to run campaigns.

7. Reviews and Word of Mouth

Customers trust the words of other customers more than the words of celebrities. More than
55% of consumers under the age of 60 read reviews on shopping websites and social
forums before purchasing a product. Reviews still play a huge role in giving the final push in
Decision phase of the buyer’s journey. Another trend that favors reviews is voice search,
which we’ve talked about earlier. Google will give more preference to results with more
reviews for voice-based searches such as, ‘what is the nearest hotel?’, ‘the best salon near
me’ etc.

Rural Marketing, Characteristics of

Rural Marketing
Rural marketing is a process of developing, pricing, promoting, and distributing rural specific
goods and services leading to desired exchange with rural customers to satisfy their needs and
wants, and also to achieve organizational objectives.

The Rural Marketing is a two-way process, i.e.

Urban to Rural: FMCG Goods, Agricultural fertilizers, automobiles, etc. are offered by the
urban market to the rural market.

Rural to Urban: The agricultural supplies viz. Fruits, vegetables, flowers, milk, etc. is offered
from the rural market to the urban market.

Concept of Rural Marketing

The concept of Rural Marketing in India Economy has always played an influential role in the
lives of people. In India, leaving out a few metropolitan cities, all the districts and industrial
townships are connected with rural markets. The rural market in India generates bigger revenues
in the country as the rural regions comprise of the maximum consumers in this country. The rural
market in Indian economy generates almost more than half of the country’s income.

The marketers are following the strategy to “Go Rural” because of the following attractions in
the rural market:
 Large Population: Still, the majority of the population in India resides in Villages and therefore,
the marketers find more potential in the rural areas and direct their efforts to penetrate the rural
market.
 Increased Income: The income and the purchasing power of the rural people have increased.
With the use of modern agricultural equipment and technology, the farmers can produce more and can
get better returns for their agricultural produce. The increased income motivates a farmer to improve
his livelihood by purchasing a good quality product and thus, the marketer gets an opportunity to enter
into the rural market.
 Competition in Urban Market: There is a lot of competition in the Urban market, where people
are well aware of the goods and services and have created a brand loyalty. Therefore, the marketers
move to the rural market to escape the intense completion and generate revenues from the untapped
areas.
 Improved Infrastructure facilities: Today, many villages are well connected with the roads and
transportation facilities that enables the marketer to access the rural market and promote his goods and
services. With the growth in telecom services, the rural people can be reached easily via mobile phones.
 Saturated Urban Market: Also, the marketers may move to the rural markets, when the urban
market has reached the saturation point, the i.e. market is well stuffed with the products, and the
consumers are not likely to make a frequent purchase due to the varied options available in the market.
 Support of Financial Institutions: Several Co-operative banks and public sector banks offer the
loan facility to the rural people at low-interest rates. With the loan, the purchasing power of an
individual increases, thus resulting in a better standard of living.
 New Employment Opportunities: The Government is running several employment opportunity
programmes, with the intention to engage people in other activities apart from the agriculture
occupation. The Integrated Rural Development Programme (IRDP), Jawahar Rozgar Yojana (JRY),
Training Rural Youth for self-Employment are the certain programmes, designed to increase the
livelihood of rural people.

Rural marketing in Indian economy can be classified under two broad categories.

These are:

 The market for consumer goods that comprise of both durable and non-durable goods
 The market for agricultural inputs that include fertilizers, pesticides, seeds, and so on.

The concept of rural marketing in India is often been found to forms ambiguity in the mind of
people who think rural marketing is all about agricultural marketing. However, rural marketing
determines the carrying out of business activities bringing in the flow of goods from urban
sectors to the rural regions of the country as well as the marketing of various products
manufactured by the non-agricultural workers from rural to urban areas.

Characteristics of Rural Marketing

1. Large and scattered market
According to 2011 census rural population is 68.4% (2001 – 72%) of total population and it is
scattered over a wide range of geographical area. With regard to size, still more than 2/3 of the
population lives in rural India and the 170 million household consumers. The sheer size is equal
 to US, UK, Germany, France, Japan and Italy together. To reach 6.00.000+ villages is really a
challenge. A few new rural distribution and procurement models have been innovated by ITC e-
chaupal and HUL Project Shakti.

2. Diverse socio-economic background

This is different in different parts of the country and brings diversity in rural markets.

3. Changing demand pattern

Demand pattern of rural customer is fast changing due to increase in income and credit facilities
offered by the banks like ‘kisan credit card’. In terms of India’s GDP, 54%, equal to that of
Switzerland, is contributed by rural India. In India’s monthly expenditure, about 55% comes
from rural India.

Non-food spending is equal to that of urban India. Consumerism is certainly on a rise and the
spending on lifestyle products is emerging. Consumer durables market is growing at 10% per
annum in urban areas, but the growth rate in rural India is 25%. Of the 40% of the sale in auto
industry comes from rural India.

4. Major income comes from agriculture

About 60% of the rural income is from agriculture and hence the demand for consumer goods is
high during harvesting season.

5. Saving habits
Rural consumer is now having saving habits due to the efforts of cooperative and commercial
banks. Presently more than 33% of India’s savings comes from rural India.

6. Traditional outlook
Rural customer values old customs and traditions and are interested in deriving core benefit from
the product. They believe in price-performance paradigm. It is because of this reason that ‘Ghari’
detergent has replaced ‘Wheel’ as the no. 1 laundry brand.

7. Low standard of living

Rural consumer have low standard of living because of low literacy, low per capita income and
social backwardness. However, roughly 34% of FMCG manufacturers’ total sales comes from
rural areas.

8. Infrastructure facilities
Facilities like roads, warehouses, communication system, etc. are inadequate in rural areas.
Hence, physical distribution becomes costly affair. Electrification is yet not complete in all the
villages. The Literacy rate in rural areas has gone up from 58.7% in 2001 to 68.9% in 2011.
During this period the improvement in literacy rate in rural area is twice that of urban areas
(rural: 10.2% and urban: 5.1%). Improvement in female literacy is more than males in both rural
and urban areas.

The telephone service is not available in all the villages, especially where there is no post office.
Radio network has increased considerably. From 6 radio stations at the time of independence, All
India Radio covers 98.8% population spread over 90% of the country. Infrastructure or lack of it
has not deterred the telecom companies to reach rural areas through their wireless telephony.

The cellphone users’ number is more than 200 million. The number is more than the subscribers
in Brazil, Indonesia and Russia. The number of account holders in banks in rural areas is greater
than urban India. In case of LIC half the policies are from the rural area.