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In the previous lesson, you have learnt about channels of distribution, which may be regarded as a path or route along which goods move from the producers to ultimate consumers. But channels of distribution are useful only when the consumers are informed and persuaded to buy the particular products. It is done through advertising, publicity and salesmanship. In addition to these activities some other techniques and programmes are also under taken to promote sales. In the present lesson we shall discuss sales promotion.
After studying this lesson you will be able to:explain the meaning and purpose of sales promotion. describe how sales promotion objectives are set. discuss sales promotion tools and programmes.
24.3 Meaning and Purpose of Sales Promotion:
Sales promotion consists of all promotional activities other than advertising, personal selling and publicity that help to increase sales
and latter improves dealer’s effectiveness at the retails outlets. The former stimulates consumer’s buying at the point of sale. such as point of purchase displays. shows and exhibitions. (A) Basic objectives of sales promotion are: (i) (ii) increasing the buying response of ultimate consumers. Purpose: The ultimate aim or purpose of sales promotion is that of increasing the volume of sales and profits but it differs from advertising and personal selling both in approach and techniques. that is why it is of two types-consumers sales promotion and dealers sales promotion. In other words. supplementing and co-ordinating the efforts of advertising and personal selling (iii) . increasing the selling efforts and intensity by dealers as well as by sales personnel.52:: Business Studies through non repetitive and one time communication. Personal selling involve face to face contact with specific individuals. in contrast with the routine and recurring nature of advertising and personal selling. while advertising is directed at a large number of potential customers. But sales promotion methods are controlled by the advertiser. and publicity. that stimulate consumer purchasing and dealer effectiveness. it includes marketing activities other than personal selling. Under advertising. advertising. Sales promotion serves as a link between two by focussing selling efforts on selected small groups of people. Sales promotion usually involves non-recurring and no-routine methods. the media is not owned and controlled by the advertiser except in direct mail advertisings. 24. Sales promotion covers various stimulants directed to the consumers and dealers. demonstrations and various non-recurring selling efforts not in the ordinary routine.4 How Sales Promotion Objectives are set: Sales promotion has dual objective: (A) Basic objectives and (B) Other objectives.
they must know their customers. Hence marketers must have up-to-date information about customer demand and customer behaviour. geographical location and purchasing power of potential . informing buyers of new brand and new packaging. Similarly. their needs and desires. (iii) Nature and size of market: The number. (ii) (iii) (iv) (v) These objectives are set on the basis of following criteria. These criteria are developed taking into consideration the following variables/factors: (i) Kinds of product: The product is one of the factors determing the form of promotion. their attitude. Mass selling consumer goods can be easily promoted through radio and television.Sales Promotion :: 53 (B) The other objectives are: (i) calling attention to new products and product improvements. improving market share. toilet soaps and cosmetics are effectively shown on television. meeting competition. If the buyers are educated then demonstrations or instructions can be used as sales promotion technique. aspirations and expectations. (ii) The buyer: If the marketers are to provide realistic solutions to the problem of buyers. contests and quizzes can be used if buyers are of young age and educated. obtaining dealer outlets. values. Industrial and speciality goods should be promoted through technical journals and through sales engineers. (i) (ii) Cost of reaching an audience member. Acceptability of the tools to be used. Toys.
the buyers loose interest on the product. This is the last stage in product life cycle.After a period of stability. and the third step is to determine the cost required to execute promotional activities and programmes. there is a greater need of expenditure. . then communication tools required to achieve these objectives are designed. At this stage either high cost sales promotion technique may be used or existing product may be improved. books and electronic items. on the one hand. and varieties of products and markets on the other. if an offering is in its early life cycle. But promotion budget should always justify the tasks to be undertaken. But the speed in achieving sales volume reduces during this stage. premium offer.This stage is longer. Product life cycles consists of four stages. Introducing a new product for most companies is a costly and difficult exercise. and sales start falling more quickly. money refund orders. coupon. are suitable for sales promotion in local markets.. Profit also starts declining much faster than the sales. (a) Introduction of the product require lot of energy to create awareness. Similarly. the greater the communication expenditure required. For example. sales promotion objectives are set. the greater the geographical dispersion of a target market. (b) Growth. (d) Declining. On the other hand. exhibitions and fashion shows are more appropriate for sales promotion on the national level particularly for garments. fairs. In short sales promotion expenditure is directly related to the objectives to be achieved. A basic principle would be the cost and returns of sales promotion tools to be adopted. Sampling.54:: Business Studies customers exercise a significant impact on the sales promotion. (iv) Stages in product life cycle: This is an important managerial tool in sales promotion. acceptance and demand for the product. (c) Maturity (Saturation). It includes a fast growth both in sales volume and profit. (iv) Budget allocation available: The decision on how much to spend on promotion is externally difficult on account of multitude of promotion tools. price-off and trading stamps etc. first of all. (v) Management policy: In the management policy. that is why they mostly depend on middlemen.
Sales Promotion :: 55 Hindustan Lever has its well drawn up sales promotion budget. the Drugs and Magic Remedies (Objectionable Advertisements) Act. (v) Government regulations: Government has passed various laws and made rules to protect the consumer interest. Informing buyers of new brand and new package is the _______of sales promotion. then promotion programmes will have to be designed to support the marketing plan. (i) Sales promotion includes all promotional activities other than advertising. personal selling and _______________ The basic object of sales promotion is to increase the buying response of ultimate_________________ The object of sales promotion is to improve_____________ share. Tools and programmes for consumers sales promotion. Intext Questions 24. such as the prevention of Food Adulteration Act. Sales promotion objective is to supplement and co-ordinate the efforts of advertising and _______________selling. Sales promotion policy must take into consideration the government regulations relating to the particular product. If any business house does not have its promotion budget fixed. (ii) (iii) (iv) (v) 24.5 Sales Promotion Tools and Programmes: Sales promotion techniques are know as promotion tools and the mode of their application is know as sales programme. and Drugs and Cosmetics Act etc.g.1 Fill in the blanks. date of expire. 2. Tools and programmes for dealer / distributor sales promotion . These tools and programmes are divided under two heads: 1. the commodity rates must be specified on the package and in case of medicines drug contents and date of manufacturing. e. and price must be specified.
Attractive reusable jars costing separately say Rs. e. It is helpful in the introduction of a new product. which appeal to bargain instinct.Rs. dinner ware. e. When a buyer gives a coupon to the dealer or retailer he gets the product at lower price. These are also known as discount coupons.56:: Business Studies Tools and programmes for consumers sales promotion: These tools and programmes are as follow: (i) Sample: Usually called consumer sample. 4 offer a Brooke . Coupons are also accepted as cash by retailers. (ii) Demonstrations or instructions: These are instructions given to educate the consumers about using the product. blades. 12 may be given as at an extra charge of Rs. hair-brushes. free samples and given to consumers to introduce a new product or to expand the market.g. with a coupon it is Rs. were given as inpack premiums. For example in DCM coupon system if regular price is Rs.g..20. (vi) Price-off: The price off label is printed on the package. It is a good device for creating new user and to strengthen the brand loyalty. artificial flowers. instant coffee sold in carafes by one company was very successful. (v) Premium (gift) offers: These are temporary price reductions. This method may be used in products like Vacuum cleaner. 4 only. ball pens. Towels. Liril gave a soap box almost free with two soap cakes. (iii) Coupon: It is a certificate that reduces the price. Refund offer creates additional interest and increases sales considerably. toilet soaps. keychains. (iv) Money-refund orders: The technique indicates refund of full purchase price if the buyer so wants.. The consumers can try the product.18.
fairs and exhibitions are important technique/tools of sales promotion. The purpose is to increase customer loyalty. It gives a temporary discount to the consumers. Fairs and exhibitions are organized usually by big firms or trade associations. (viii) Trading stamps: Trading or Bonus stamps are issued by retailers to customers who buy goods from there. In Sweepstakes. fashion shows or parades. This type of sales promotion is not a lottery because there is chance or luck. prizes are offered and a payment to participant is there. Sometimes sales conventions or conferences of dealers are held. The number of stamp given to a buyer depends upon the amount of purchases made by him. They provide a forum for the exhibitions or demonstration of products. and quizzers. For instance. . where publishers of all over the world are invited to display their publications. Customer can be attracted through gifts. in India Roman Bonus Stamps are issued at the rate of 2-1/2 percent of the purchase amount. participants compete for prizes on the basis of their skill or creative ideas. (vii) Contests or quizzes: These are held to stimulate consumer’s interest in the product. business firms are allotted stalls where in they display their products. At these fairs and exhibitions.Sales Promotion :: 57 Bond tea pack of 500 grams. For instance. This technique induces customer to buy their requirements from the retailers who offer such stamps. Fairs and exhibitions have wide appeal as several people visit there. In these contests. special concessions and free demonstrations of technical and speciality products. they submit their names to be included in a draw of prize winners. They provide an opportunity to the visitors to observe the competing products and help to promote sales. These stamps are given free of charge and the customers can redeem them to obtain products out of the specified list. The National Book Trust organises World Book Fair. (ix) Fairs and exhibitions: Trade shows. Free literature can be distributed to introduce the firm and its products to the public. the Trade Fair Authority of India organises Trade Fairs of various types in New Delhi.
Their purpose is not to create immediate demand or to increase sales. exchange of old Black & White Television for Colour Television by paying rupees 8000 only (original price is rupees 10000) was offered by a particular producer of colour TV sets.58:: Business Studies Producers of garments often organise fashion shows to promote their products.g. offer of Privileged Citizen Card. Display reaches consumers when they are buying and actually spending their money. donating space for noble causes. Retail demonstrations: These are arranged by manufactures preparing and distributing the products as a retail sample. (x) Public relations activities: These include greetings or thanks in newspapers. for for for the (ii) (iii) Trade deals: These are offered to encourage retailers to give additional selling support to the product. tooth paste sold with 30% to 40% margin. A buy back is a (iv) (v) . (xi) Exchange scheme: This technique offers to exchange the old product with new in payment of a fixed amount which is less than the original price for example. etc.. depending on one’s view point. They are designed to create a good image of the firm in the society. Nescafe Instant Coffee was served to consumers trying the sample on the spot of demonstration regarding method of using the product. Buy-back allowance: It is offered to encourage repurchase of a product immediately after another trade deal. Buying allowance: Sellers give buying allowance of a certain amount of money for a product bought. example. Tools and programmes for dealers/distributors sales promotion: These tools and programmes are: (i) Free display : There is provision of free display of material either at the point of purchase (POP) or at the point of sale(POS). e.
mechanised signs are other point-ofpurchase displays. (vii) Advertising and display allowance : These are also offered to retailers to popularise the product and brand name of the manufacturer.Sales Promotion :: 59 resale opportunity. Tell tags are informative labels affixed on the product.2 Fill in the blanks: (i) (ii) Free samples are given to customers to introduce a new_________ Coupon is a certificate that reduces the __________ of the product. Price-off gives a temporary ___________ to the consumers. posters. (vi) Free goods : Seller gives free goods. Retail demonstrations are supplied by manufactures for preparing (iii) (iv) (v) . or two pieces free with 10. (viii) Contents : Sales contests are held for salesmen.g. Sales promotion devices at the point of purchase inform. Dealer sales promotion provides the selling devices. and stimulate buyers to purchase products. Training for salesmen : Dealer and distributor training for salesmen. which may be provided to give them a better knowledge of a product and how to use it. e. People who see these devices are in a buying mood and thus they can be easily persuaded to buy those products. Counter.. top racks. one piece free with two. Producers of garments often organise ____________ shows to promote their products. are common free deals. (x) Intext Questions 24. remind. (ix) Dealer loader : A gift for an order is a premium given to the retailer for buying certain quantities of goods or for special display done by the retailer. describing in detail the features of the product and its unique selling points.
60:: Business Studies and distributing the products as retail_____________. The purpose of sales promotion is to increase the sales and profits of the organisation / business house. (i) (ii) Cost of reaching an audience member. 24. personal selling and publicity. (iv) Stages in product life cycle. Fortors to be considered in developing the criteria: The following variables are considered in developing the criteria of sales promotion. (vi) Budget allocation available. Acceptability of the tool to be used. (vii) Government regulations. (ii) The buyer. Tools and programmes for consumers sales promotion: . These are divided under two heads: (i) (ii) (1) Tools and programmes for consumers sales promotion. (iii) Nature and size of market. (v) Management policy. Tools and programmes for dealers/distributors sales promotion. Sales promotion tools and programmes: Sales promotion techniques are known as sales promotion tools and the mode of their implementation is known as programme. (i) Kinds of product.6 What you have learnt: Sales promotion includes all those activities which help to promote/increase sales except advertising. Sales promotion objectives are divided into two groups (i) Basic objectives (ii) Other objectives Basis of setting sales promotion objectives: The objectives are set on basis of following criteria.
Explain sales promotion. (viii) Trading stamps. (x) Public relation activities.Sales Promotion :: 61 (i) Sample (ii) Demonstration or instructions (iii) Coupon (iv) Money-refund orders (v) Premium (gift) offers. (iii) Trade deals. (vii) Advertising and display allowance. Explain the nature of product as a variable considered for developing sales promotion criteria. (viii) Contests. (ix) Fairs and exhibitions. 4. 4. 2. (x) Training for salesmen.. Define sales promotion tool and programme. State any two basis of setting sales promotion objectives. What are the criteria for setting the objectives of sales promotion. 2. 3. (xi) Exchange schemes. Explain the factors to be considered in developing these criteria. (ii) Retail demonstrations. State the object of providing training for salesmen. (vi) Contest or quizzes. State any two purpose of sales promotion. (ix) Dealers loader.7 Terminal Exercise: 1. (vi) Free goods. (v) Buy-back allowance. 5. . Explain various sales promotions tools and programmes for dealer/ distributor sales promotion. 24. Describe the purpose served by sale promotion Explain briefly the objectives of sales promotion. (2) Tools and programmes for dealer/distributor sales promotion: (i) Free display. 3. 5. (iv) Buying allowance. Short Question: 1. (vi) Price-off. Explain various sales promotion tools and programmes for consumers’ sales promotion.
8 Answer to Intext Questions: 24.2 (i) Product (iv) Fashion (ii) Consumers (v) Objective.1 (i) Publicity (iv) Personal 24. (ii) Price (v) Sample (iii) Discount (iii) Market .62:: Business Studies 24.
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