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24 Sales Promotion

24.1 Introduction
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.

24.2 Objectives
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:
Meaning:
Sales promotion consists of all promotional activities other than advertising, personal selling and publicity that help to increase sales

demonstrations and various non-recurring selling efforts not in the ordinary routine. that is why it is of two types-consumers sales promotion and dealers sales promotion. But sales promotion methods are controlled by the advertiser. that stimulate consumer purchasing and dealer effectiveness. advertising. supplementing and co-ordinating the efforts of advertising and personal selling (iii) . 24. Sales promotion serves as a link between two by focussing selling efforts on selected small groups of people. shows and exhibitions. 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. 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. and publicity. Under advertising. 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.4 How Sales Promotion Objectives are set: Sales promotion has dual objective: (A) Basic objectives and (B) Other objectives.52:: Business Studies through non repetitive and one time communication. it includes marketing activities other than personal selling. In other words. and latter improves dealer’s effectiveness at the retails outlets. such as point of purchase displays. increasing the selling efforts and intensity by dealers as well as by sales personnel. The former stimulates consumer’s buying at the point of sale. Sales promotion covers various stimulants directed to the consumers and dealers. (A) Basic objectives of sales promotion are: (i) (ii) increasing the buying response of ultimate consumers.

Similarly. (i) (ii) Cost of reaching an audience member.Sales Promotion :: 53 (B) The other objectives are: (i) calling attention to new products and product improvements. Acceptability of the tools to be used. (iii) Nature and size of market: The number. meeting competition. informing buyers of new brand and new packaging. improving market share. Hence marketers must have up-to-date information about customer demand and customer behaviour. (ii) The buyer: If the marketers are to provide realistic solutions to the problem of buyers. their needs and desires. Industrial and speciality goods should be promoted through technical journals and through sales engineers. If the buyers are educated then demonstrations or instructions can be used as sales promotion technique. contests and quizzes can be used if buyers are of young age and educated. toilet soaps and cosmetics are effectively shown on television. Mass selling consumer goods can be easily promoted through radio and television. their attitude. (ii) (iii) (iv) (v) These objectives are set on the basis of following criteria. obtaining dealer outlets. geographical location and purchasing power of potential . values. aspirations and expectations. 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. they must know their customers. Toys.

coupon. on the one hand. Similarly.After a period of stability. On the other hand. For example. if an offering is in its early life cycle. (v) Management policy: In the management policy. Sampling. the greater the geographical dispersion of a target market. This is the last stage in product life cycle. (iv) Stages in product life cycle: This is an important managerial tool in sales promotion. and sales start falling more quickly. books and electronic items. that is why they mostly depend on middlemen.This stage is longer. (b) Growth. first of all. sales promotion objectives are set. (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. then communication tools required to achieve these objectives are designed. the buyers loose interest on the product. acceptance and demand for the product. the greater the communication expenditure required. Product life cycles consists of four stages. Introducing a new product for most companies is a costly and difficult exercise. It includes a fast growth both in sales volume and profit. But promotion budget should always justify the tasks to be undertaken. But the speed in achieving sales volume reduces during this stage. (a) Introduction of the product require lot of energy to create awareness. Profit also starts declining much faster than the sales. there is a greater need of expenditure. and varieties of products and markets on the other. premium offer. are suitable for sales promotion in local markets. fairs.. and the third step is to determine the cost required to execute promotional activities and programmes. (c) Maturity (Saturation). 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. (d) Declining. At this stage either high cost sales promotion technique may be used or existing product may be improved. money refund orders. .54:: Business Studies customers exercise a significant impact on the sales promotion. exhibitions and fashion shows are more appropriate for sales promotion on the national level particularly for garments.

Intext Questions 24.1 Fill in the blanks. date of expire. then promotion programmes will have to be designed to support the marketing plan.Sales Promotion :: 55 Hindustan Lever has its well drawn up sales promotion budget. (i) Sales promotion includes all promotional activities other than advertising. 2. (v) Government regulations: Government has passed various laws and made rules to protect the consumer interest. (ii) (iii) (iv) (v) 24. Tools and programmes for consumers sales promotion. the Drugs and Magic Remedies (Objectionable Advertisements) Act. If any business house does not have its promotion budget fixed. Sales promotion objective is to supplement and co-ordinate the efforts of advertising and _______________selling. and price must be specified. such as the prevention of Food Adulteration Act. the commodity rates must be specified on the package and in case of medicines drug contents and date of manufacturing. Tools and programmes for dealer / distributor sales promotion . These tools and programmes are divided under two heads: 1. Informing buyers of new brand and new package is the _______of sales promotion. Sales promotion policy must take into consideration the government regulations relating to the particular product. e.g.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. 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. and Drugs and Cosmetics Act etc.

These are also known as discount coupons. ball pens. Towels. e. e.g. Liril gave a soap box almost free with two soap cakes. artificial flowers. with a coupon it is Rs. were given as inpack premiums.18. It is a good device for creating new user and to strengthen the brand loyalty. Attractive reusable jars costing separately say Rs. blades.g. which appeal to bargain instinct. keychains. (ii) Demonstrations or instructions: These are instructions given to educate the consumers about using the product.. (vi) Price-off: The price off label is printed on the package. For example in DCM coupon system if regular price is Rs. (v) Premium (gift) offers: These are temporary price reductions.. The consumers can try the product. hair-brushes.20. 4 offer a Brooke . Refund offer creates additional interest and increases sales considerably. toilet soaps. This method may be used in products like Vacuum cleaner. When a buyer gives a coupon to the dealer or retailer he gets the product at lower price. 12 may be given as at an extra charge of Rs.56:: Business Studies Tools and programmes for consumers sales promotion: These tools and programmes are as follow: (i) Sample: Usually called consumer sample. It is helpful in the introduction of a new product. dinner ware. Coupons are also accepted as cash by retailers. 4 only. (iv) Money-refund orders: The technique indicates refund of full purchase price if the buyer so wants. free samples and given to consumers to introduce a new product or to expand the market. (iii) Coupon: It is a certificate that reduces the price. instant coffee sold in carafes by one company was very successful.Rs.

These stamps are given free of charge and the customers can redeem them to obtain products out of the specified list. They provide a forum for the exhibitions or demonstration of products.Sales Promotion :: 57 Bond tea pack of 500 grams. At these fairs and exhibitions. (viii) Trading stamps: Trading or Bonus stamps are issued by retailers to customers who buy goods from there. 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. In these contests. they submit their names to be included in a draw of prize winners. the Trade Fair Authority of India organises Trade Fairs of various types in New Delhi. The National Book Trust organises World Book Fair. Fairs and exhibitions are organized usually by big firms or trade associations. fashion shows or parades. For instance. where publishers of all over the world are invited to display their publications. and quizzers. In Sweepstakes. They provide an opportunity to the visitors to observe the competing products and help to promote sales. (ix) Fairs and exhibitions: Trade shows. (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. Free literature can be distributed to introduce the firm and its products to the public. participants compete for prizes on the basis of their skill or creative ideas. It gives a temporary discount to the consumers. Fairs and exhibitions have wide appeal as several people visit there. fairs and exhibitions are important technique/tools of sales promotion. Customer can be attracted through gifts. For instance. This type of sales promotion is not a lottery because there is chance or luck. This technique induces customer to buy their requirements from the retailers who offer such stamps. in India Roman Bonus Stamps are issued at the rate of 2-1/2 percent of the purchase amount. The purpose is to increase customer loyalty. special concessions and free demonstrations of technical and speciality products. .

g. (x) Public relations activities: These include greetings or thanks in newspapers. 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. example. They are designed to create a good image of the firm in the society. e. 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. Retail demonstrations: These are arranged by manufactures preparing and distributing the products as a retail sample. Display reaches consumers when they are buying and actually spending their money. Their purpose is not to create immediate demand or to increase sales. 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. 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). etc. depending on one’s view point. for for for the (ii) (iii) Trade deals: These are offered to encourage retailers to give additional selling support to the product..58:: Business Studies Producers of garments often organise fashion shows to promote their products. tooth paste sold with 30% to 40% margin. offer of Privileged Citizen Card. donating space for noble causes. Buying allowance: Sellers give buying allowance of a certain amount of money for a product bought.

are common free deals. Sales promotion devices at the point of purchase inform. Price-off gives a temporary ___________ to the consumers. and stimulate buyers to purchase products. posters. Producers of garments often organise ____________ shows to promote their products. or two pieces free with 10. remind.g. (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.Sales Promotion :: 59 resale opportunity. mechanised signs are other point-ofpurchase displays.. Retail demonstrations are supplied by manufactures for preparing (iii) (iv) (v) . Training for salesmen : Dealer and distributor training for salesmen. 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. (vi) Free goods : Seller gives free goods. Dealer sales promotion provides the selling devices. describing in detail the features of the product and its unique selling points. (x) Intext Questions 24. (viii) Contents : Sales contests are held for salesmen. which may be provided to give them a better knowledge of a product and how to use it. (vii) Advertising and display allowance : These are also offered to retailers to popularise the product and brand name of the manufacturer. top racks. one piece free with two. Counter. People who see these devices are in a buying mood and thus they can be easily persuaded to buy those products. e.

24. The purpose of sales promotion is to increase the sales and profits of the organisation / business house. Tools and programmes for consumers sales promotion: . 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. These are divided under two heads: (i) (ii) (1) Tools and programmes for consumers sales promotion. (vi) Budget allocation available. (iii) Nature and size of market. Fortors to be considered in developing the criteria: The following variables are considered in developing the criteria of sales promotion. Acceptability of the tool to be used. (iv) Stages in product life cycle.6 What you have learnt: Sales promotion includes all those activities which help to promote/increase sales except advertising. personal selling and publicity. Tools and programmes for dealers/distributors sales promotion. (vii) Government regulations. (ii) The buyer. (i) Kinds of product. (v) Management policy. (i) (ii) Cost of reaching an audience member.60:: Business Studies and distributing the products as retail_____________. Sales promotion tools and programmes: Sales promotion techniques are known as sales promotion tools and the mode of their implementation is known as programme.

. Explain the factors to be considered in developing these criteria. 2. 2. 5. State any two basis of setting sales promotion objectives. (vii) Advertising and display allowance. (iii) Trade deals. State any two purpose of sales promotion. (vi) Contest or quizzes.7 Terminal Exercise: 1. 3. (x) Public relation activities. State the object of providing training for salesmen. Explain the nature of product as a variable considered for developing sales promotion criteria. (ix) Fairs and exhibitions. 3. (ii) Retail demonstrations. What are the criteria for setting the objectives of sales promotion.. Short Question: 1. (vi) Free goods. 4. Explain various sales promotions tools and programmes for dealer/ distributor sales promotion. Describe the purpose served by sale promotion Explain briefly the objectives of sales promotion. Explain sales promotion. (viii) Trading stamps. 24. 4. Explain various sales promotion tools and programmes for consumers’ sales promotion. 5. Define sales promotion tool and programme. (iv) Buying allowance. (v) Buy-back allowance. (viii) Contests. (xi) Exchange schemes. (vi) Price-off. (2) Tools and programmes for dealer/distributor sales promotion: (i) Free display. (ix) Dealers loader.Sales Promotion :: 61 (i) Sample (ii) Demonstration or instructions (iii) Coupon (iv) Money-refund orders (v) Premium (gift) offers. (x) Training for salesmen.

1 (i) Publicity (iv) Personal 24. (ii) Price (v) Sample (iii) Discount (iii) Market .62:: Business Studies 24.2 (i) Product (iv) Fashion (ii) Consumers (v) Objective.8 Answer to Intext Questions: 24.