Sales promotion

Introduction: “Sales promotion includes incentive-offering and interest-creating activities which are generally short-term marketing events other than advertising, personal selling, publicity and direct marketing.The purpose of sales promotion is to stimulate, motivate and influence the purchase and other desired behavioral responses of the firm’s customers.” Sales promotion offers a direct inducement to act by providing extra worth over and above what is built into the product at its normal price. These temporary inducements are offered usually at a time and place where the buying decision is made. Not only are sales promotions very common in the current competitive market conditions, they are increasing at a fast pace. These promotions are direct inducements. In spite of the directness, sales promotions are fairly complicated and a rich tool of marketing with innumerable creative possibilities limited only by the imagination of promotion planners. Sales promotion is often referred to by the names of ‘extra purchase value’ and ‘below-the-line selling'. 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 Sales promotion is an important component of a small business's overall marketing strategy, along with advertising, public relations, and personal selling. The American Marketing Association (AMA) defines sales promotion as "media and nonmedia marketing pressure

increase consumer demand. Sales promotion acts as a competitive weapon by providing an extra incentive for the target audience to purchase or support one brand over another. resellers. the stage of the product in its life cycle. selling effectiveness. contests." But this definition does not capture all the elements of modern sales promotion. In determining the relative importance to place on sales promotion in the overall marketing mix. the nature of competition in the market. One should add that effective sales promotion increases the basic value of a product for a limited time and directly stimulates consumer purchasing. and rebates. sweepstakes. sales promotion usually operates on a shorter time line. Businesses can target sales promotions at three different audiences: consumers. a small business should consider its marketing budget. Some common types of sales promotion include samples. publicity. and personal selling). or the effort of the sales force. trade shows. It is particularly effective in spurring product trial and unplanned purchases. and they use sales promotion to change this price-value relationship by increasing the value and/or lowering the price. or improve product quality. uses a more rational appeal. returns a tangible or real value. and the . price-off deals.applied for a predetermined. Compared to the other components of the marketing mix (advertising. premiums. It can be used to inform. in-store displays. and the company's own sales force. limited period of time in order to stimulate trial. persuade. and contributes highly to profitability. and remind target customers about the business and its marketing mix. the target of the promotion. coupons. Most marketers believe that a given product or service has an established perceived price or value. fosters an immediate sale.

Product managers also tend to view sales promotion as a way to differentiate their brand from that of competitors in the short term. Growth of Sales Promotion: Sales promotion has grown substantially in recent years. First. expensive items that might require handson demonstration. sales promotion can be an effective tool in a highly competitive market. There are several reasons for this dramatic growth in sales promotion. sales promotion and direct mail are particularly attractive alternatives when the marketing budget is limited.nature of the product. when mass advertising to build awareness might be more important. the emergence of computer technology has enabled manufacturers to get rapid feedback on the results of promotions. In addition. sales promotion tends to work best when it is applied to impulse items whose features can be judged at the point of purchase. Second. the increasing tendency of businesses to focus on short-term results has helped spur growth in sales promotion. Third. Similarly. sales promotion is often used in the growth and maturity stages of the product life cycle to stimulate consumers and resellers to choose that product over the competition—rather than in the introduction stage. as it is for many small businesses. rather than more complex. Redemption rates for . It provides reluctant decision makers with an incentive to make choices by increasing the value offered by a particular brand. Finally. which can provide an immediate boost in sales. when the objective is to convince retailers to carry a product or influence consumers to select it over those of competitors. consumers have accepted sales promotion as part of their buying decision criteria. For example.

coupons or figures on sales volume can be obtained within days. • Incentive: They incorporate some concession. Historically. With consolidation and the growth of major retail chains. creating a demand for the heavily advertised brands that stores could not afford to ignore. Many sales promotions are designed to provide benefits to the retailers. or contribution that gives value to the consumer. Finally. Characteristics of sales promotion: “They have 3 distinctive characteristics.” • Communication: They gain attention and usually provide information that may lead the customer to the product. an increase in the size and power of retailers has also boosted the use of sales promotion. inducement. the manufacturer held the power in the channel of distribution. retailers have gained the power to demand incentives from manufacturers to carry their products. however. Mass marketers utilized national advertising to get directly to consumers. • Invitation: They include a distinct invitation to engage in the transaction now (offer valid till …or till stocks last) Objectives of sales promotion: To influence the customer for purchasing the product or service instantly because the sales promotion time is very limited and if the .

• • • • • • • To introduce new product To attract new customers To face the competition effectively To maintain old customers To improve public image of the firm To popularize the brand name of the product To induce customer to purchase more items Principles of sales promotion: The promotional program should proceed in the light of the pretest experiences. Sales Promotion Evaluation: In order to accomplish the activity of measuring the results in any area of business activity related to the objectives for sales promotions . they may lose the offer. Result must be evaluated at the end of exercise. Clear objects must be ascribed to the campaign.customer does not respond to it quickly. There should be some pre testing in order to check that proposed method is likely to attain the desired result. The most effectively of attaining these objectives must be throughout and selected. It increases the sales directly by publicity through media that are complementary to the press and poster advertising.

Another approach. A portfolio of sales promotion is prepared and shown to consumers in person and the responses are noted. For Example it is very easy to measure sales effect before sales promotion activities. They are requested to evaluate different illustrated promotion is and vote for the most right and return the ballot to the firm. such as trial purchase. during these activities and post sales promotion activities. For these cases there are not many complexities as a number of objectives as sales based techniques can be used with relative ease. the reseller support is important and can have significant effect on marketer's promotion performance. A customer considers whether it would be wise to buy an unknown brand of sport shoes at a 45% discount. measurement is more difficult. In this offer was there a risk of buying an unfamiliar brand? The pre-test can be conducted to assess these factors by using focus groups and consumer panels. or changing consumer awareness and attitude as resultant increase and perceived value of the product.evaluation criteria's are laid down to implement the sales promotion programme. . Pre-testing: How sales promotion is to be communicated and what would be communicated to the target groups is important and can be pretested. For example the pre-tested may find out what is likely to be the perceived value and the risk. Many of which are directly related to sales. In case of objectives not related to sales. ballot Method consists of kneeling a ballot paper to a list of consumers. A relatively expensive but more accurate method is a portfolio test. In certain types of promotion.

All other factors remain the same. Concurrent testing permit the promotion manager to modify the sales promotion. Post-testing: Post-testing is done after the promotion period is over. repeat purchase.To test consumers behaviour responds such as trial purchase. telephone calls. To assess the changing consumer awareness and attitude. This type of testing is conducted in terms of sales data which can be obtained on a weekly or monthly basis. If the promotion is a consumer contest and the consumer is not require to purchase anything. if needed. the contest period can be extended. the response to promotion can be adjudged by the number of entries received at some interval and if need be. The simplest ways to visit several important retailers and wholesalers discuss the programme and seek their opinion and suggestions. pretesting consists of experimenting in certain markets for individual stores in a market. etc. similar approach can be adopted by keeping track of coupons redeemed. It is often quite helpful to evaluate the responses of resellers before implementing the promotion programme. only the sales promotion device being tested is the variable that is manipulated. questionnaire mailed to the consumers and personal interviews can be used.. This may prove to be quite favorable in case the support of resellers is considered to be of paramount importance for promotion results. Concurrent testing: This testing is done when the sales promotion is in progress. In these methods. the most expensive is the personal interview . In case of a coupon distribution programme.

To measure the sales affect. The sales jumped to in excess of 5.5 million rupees. if the regular sales settle at 5. Advantages of Sales Promotion: Sales promotions have a significant effect on the behaviour of consumers and trades people. The information sought pertains to the promotion event. sales figures before the promotion period can be compared with figures at the end of promotion and one month after the promotion ends. then perhaps the sales jump is because of brand features and deal prone customers. Such promotions can bring in more profits for the manufacturers because they permit price discrimination.5 million rupees on the long run. In case of samples on premiums distributed through retail stores. This would show that the objective was achieved. then definitely the promotion prove successful in increasing the long run sales by attracting new customers and we have also attracted customers away from other competing brands last. 1. the sales will come down to say 3. intercept interviews at the Point of Sale can reveal more reliable information.6 million in the promotion period.method and the least expensive is the mail. It is very likely that in the ensuing month after the promotion. Suppose that the promotion objective was to increase sales by 30 percent in certain period and the pre-promotion sales for a similar period were worth 5 million rupees. Price discrimination: . However. In the sales return to 5 million rupees on the long run.

The Tamilian. arranged displays and offer attractive promotion deals to consumers. clearance sales and discounts are examples to explain the phenomenon. rational and looks up to film stars. Often such price discrimination are offered in specific cities in the country. Effect on trade behaviour: Short-term promotions present an opportunity and encourage dealers to forward buy. They can charge different prices to different consumers and trade segments depending on how sensitive each segment is to particular prices. These actions help in increasing the store traffic. consumer in particular. 2. The Bangalorean is as Cosmopolitan as his Mumbai or Delhi counterpart. This forward buying ensures that retailers won’t to go out of stocks. while the Keralite is more international in his outlook. Coupons. is value oriented. They are persuaded to act now rather than later. 4. Effect on consumer behaviour: As sales promotions are mostly announced for a short period. 3. As dealers have more than the normal stocks.Producers can introduce price discrimination through the use of sales promotions. customers may feel a sense of urgency and stop comparing the alternatives. special sales events. they think it advisable to advertise in local media. Regional Differences: The South is generally characterised by greater degree of going out and people tend to drink outside the house. Such factors have to be taken into consideration while providing incentives to the customers. .

and machinery. In addition. it is not a cure for a bad product. as each marketer tries to be more creative. or an inferior sales team. sales promotion activities may bring several negative consequences. including "clutter" due to the number of competitive promotions. more attention getting. for example. cleaning supplies. consumers and resellers have learned how to milk the sales promotion game. the product must then take over and convince them to become repeat buyers. Finally. or more effective in attracting the attention of consumers and the trade. In contrast. Consumer Promotions: Consumer sales promotions are steered toward the ultimate product users—typically individual shoppers in the local market—but the same techniques can be used to promote products sold by one business to another. trade sales promotions target resellers— . such as computer systems. poor advertising. short-term.Limitations of Sales Promotion: Although sales promotion is an important strategy for producing quick. Consumers may wait to buy certain items knowing that prices will eventually be reduced. positive results. while resellers have become experts at negotiating deals and manipulating competitors against one another. New approaches are promptly cloned by competitors. After a consumer uses a coupon for the initial purchase of a product.

however. usually do not induce first time buyers. Existing customers perceive discounts as rewards and often respond by buying in larger quantities. the retailer. they must have the support of all distributors in the channel. or purchase multiple units. including fliers and newspaper and television ads. Following are some of the key techniques used in consumer-oriented sales promotions. Buyers may learn about price discounts either at the point of sale or through advertising. For instance. Price Deals: A consumer price deal saves the buyer money when a product is purchased. where local supermarkets run weekly specials. .wholesalers and retailers—who carry the marketer's product. Many types of advertisements can be used to notify consumers of upcoming discounts. Price deals are usually intended to encourage trial use of a new product or line extension. or the distributor. or to convince existing customers to increase their purchases. on signs near the product. The main types of price deals include discounts. and coupons. a manufacturer may "pre-price" a product and then convince the retailer to participate in this short-term discount through extra incentives. Price discounts alone. or in storefront windows. At the point of sale. Price discounts are especially common in the food industry. refunds or rebates. price reductions may be posted on the package. accelerate their use. For price reduction strategies to be effective. bonus pack deals. Price discounts may be initiated by the manufacturer. to recruit new buyers for a mature product. Price deals work most effectively when price is the consumer's foremost criterion or when brand loyalty is low.

an extra amount of the product is free when a standard size of the product is bought at the regular price. to encourage customers to "load up" on the product. such as in toothbrush and toothpaste offers. Manufacturers sustain the cost of advertising and distributing their coupons. Sometimes the products are physically banded together. A bonus pack rewards present users but may have little appeal to users of competitive brands. A banded pack offer is when two or more units of a product are sold at a reduction of the regular single-unit price. redeeming their face values. They grant specified savings on selected products when presented for redemption at the point of purchase.Another type of price deal is the bonus pack or banded pack. and they appear to build brand loyalty rather than diminish it. food. stimulates the purchase of postponable goods such as major appliances. This strategy dampens competition by temporarily taking consumers out of the market. This technique is routinely used in the marketing of cleaning products. Retailers who offer their own coupons incur . Refunds aim to increase the quantity or frequency of purchase. and health and beauty aids to introduce a new or larger size. A refund or rebate promotion is an offer by a marketer to return a certain amount of money when the product is purchased alone or in combination with other products. When a bonus pack is offered. and paying retailers a handling fee. Retailers who offer double or triple the amount of the coupon shoulder the extra cost. and creates on-shelf excitement by encouraging special displays. Refunds and rebates are generally viewed as a reward for purchase. Coupons are legal certificates offered by manufacturers and retailers.

specialty retailers or newly opened retailers will distribute coupons door to door or through direct mail. dropped door to door. including paying the face value. compared to just $2. contests were more commonly used as sales promotions. mostly due to legal restrictions on gambling that many marketers feared might apply to sweepstakes. Administering a contest once cost about $350 per thousand entries. Coupons can be inserted into. participation in contests is very low compared to sweepstakes. . Furthermore. though. At one time. or distributed through a central location such as a shopping mall. But the use of sweepstakes as a promotional tactic has grown dramatically in recent decades. partly because of legal changes and partly because of their lower cost. Retailer-sponsored coupons are typically distributed through print advertising or at the point of sale.75 per thousand entries in a sweepstake. newspapers.75 to $3. Coupons may also be distributed through the media—magazines. attached to.the total cost. Contests / Sweepstakes: The main difference between contests and sweepstakes is that contests require entrants to perform a task or demonstrate a skill that is judged in order to be deemed a winner. since they require some sort of skill or ability. Sometimes. Manufacturers disseminate coupons in many ways. or they may be distributed by a retailer who uses them to generate store traffic or to tie in with a manufacturer's promotional tactic. In this way. Sunday supplements. or printed on a package. They may be delivered directly by mail. while sweepstakes involve a random drawing or chance contest that may or may not have an entry requirement. or free-standing inserts (FSI) in newspapers. retail coupons are equivalent to a cents-off deal.

In fact. Second. Many elements of event sponsorship are prepackaged and reusable. Incentives that are given for free at the time of purchase are called direct premiums. displays. First. Therefore. events tend to attract a homogeneous audience that is very appreciative of the sponsors. such as booths. compared to producing a series of ads. Premiums: A premium is tangible compensation that is given as incentive for performing a particular act—usually buying a product. large companies like RJR Nabisco and Anheuser-Busch have special divisions that handle nothing but special events. event management is relatively simple. Finally. Special events marketing is available to small businesses. and ads.Special Events: According to the consulting firm International Events Group (IEG). as well. plus there is no confusion about returning coupons or box tops. or may be offered to consumers for a significantly reduced price. through sponsorship of events on the community level. if a product fits well with the event and its audience. the impact of the sales promotion will be high. Some examples of premiums include receiving a prize in a cereal box or a free garden tool for visiting the grand opening of a hardware store. These offers provide instant gratification. Special events marketing offers a number of advantages. businesses spend over $2 billion annually to link their products with everything from jazz festivals to golf tournaments to stock car races. or saving bar codes or proofs of purchase. . event sponsorship often builds support among employees—who may receive acknowledgment for their participation—and within the trade. The premium may be given for free.

airlines' . Trading stamps. Mail premiums. The garden tool is an example of a traffic-builder premium—an incentive to lure a prospective buyer to a store. an electronics manufacturer might offer free software to an office manager who agrees to an on-site demonstration. A catalog listing the quantity of stamps required for each item was available at the participating stores. are prime examples.Other types of direct premiums include traffic builders. For example. and referral premiums. door openers. Continuity Programs: Continuity programs retain brand users over a long time period by offering ongoing motivation or incentives. An example might be a limited edition toy car offered by a marketer in exchange for one or more proofs-of-purchase and a payment covering the cost of the item plus handling. Continuity programs demand that consumers keep buying the product in order to get the premium in the future. a homeowner may receive a free clock radio for allowing an insurance agent to enter their home and listening to his sales pitch. The final category of direct premiums. require the customer to perform some act in order to obtain a premium through return mail. The stamp company provided redemption centers where the stamps were traded for merchandise. referral premiums. The premium is still valuable to the consumer because they cannot readily buy the item for the same amount. popularized in the 1950s and 1960s. Consumers usually received one stamp for every dime spent at a participating store. A door-opener premium is directed to customers at home or to business people in their offices. Similarly. Today. rewards the purchaser for referring the seller to other possible customers. unlike direct premiums.

frequent-flyer clubs. The most popular has been through the mail. either free or for a small fee. Another method is distributing samples in conjunction with advertising. But in order for sampling to change people's future purchase decisions. continuity programs also reduce the threat of new competitors entering a market. There are several means of disseminating samples to consumers. When competing brands have reached parity in terms of price and service. particularly when the items are bulky and when reputable distribution organizations exist. or even people. the product must have benefits or features that will be obvious during the trial. This method permits selective sampling of neighborhoods. but increases in postage costs and packaging requirements have made this method less attractive. or through retailers using special displays or a person hired to hand out samples to passing customers. retailers' frequent-shopper programs. Though this last technique may build goodwill for the retailer. An ad may include a coupon that the consumer can mail in for the product. continuity programs sometimes prove a deciding factor among those competitors. some . Direct sampling can be achieved through prime media using scratch-andsniff cards and slim foil pouches. dwellings. hotels' frequent-traveler plans. Sampling: A sign of a successful marketer is getting the product into the hands of the consumer. an effective strategy is giving a sample product to the consumer. particularly when a product is new or is not a market leader. or it may include an address or phone number for ordering. and bonus-paying credit cards are common continuity programs. Sometimes. An alternative is door-to-door distribution. By rewarding longstanding customers for their loyalty.

Such packages may be delivered at hospitals. Consumers like to make use of such occasions to buy larger quantities of such products. new parents. A final form of sample distribution deals with specialty types of sampling.Importance to Consumers • Increased Buying Confidence: Distribution of free samples is probably the fastest and best way through which manufacturers can push consumers to try a product. For instance. such as newlyweds. some companies specialize in packing samples together for delivery to homogeneous consumer groups. Once satisfied with the quality of the sample product. hotels.retailers resent the inconvenience and require high payments for their cooperation. or tourists. . • Reduced Rates: During promotional campaigns. or dormitories and include a number of different types of products. students. consumers become more confident about buying a new product. Advantages of Sales Promotion . companies offer their products at discounted rates.

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