MODULE 4

SALES PROMOTION
Effective promotion is a key component of the marketing mix. It is the
element that helps firms to attract customers, persuade them to buy, and
generate loyalty.
Components of Promotion Mix
1. Advertising
2. Publicity
3. Personal selling
4. Direct marketing
5. Sales promotion and
6. Public relations
The various elements of promotion mix are described below;
1. Advertising
Advertisement is a form of paid communication used to persuade the
target market to take some action with respect to products, ideas, or
services. Advertisements are made through various media including both
print and electronic media such as newspapers, magazines, television,
radio and websites.
2. Publicity
Publicity can be simply defined as no cost (free) advertisement. It is a
non-paid form of promotion. In this type of promotion, firm uses media to
publish news coverage (Features, Articles, Editorials, Stories and
Documentaries) about its products.
Publicity differs from advertising in the following ways;
1) There is no cost involved in publicity. It is totally free.
2) Publicity is more credible and more likely to have an impact on the
readers, listeners or viewers.
3. Personal Selling
Personal selling is oral communication with potential buyers of a product
with the intention of making a sale. It is the oldest form of product
promotion. It helps and encourages customers to purchase goods through
the use of oral presentation.
4. Direct Marketing
Direct marketing is a channel free approach in marketing communications.
In this type of promotion, a company deals with its customers directly
without the help of any intermediaries. For example, banking services, tele
marketing, internet marketing etc.
5. Sales Promotion
Sales promotion is the process of persuading a potential customer to buy
the product.It attempts to provide added values or incentives to
consumers, wholesalers, retailers and customers to promote immediate
sales.

6. Public Relations (PR)

The purpose of public relations is communication intended to earn public
understanding and acceptance by stressing the practices, policies, and
procedures of the organisation.

Sales Promotion
Sales promotion is the key ingredient of promotion mix. It includes several
communications activities that attempt to provide added values or
incentives to consumers, wholesalers, retailers and customers to promote
immediate sales.
Sales promotion is any initiative undertaken by an organisation to promote
an increase in sales. It has been developed to supplement and co-
ordinate advertising and personal selling efforts of a firm.
Definitions
“sales promotion consists collection of diverse incentive tools mostly for
short term designed to stimulate quicker and/or greater purchase of a
particular product by consumers and traders.
Features of Sales Promotion
sales promotion has 3 distinctive characteristics. They are;
1. Communication: Sales promotion usually provides information
that may lead the customer to the product.
2. Incentive: It incorporates some concession, inducement, or
contribution that gives value to the consumer.
3. Invitation: It includes a distinct invitation to engage in the transaction
immediately
The following are some of the salient features of sales promotion;
1. It is a set of inducements offered by a firm to promote immediate sales.
2. It may be offered directly to the customers or through middlemen.
3. It does not include personal selling, advertisement and publicity.
4. It is usually offered for a short period of time.
5. It focuses on a small group of consumers.

Objectives of Sales Promotion

1. Building product awareness
In the situations of new product introduction, sales promotion techniques
are used to create awareness among the consumers about the product.
2. Immediate increase in sales
Advertising, personal selling and other methods of promotion produce
slower sales response compared to sales promotion.This creates an
immediate positive impact on sales.

3. Competitive advantage
Due to increase in competition, companies are finding it increasingly
difficult to compete on quality. They are therefore resorting to more
innovative methods of sales promotion in order to have an advantage over
its competitors.
4. Strengthen the brand image
Sales promotion techniques are used by organisations to create a distinct
image for their brands in the target market. Thus, sales promotion
strengthens the brand image.
5. Attracts customers
Sales promotions are very effective in creating interest in a product.
Appealing sales promotions increase attraction of the consumers to the
products.
6. Motivation of the existing customers
The most important use of sales promotion is to build demand by
convincing customers to make a purchase.
7. Reinforcing the brand
Once customers have made a purchase, sales promotion can be used to
both encourage additional purchasing and also as a reward for purchase
loyalty. Sales promotion is used to reinforce the brand in the market.

Scope of Sales Promotion

Sales promotion plays a vital role in inducing the consumer to buy your product.
Sales promotion work includes all those activities, which are directed towards
promoting sales. In short, sales promotion is any activity, which improves the
effectiveness of personal selling and advertising.
There are three categories of sales promotion;
1. Trade oriented promotions
They are directed to the members of the distribution channel. The
objectives of Trade Oriented Sales Promotion are to obtain distribution for
new products, maintain trade support for established brands and
encourage retailers to display brands.
2. Consumer oriented promotions
They are aimed at consumers. The major objectives are inducing people
to buy the product and make repeated purchases, increasing the
consumption of the brand, retaining current customers and attracting new,
targeting a new market and supporting the advertising and marketing
efforts of the company.
4. Sales force promotions
They are aimed at the sales personnel. They are intended to motivate
sales people to put in more efforts to increase sales. Sales
force promotions are meant to prepare the sales people to do their jobs
effectively. Importance of Sales Promotion
Sales promotion is an important component of the marketing programme.
It can be a specific tool of the promotion. Quality sales promotion is
important for consumers, producers, middlemen and the society.
1. Importance to consumers 2. Importance to producers 3. Importance to
middlemen
1. Importance to Consumers
1) Consumers get new products because the manufacturers are
encouraged to introduce new products in the market with the help of sales
promotion.
2) Sales promotions offer various incentives like rebates & free discounts,
free samples to consumers.
3) Various incentives contents samples, demonstrations, fair and
exhibitions create thrill and joy in the life of consumers.
4) Provides higher standard of living to consumers.

2. Importance to Producers
1) Sales promotion attracts consumers and stimulates them to
make larger purchases.
2) Sales promotion makes the advertisement and other media activities
more effective to achieve the sales largest these give pulling power to
ads.
3) It is an effective step to face the competition.
4) It helps in increasing the demand of new products.
5) It helps in maintaining existing customers.
6) It increases goodwill of the firm.
3. Importance to Middlemen
1) It facilitates longer sales.
2) Through sales promotional plans, manufacturers provide various types
of helps such as rebates, trade discounts, gifts, rewards to dealers.
3) Good relationship between the dealers & the customers are established
through the sales promotion techniques.
Role of Sales Promotion
1. It popularises goods and services of the producer among the target
consumers and motivates them towards larger purchases.
2. Maintains the sales up to normal level even during seasonal vacations
& during the declining stage of product life cycle.
3. Increases the goodwill of the firm.
4. Simplifies the efforts of sales force and motivates them for larger
purchase.
5. Stimulates maximum sales on special occasions and festivals.
6.Acts as tool to overcome competition.
Advertising Sales promotion
1. It uses a variety of pers-uasive It offers several incentives to the
appeals to influence the customers. consumers to buy the product.
2. A reason is offered to buy a An incentive is offered to buy a
product or service. product or service.

3. The primary objective is to create The objective is to get quick sales

a long lasting brand image.
5. Time-frame of advertising is
long term.
6. It tries to attract the ultimate
consumer.
of products.
Time frame is short-term.
It tries to attract not only consumers
but retailers, wholesales and sales
 force.

Methods and Techniques of Sales Promotion

1. Consumer promotion techniques 2. Trade promotion techniques
3. Salesforce promotion techniques
1. Consumer Promotion Techniques
1) Couponing
It is a scheme of distributing discount coupons to the customers. Coupons
are paper offers that are available in magazines and newspapers, may be
downloaded from the internet or are available at the point-of-purchase and
entitle the recipient to a reduction in price for a product or service.
2) Sampling
It refers to offering free product samples to consumers for trial It refer and
use. Sampling provides the consumer with the opportunity to use the
product by giving a free small portion of the product for the consumer to
test.
3) Rebates
They are money-back offers requiring a buyer to mail in a form requesting
the money back from the manufacturer rather than from the retailer.
4) Gifts/Free offer
In this scheme, customers are entitled to get gifts while purchasing a
brand.
5) Price cuts/Price-off offers
It refers to a reduction in the regular price of a brand for a short span of
time.
6) Quantity-off offers
It refers to offering more quantity of a product at the regular price.
7) Consumer contests and lucky draws
In the case of contests, consumers are invited to participate in competitors
and the winners are given special gifts. Lucky draw is a play based on the
luck factor.
2. Trade Promotion Techniques
Trade promotion techniques are directed towards dealers and other
middlemen involved in marketing.
The most common types of trade promotion techniques are;
1) Buying allowance
Special allowances offered to dealers to motivate them to purchase a new
product.
2) Buy back allowance
It is an agreed sum of money offered by the firm if the dealer returns the
product. This is to encourage re-stocking (fresh purchase) by the dealers.
3) Merchandise allowances
These allowances are offered to meet the promotional expenses incurred
by a dealer in connection with the sale of a brand.
4) Bulk discount
It refers to reduction in price offered to a dealer for purchasing the product
in large quantities.
5) Gifts, awards and cash prizes
Dealers who have attained success in achieving the target sales fixed by
the company are honoured by giving awards, gifts and cash prizes.

3. Salesforce Promotion Techniques

In this type of promotion, special incentives are given for the sales
personnel. The most common types of sales force promotion techniques
are as follows;
1) Bonus to salesforce
Sales personnel are issued bonus on the basis of a sales target.
Salesmen achieving this target are eligible to get the bonus.
2) Gifts
Salesmen will be given gifts for inducing them to boost the sale of
the product.
3) Salesforce meet
Sales force meet will be organised by the companies to educate and train
the salesmen to promote the sales of the product.

Sales Promotion Strategies

1. Push strategy 2. Pull strategy and 3. Combination strategy
1. Push Strategy
A push sales promotion strategy involves pushing distributors and
retailers to sell the products of a firm to the consumer by offering various
kinds of promotions and personal selling efforts. In this strategy, a
company promotes its products to a dealer who in turn promotes it to the
retailer or to the consumer.
2. Pull Strategy
A pull sales promotion strategy concentrates on the consumers instead of
the middlemen involved in marketing. This strategy offers discounts and
other benefits to the consumers so as to encourage them to purchase a
brand.
3. Combination Strategy
A combination sales promotion strategy is a mixture of a push and a pull
strategy. It focuses both on the middlemen as well as the consumers.

Evaluation of Sales Promotion Strategies

Companies evaluate the effectiveness of sales promotion strategies
based on the sales volume and the costs of sales promotion. They
analyse the brand awareness by performing customer surveys. In the long
run, a successful sales promotion improves sales and profits.
The important ways of evaluating the effectiveness of sales promotion
strategies are as follows;
1. Sales Evaluation
A comparative evaluation of the volume and turnover of sales before the
adoption of sales promotion strategies and after the sales promotion
strategies helps firms to understand the effectiveness of the sales
promotion strategies. If there is considerable difference in the sales of the
two periods, then the sales promotion strategies are effective.
2. Profit Evaluation
Comparative analysis of the amount and rate of profit before and after the
implementation of sales promotion strategies helps to evaluate the
effectiveness of the sale promotion strategies. The sales promotion
strategies are considered effective when the additional profits generated
are more than the cost of sales promotion.
3. Evaluation of Brand Awareness
Understanding the increase in brand awareness is another important
method for evaluating sales promotion strategies. If the customers have
high brand awareness after sales promotion campaigns, then the sales
promotion programmes implemented by the firm is considered effective.
Advantages of Sales Promotion
1. It helps companies to make an immediate increase in their sales
volume.
2. Consumers get lot of incentives and inducements without paying more
on a product.
3. Consumers get the product at a cheaper rate.
4. It gives the consumers a reason to buy a particular brand compared to
other brand.
5. Companies can dispose off their existing stock easily
6. Different sales promotion schemes and incentives help to retain
customers.
7. Sales promotion helps firms to sell additional products along with the
brand.
8. Sales promotion can be used to easily clear the stock in situations
where product replacement is needed
9. Compared to other types of promotion, most of the sales promotion
techniques can be quickly created and made available within a market.
10. When compared with advertising and personal selling, sales
promotion activities are less expensive.

Drawbacks of Sales Promotion

1. Sales promotion measures are usually offered for a short period
of time.
2. Lack of support from middlemen involved.
3. Consumers may suspect the quality of the product.
4. Repeated and overuse of sales promotion strategies reduce the trust
among the customers related with the brand.
5. Consumers may postpone their purchase decisions in anticipation of
incentives and discounts from the dealers and companies.
6. There is a tendency to use the same method of sales promotion by all
the firms at the same time.
Preparation of Sales Promotion Budget
1. Percentage of sales method
The method is most popular among companies. In this approach, the
budget is determined by taking a fixed percentage of sales.This
percentage could also be based on the forecasted sales of the year under
consideration.
2. Unit of sales method
This method is commonly used by companies dealing in highpriced
products, generally consumer durable goods such as refrigerators,
washing machines and many other items. Instead of rupee value of sales,
as in the percentage of sales method, the base is the physical volume of
either the past or anticipated sales.
3. Competitive parity method
Many marketers match or base their sales promotion budget to that of the
major competitors. This method evaluates the sales promotion strategies
of the competitors to prepare the sales promotion budget.
4. Affordable method
In using this approach to budget allocation, the amount that is leftover
after all other relevant allocations have been made, is allotted for sales
promotion. This approach is used, generally, by companies with small
budget.
5. Objective end task method
Objective end task method is driven by strategy. The promotion manager
starts by making a thorough study of the market, the product, competition
and consumer behaviour in consumer behaviour in order to set up
appropriate promotion objectives.
Sales Promotion Campaign
Sales promotion campaigns are organised to stimulate quicker or greater
purchase of particular products or services by consumers.
A sales promotion campaign aims at three important goals;
1. The promotional message reaches the targeted audience.
2. The message is understood by the audience.
3. The message stimulates the recipients to take action.
Steps in a Sales Promotion Campaign
The following are the major steps in developing a successful promotion
campaign;
1. Assessment of marketing opportunities
The firm has to first examine and understand the needs of its target
market. This will help the firm to calculate future sales needs.
2. Defining the promotion objectives
Promotional objectives should be stated in terms of long or shortterm
behaviours by people who have been exposed to the promotional
communication. These objectives are to be clearly stated on the basis of
different phases of market development (Introduction, Growth, Maturity
and Decline).
3. Deciding the promotion mix
The information derived obtained from the assessment of narketing
opportunities will assist a firm in deciding the promotion mix to be used.
4. Formulating the sales promotion strategies
In this stage, the firm has to focus on the sales promotion strategies to be
followed. The strategy may be push strategy, pull strategy or a
combination strategy.
5. Designing sales promotion schemes
The firm has to develop sales promotion schemes in accordance with the
sales promotion strategy adopted. If it is a push strategy, schemes must
be devised to induce distributors and retailers to sell the products.
6. Developing the promotion budget
The firm has to determine the total promotion budget. This involves
determining cost per market and promotional mix elements. By breaking
down these costs the firm will get a better idea on measuring the success
potential of the campaign.
7. Execution of the campaign
In this phase, the firm implements the sales promotion campaign. The
campaign should be implemented effectively to attract the customers. An
effectively implemented sales promotion campaign yield a faster and an
efficient response in sales than other promotion tools.
8. Evaluation of the campaign effectiveness
After the implementation of the sales promotion campaign, the firm has to
measure its effectiveness. Firms use different methods to measure sales
promotion effectiveness. The most common method is to compare sales
before, during and after a sales promotion campaign.
Sales Promotion and Brand Equity
Sales promotion is used to create a temporary stimulus on the sales of a
brand by making consumers a special offer. But another major objective
of sales promotion is to lead consumers through the process of generating
brand awareness, brand associations, positive attitudes and positive
behaviors.Companies can create brand equity! for their products by
making them memorable, easily recognisable and superior in quality and
reliability. Sales promotions result in positive or negative influence on a
brand.
Positive Effects of Sales Promotion on Brand Equity
1. It increases the awareness of a brand among the consumers.
2. Consumers develop value and perceptions of a brand on the basis
of the strength of sales promotion campaign. If they see the offer as highly
favourable, then it may strengthen the relationship between the
consumers and the brand.
3.Sales promotions can develop meaningful points of difference to the
brand and associations to particular brands.
Negative Effects of Sales Promotion on Brand Equity
1. If a company follows huge sales promotion efforts in establishing a high
brand image for a low quality product, then consumers may perceive it as
a substandard brand.
2.Frequently conducted sales promotions can lead consumers to buy the
brand at discounted prices. Consumers will be unwilling to buy the brand
at its earlier (pre-promotion) prices. This may ! lead to a situation of
permanent cut in the price of a brand.
3.Consumers may reduce or stop their purchases of the brand following
frequent sales promotions as the brand may lose its Popularity due to
excessive promotions.