SALES

PROMOTION
 DEFINATION
 “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.
 The aim of sales promotion is goal-oriented to achieve
sales/marketing objectives which are short-term and
immediate.
 Today we find companies in almost all sectors offering some
sort of a promotion scheme. These sectors range from
automobiles to beverages, from financial services to foods,
from household durables to services, from household
products to business products, from personal care to textiles
and apparel.
 Writing about sales promotion tools, Prof. Philip Kotler
observes – “they have 3 distinctive characteristics.”
 Communication: they gain attention and usually provide
information that may lead the customer to the product.
 Incentive: they incorporate some concession, incentives, or
contribution that gives value to the consumer.
 Invitation: they include a distinct invitation to engage in the
transaction now (offer valid till …or till stocks last)
 In fact the list of product categories using sales promotion is
ever-increasing, no matter what the product category, it
could be staples, impulse goods, emergency goods shopping
goods, speciality goods, unsought goods, industrial products,
or different types of services.
 Advertising Sales Promotions

By using a variety of persuasive appeals, it Besides giving reasons in the form of

offers reasons to buy a product or service. different appeals, they offer incentive to the
consumers to buy the product or service now.

Appeals are emotional or functional in nature Appeals are rational

Time-frame is long term Time frame is short term

The primary objective is to create an enduring To get sales quickly or to induce trial.
brand image

Indirect and subtle approach towards Direct in approach to induce consumers to

persuading customers to buy a product or buy a product or service immediately by
service temporarily changing the existing price-value
relationship of the product or service.
 REASONS FOR RAPID GROWTH
OF SALES PROMOTION
 Increasing Competition
 The air of change is gaining momentum after the
introduction of economic liberalisation.Due to increase in
competition, companies are finding it increasingly difficult to
compete on quality. They are therefore resorting to more and
innovative methods of sales promotion.
 Customers Have Become More Price Sensitive
 This increased price sensitivity is a direct result of rampant
inflation. Economic recession is likely to fuel this trend
further, as consumers and dealers become more sensitive
towards prices.
 Sales Promotions Generally Create An Immediate
Positive Impact On Sales
 Advertising, personal selling and other methods of
promotion produce slower sales response compared to sales
promotion. Sales promotions are mostly for short duration,
for a specified period, leading to a sense of urgency in
consumers to buy now. This creates an immediate positive
impact on sales. With careful planning, it would not be
difficult to measure the impact on sales volume and profit,
and see the consequences of running the promotion even on
weekly or daily basis.
 Products have become more standardised
 In many product categories, there is a proliferation of brands;
many of them are line extensions and me-too brands. Most brands
are being perceived by consumers to be more or less similar
within a given price range because of the inability of
manufacturers to develop truly differentiated products. Under
these circumstances, advertising messages are unable to strongly
influence the consumers’ perceptions and create brand franchise.
As a result of these perceptions of similarity among brands,
marketers have no way but to compete on the basis of extra
benefit offered through sales promotion. Competing companies
struggle to capture market share by using every tool likely to bring
sales success.
 Consumer Acceptance
 As competition intensifies and promotions reproduce, consumers
have learnt to earn the rewards of being smart shoppers. Over a
period of time, they have also learnt that brands on promotion are
not necessarily of lower quality.
 Woodland has a scheme of upto 50% off onWoodland shoes and apparel.
 This learning based on experience, gets transferred to
other product categories as well. Consumers have learnt
that promotions are being extended to many product
categories where such promotions were unheard of.
 Expectations Of Price Decrease
 With the entry of many different brands of consumer durable
products in the same product category, consumers anticipate that
the prices of durable goods will come down. This encourages them
to postpone their purchases. To speed up the purchase in this
segment of consumers, sales promotions are an effective and
attractive method. Consumers evaluate the incentives associated
with their purchase decision and are motivated to act now, rather
than wait for the anticipated decrease in price. The marketers
should ensure that the extra benefit is attractive enough to create a
sense of urgency in consumers.
 Samsung offers up to Rs. 8,000 off on exchanging an old
refrigerator for a new Samsung refrigerator
 Advertising Has Become More Expensive And Less
Effective
 All the advertising media have become quite expensive.
Audio-visual medium, which is considered as the most
effective for short-duration ads, may cost in excess of Rs. 1
lakh for a 10 second exposure during prime time. In many
cases, consumers have reached a point of boredom due to
excessive advertising on TV.
 Some consumers even consider advertising as an intrusion
into their privacy, leading to zapping (surfing channels).
Firms with small budgets cannot compete with big
companies which spend huge sums of money on advertising.
For these small budget firms, sales promotion is a more cost-
effective promotion method to produce sales results.
 Trade Has Become More Powerful
 Retailers and wholesalers have become powerful and find
themselves in a position to demand extra facilities from the
companies.
 They Channel members demand more incentives to get the
desired results.
 Manufacturers do not seem to have any alternatives but to
concede to their demands, keeping in view the competitive
market conditions.
 Pepsi offers silver coins to their dealers stocking Pepsi
cases during Diwali season. And the promotions offer
differs across dealers
 Emphasis On Sales Volumes
 Towards achieving the long-term profit goals, manufacturers
try to attain high sales volume.
 Brand managers and product managers find themselves under
pressure to achieve short-term sales results for the sake of
their careers.
 Compared to any other promotional method, sales
promotion is a more effective method to generate short-term
sales volume.
 Sales Promotions Maximise Profits
 A number of economic theories conclude that a company can
maximise profits by using sales promotion.
 Such promotions can permit price discrimination by allowing
the brand to compete in 2 or more different market
segments.
 Sales promotion may allow a premium brand to compete
with a lower tier brand among price sensitive consumers.
 For example, a premium band of toilet soap may be on
promotion in some price sensitive markets, while in the
remaining markets it is sold at its normal price.
 Introducing An Element Of Interest
 There are a number of promotions which are often called
interest promotions.
 Some of the more popular interest promotion techniques are
samples, contests, and sweepstakes, free premiums and mail-
in premiums.
 These promotions create an element of interest and
excitement, and consumers enjoy these and response
enthusiastically to such contests and sweepstakes, etc.
 Fevicol had recently launched a contest in which one had
to choose 3 Fevicol ads which they considered the best,
and then complete a slogan ‘I like Fevicol ads because…’
 Impulse Buying Is Increasing
 The number of marginal customers is increasing. Displays at
the point of purchases lead to impulse buying by consumers,
more so if the items on display are not expensive.
 There is a popular saying in Hindi, “jo dikhta hai, voh bikta hai.”
 This strategy is followed by soft drink majors like Pepsi and Coke on
a large scale.They pay huge sums of money to keep their products in
front so that they are visible.
 These are also known as display promotions
 Sales Promotion Specialists Are Available
 As a result of economic liberalisation, the number of
management institutions has increased.
 This has lead to the availability of specialists, who are not
only well paid but can handle this specialised work more
efficiently in the current market conditions, where sales
promotion has become more important.
 Excess Stocks
 Because of increasing number of brands, it is difficult for
manufacturers and dealers to anticipate future sales.
 This, at times, leads to excessive inventories, and the
quickest way to clear that, is to go for sales promotion.
 Footwear companies like Bata,Woodland, etc regularly
offer around 50% discount on
 ADVANTAGES OF SALES
PROMOTION
 Price discrimination
 Producers can introduce price discrimination through the use
of sales promotions. They can charge different prices to
different consumers and trade segments depending on how
sensitive each segment is to particular prices.
 Coupons, special sales events, clearance sales and discounts
are examples to explain the phenomenon.
 Often such price discrimination are offered in specific cities
in the country,
 Bajaj Auto Ltd. started the scheme on 20th august 2001,
where by if you buy a Bajaj Spirit two-wheeler you get
Rs.3000/- off, valid only in Ahmedabad.
 Effect on consumer behaviour
 As sales promotions are mostly announced for a short period,
customers may feel a sense of urgency and stop comparing
the alternatives. They are persuaded to act now rather than
later.
 With every 500g pack of Tang, you get a free Tang glass. Offer valid
only till stocks last.
 In our over communicated society and because of selective
attention, it is not uncommon to ignore many
advertisements. Sales promotion deals such as discounts,
debates, coupons, premiums, etc also increased the attention
getting power of advertisements and convey the advantages
and benefits of the brand, including price information. By
using promotions, marketers can reach the deal prone
customers and encourage brand switching.
 Effect on trade behaviour
 Short-term promotions present an opportunity and
encourage dealers to forward by. This forward buying ensures
that retailers won’t to go out of stocks. As dealers have more
than the normal stocks, they think it advisable to advertise in
local media, arranged displays and offer attractive promotion
deals to consumers. These actions help in increasing the store
traffic.
 Retailer promotion: Buy Cadbury’s products worth Rs.3000/- and
get any 30 chocolates worth Rs.5 each free.
 Buy a box of Munch and get 1 Munch free
 Regional Differences
 The South is generally characterised by greater degree of
going out and people tend to drink outside the house. The
Tamilian, consumer in particular, is value oriented,
rational and looks up to film stars, while the Keralite is
more international in his outlook. The Bangalorean is as
Cosmopolitan as his Mumbai or Delhi counterpart."
 DISADVANTAGES OF SALES
PROMOTIONS
 Increased price sensitivity
 Frequently promoted brands in the product category,
especially on the basis of price, make consumers and traders
more price sensitive not only for the promoted brands but
for other brands as well in the same product category.
 Consumers wait for the promotion deals to be announced
and then purchase the product.
 This is true even for brands where brand loyalty exists.
Customers wait and time their purchases to coincide with
promotional offers on their preferred brands.
 Quality image may become tarnished
 If the promotions in a product category have been rare, or
the product happens to be of high involvement category, the
promotions could have a negative effect about its quality
image.
 Consumers may start suspecting that perhaps the product has
not been selling well, the quality of the product is true
compared to the price or the product is likely to be
discontinued because it has become outdated.
 Dealers forward buy and divert stocks
 In case of deals for the trade, many dealers forward buy, in
excess of their inventory requirements.
 This is particularly happens if a product is low bulk, much in
demand and the inventory holding costs are favourably low.
This is true both for wholesalers as well as retailers.
 Forward buying of excessive stocks on deals or quantity
discounts can lead to diversion of some of the stocks in non-
deal areas.
 Wholesalers and retailers do not hesitate in selling these
excess stocks in non- deal areas on prices that are less than
the list price, but keeping some reasonable margin for
themselves.
 This is likely to have a negative effect on price discrimination
efforts of the company as dealers and those areas would not
be buying even the normal requirements from the company.
 Merchandising support from dealers is doubtful
 One of the trade promotions tool is to offer promotional
allowances to trade people to motivate them to provide
merchandising support and to pass on some benefit to
consumers.
 This generally is the condition attached with such
promotional allowances.
 In many cases, the dealers do not cooperate in providing the
merchandising support nor do they pass on any benefit to
consumers.
 The retailer might not be willing to give support because he
does not have the place, or the product does not sell much in
his shop, or may be he thinks the effort required is more than
the commission/benefit derived.
 Short-term orientation
 Sales promotions are generally for a short duration. This
gives a boost to sales for a short period.
 This short-term orientation may sometimes have negative
effects on long-term future of the organization.
 Promotions mostly build short-term sales volume that is not
maintained. Heavy use of sales promotion, in certain
product categories, may be responsible for causing brand
quality image dilution.
 The argument given in favour is that companies should
develop superior products or services which are better than
competitors and consumer should be convinced through
appropriate and focused advertising about the superiority of
the product and its image. .
 This will result in lasting brand identities reflecting consumer
values. Then there will be no need to offer any extra
benefits; only the lasting brand image will keep customers
loyal to the brand
 PULL AND PUSH STRATEGIES
 Sales promotion decisions are significantly affected by
whether the company decides to do to pull or push strategies
to accomplish its objectives.
 Such a decision may require a little or a lot of cooperation
from resellers.
 The requirements to implement one strategy might be little
more than to just stock the product by the retailers. The
other strategy may demand more participation from resellers
such as the ability to explain to the consumers as to how a
product works.
 In case of using a pull strategy, marketing efforts are
directed at the ultimate consumer and consumer promotions
such as consumer contests and sweepstakes, rebates,
coupons, free samples, consumer premiums, etc are used.
 If this strategy is also chosen to include advertising, there are
large advertising expenditures.
 The objective of such promotional efforts would be to create
sufficient consumer demand to pull the product through the
channels, that is the consumers are encouraged to demand
the product from retailers who in torn place orders with
wholesaler or manufacturer to meet the consumer demand
 Bajaj Auto Ltd. offered a scheme of taking home a scooter at Rs
999 was a sales promotional offer communicated through effective
advertising and was essentially a pull strategy.
 A pull strategy is appropriate when
 The product demand as high.
 It is possible to differentiate the product on the basis of real
or emotional features,
 Brand consumers show high degree of involvement in the
product purchase,
 There is reasonably highly brand loyalty and consumers make
brand choice decision before they go to the store.
 Push strategy
 If a firm decides to use push strategy, its efforts are
directed at resellers and the manufacturer becomes very
dependent on their personal selling abilities and efforts.
 The promotional efforts are focused at pushing the product
through the distribution channels; the resellers may be
required to display, demonstrate and offer discounts, to sell
the product.
 The communication to resellers is generally through trade
circulars or the sales force.
 Push strategies generally appropriate for product
categories where there is low brand loyalty and many
acceptable substitutes are available in the market.
 It may also be suitable for relatively new products or when
the brand choice is often made in response to displays in the
stores, the product purchase is unplanned or on impulse and
the consumer is familiar and has reasonably adequate
knowledge about the product.
 Manufacturers, who cannot afford to engage in sustained
mass advertising, often use push strategy and offer effective
incentives to dealers.
 Retailer promotion: Buy Cadbury’s products worth Rs.3000/- and
get any 30 chocolates worth Rs.5 each free.
 Through this offer the company is pushing its product to the retailers
and now that the retailer has enough incentive the retailer stocks
more and thus it becomes essential for the retailer to push the product
to the consumers.
PULL AND PUSH
 Pull promotions Push promotions Push promotions
(Manufacturer to (Offered to trade) (Offered by retailer)
consumer)

Sampling Discounts Price cut

Coupons Display allowance Free goods
Price packs Advertising allowance Premiums
rebate Free goods Displays
Continuity programs Contests Feature advertising
Contests Trade coupons Quantity discount
Sweepstakes Quantity discounts Clearance sale
Tie-in promotion
Financing incentives
Special events
Premiums
Bonus packs
Exchange offers
"Product life cycle and pull or push
strategies"
 Introduction stage
 When the product is being introduced, the major objective is
to increase the trial rate and distribution of the product.
 For increasing trial sampling, coupons, demonstration which
are all pull promotions, can be used.
 To make the product available in distribution channels, it
may become necessary to use some kind of incentive scheme
for the resellers to encourage them and minimise their risk
associating stalking a new product.
 Manufacturers can offer display allowances to resellers to
make the product highly visible.
 There could be liberal guarantees to take back the stocks, if unsold,
to reassure the trader.
 These are all push promotions. For most new products, it would
be difficult to be successful without pull promotions.
 In fact when new products are introduced, much more emphasis is
given to pull rather than push promotions.
 Fair and lovely is introducing the Fair &Lovely dark circle remover crème
by having an introductory offer Rs10 off which will be available through
the coupons that are distributed with newspapers like the Times of India.
 Growth stage
 In this stage, the dominant objectives are to expand the market for
increasing the number of new customers who would try the product
for the first time and to encourage the repeat purchase by those who
have already tried the product.
 Another important objective is to expand or at least maintain the
distribution.
 For increasing trial, pull promotions are appropriate however as the
trial rate increases free samples become quite an expensive
proposition.
 To encourage repeat purchase by consumers, in pack or on-pack
coupons can be used.
 Samsung had launched the ‘Phod Ke Dekho’ offer last Diwali between October
15 and November 20, 2001, to optimise sales of its consumer electronics and
home appliance products during the festival season, which resulted in
tremendous sales. Samsung's sales during Diwali grew by over 28 % over last
year's corresponding period and closed the period with sales of Rs 275 crore.
While Samsung's CTV sales grew by 46%, refrigerator sales grew by 25% and
microwave ovens by 52%.
 This would also help in converting those customers who have already
tried the product into regular users of the product.
 Another tool of sales promotion that can be used is to offer bonus
packs containing additional quantity at the same price as an incentive
to encourage repeat purchase.
 To expand the distribution, push promotions such as different types of
discounts, free goods that increase the profitability of the trade, can be
used.
 Maturity stage
 When the product is in maturity stage, many similar brands are
available to customers. Due to price discounts or other extra benefits,
consumers often switched brands.
 This phenomenon of brand switching is more common if the product
category happens to be one of low involvement.
 The sales promotional strategy in this stage can focus on attracting
maximum number of brand switchers, reward and reinforce the loyalty
of regular users and use more of push promotions to build inventories
with resellers.
 Many tools of sales promotion such as premiums, price discounts,
extra goods, displays, dealer contests, feature advertising become
important.
 Generally a combination of pull and push promotions prove more
effective during maturity stage of a product life cycle. The market share
of the brand is an important factor in gaining the support of resellers.
 Decline stage
 Survival of the brand often becomes more important during decline
stage. Another important objective is to maintain distribution.
 Sales promotions that help in generating sales volume become quite
important. Resellers, in general, are not a tall enthusiastic about
declining brands and for this reason we do not show any kind of
interest in promoting them.
 Because of this negative factor, manufacturers use pull promotions.
In many cases this becomes a game of endurance for marketers.
 Bombay Dyeing
 The Bombay Dyeing Lao Diamond Pao Offer
 On buying Bombay Dyeing products worth Rs. 300 and scratching the card
available, you would be eligible for a prize. There were 6990 diamonds to be
won.
 CONSUMER SALES PROMOTIONS
 Sales promotions directed at the end-user, whether by the
manufacturer or the retailer, are called consumer sales
promotions. Manufacturer announced promotions to
consumers are based on ‘pull’ strategy of the manufacturer
and retailer announced promotions to consumers constitute
‘push’ strategy of the retailer.
 Objectives of consumer market
sales promotions
 Stimulate trial purchase
 When a firm wants to attract new users sales promotions
tools can reduce the consumer’s risk of trying something
new. A reduced price or offer of a rebate may stimulate trail
purchase.
 Pantene when it was launched did a lot of sampling, to stimulate
trail purchase. Their efforts have surely shown results, with Pantene
being one of the top selling brands in India today.
 Stimulate repeat purchases
 In-package coupons good for the next purchase, or the
accumulation of points with repeat purchases, can keep
consumers loyal to a particular brand.
 The most prominent frequency programs are found in the
airline industry where competitors try to retain their most
lucrative costumers by enrolling them for various perks such
as frequent flyers can earn free travel, hotel stays, gifts etc.
 Stimulate larger purchases
 Price reductions or two-for-one sales can motivate
consumers to stock up on a brand, thus allowing firms to
reduce inventory or increase cash flow.
 Many soaps brands are doing sales promotions to
stimulate larger purchases. When people generally come
to buy soaps, and see the offers like,
 Fairglow, buy 3 get 1 free,
 Lux buy 3 get 1 free,
 Introduce a new brand
 Because sales promotions can attract attention and motivate
trial purchase, it is commonly used for new brand
introductions.
 Fairglow has effectively used sales promotions to
introduce its brand, by doing a lot of sales promotions
like the buy 3 get 1 free, also Fairglow free with Good
Knight, with other HLL products.
 Combat or disrupt competitors strategies
 Because sales promotions often motivate consumers to buy in
large quantities or try new brands, they can be used to
disrupt competitors marketing strategies. If a firm knows
that one of its competitors is launching a new brand or
initiating a new advertising campaign, a well-timed sales
promotions offering deep discounts or extra quantity can
disrupt the competitor strategy. Add to the original discount
an in-package coupon for future purchases, and a marketer
can severely compromise competitor’s efforts.
 When Godrej did sales promotions to increase it washing machine
sales Samsung to protect its market also introduced sales
promotions.
 Godrej gave a rebate offer and a free VIP suitcase. So Samsung also
introduced the rebate offer and gave a camera free.
 Contribute to Integrated Marketing Communications
 In conjunction with advertising, direct marketing, public
relations and other programs being carried out by a firm,
sales promotions can add yet another type of communication
to the mix. Sales promotions suggest an additional value,
with price reductions, premiums, or a chance to win a prize.
This is an additional and different message within the overall
communication effort.
Techniques of consumer sales
promotions