Sales Promotion Considerations

In considering the effectiveness of sales promotion programs, a marketing manager should consider several conditions within the market. Some conditions may work against the ultimate goals of the brand and may adversely affect overall brand loyalty. However, the marketing manager can do several things to minimize their impacts. There are several conditions when the use of sales promotions may work to decrease brand loyalty at the expense of short-term gains in sales volume. Consumer products that exhibit unclear or difficult-to-distinguish differentiators often lead consumers to consider other factors before purchase. Often price becomes the mitigating factor and the use of sales promotions is a key driver to capturing loyalty. Realizing this, the marketing manager needs to be aware of the frequency with which sales promotions are used as well as anticipate the optimal times to do so. The marketing manager must also use sales promotional tactics that reinforce the overall brand positioning that is sought. For instance, in the case of tanning cream, a brand could use an incentive program (trip to the beach) that may help drive sales versus a simple cost reduction that may have residual effects. While both may drive sales, the incentive could work to reinforce many of the brand's key values, as well as stress key product differentiators. From a promotional standpoint, the effort would drive short-term sales, yet would also work to raise awareness for the product in the minds of consumers, and hopefully would communicate a deeper message. Another factor is overall timing. In this case, the seasonal demands of this product will vary and this could be used to the manager's advantage. Different times of the year could be used to achieve sales gains. In any case, the manager must be cognizant of frequency and not rely on these types to efforts too much. Another aspect of sales promotion that may not be considered as heavily is the support of a brand's complete 'supply chain' relative to sales promotional efforts. The manager would be mistaken to consider an aggressive price promotion without similar support or enticements to the retailer or wholesaler/distributor. Both of these segments are critical to helping the brand achieve in-store awareness and ready supply. As part of any sales promotion, I believe that the manager much consider the needs of these groups and provide integrative support in some manner. For example, if Frito Lay decided upon an aggressive promotion of chips, it needs to provide complimentary enticements within it distribution channels to get everyone to play along. Although any one of several tactics could be used, all would work to help entice the retailer and wholesaler to participate. I feel that while brands clearly position themselves in the minds of consumers, they are similarly situated among their trading partners as well. These 'team members' also influence what the consumer sees and experiences in-store. The manager must consider these factors and deliver promotional programs that provide integrated support. Doing so effects may increase the likelihood of preferential product placement or favorable consideration relative to slotting fees. If conducted effectively, some types of sales promotions can be used to increase brand loyalty. A perfect example of this is with a new product introduction. Case in point is a scenario in which Proctor and Gamble introduces a new skin cream. To introduce the product to its target consumers, the brand manager could decide to run a sales promotion that offers a major price discount for a limited time. This would work to drive consumers to purchase the product on a

trial basis and sample it. After sampling, if the consumer was satisfied with the product's performance, they may consider additional purchases, regardless of 'normal' price. By pursuing an activity that promoted trial on behalf of the consumer, the brand could increase its awareness and its loyalty within its target market.
http://www.grabers.com/library/imc/archives/2006/03/sales_promotion.php

In the present world we have consumer oriented markets. Sales promotion techniques are a must for the survival of any business. Consumers are always right regarding what they want. How do you come to know what they want? You only come to know their wants if only you conduct marketing research. It is critical for you to inform your consumers about when, how and at what price your products are available. How do you inform them? Advertisements reach consumers at their homes, working places etc but Sales promotion techniques inform, remind or stimulate the consumers at the point of purchase. Nine Sales Promotion Techniques 1. Sampling In sampling you give free samples to consumers so as to create demand by increasing their interest towards your products. This is used in introducing a new product to consumers. It is used to give consumers a chance of comparing the product with other available substitutes. It is expensive if you implement it. 2. Coupon You supply the product along with coupons. A coupon is a certificate that reduces the price. And, it is effective when selling new products, increasing sales for an already established product, encouraging repeated sales and in switching the consumers from using competitor's brands to yours. 3. Demonstration This is where you educate the consumers on how to use your product. You use it in attracting their attention. It is suitable where the products are complex and technical in nature. 4. Contest You conduct it to attract new consumers or in introducing new products to consumers. You ask the consumers to state in few words why they prefer using your products. For the consumers to enter into the contest, they have to purchase your product and submit evidence that they used your product which is attached to the entry form contest.

Your business tests the consumers skill and ideas about the use of the product. The best consumer is awarded the prize. This creates a new demand and strengthens consumers loyalty for your brand. 5. Premium Offer This is where you temporarily reduce the price so as to increase consumers instincts. They are of five types; direct premium, reusable container, free in mail premium, self liquidating premium and trading stamps. 6. Price off Offer You use this type of promotion to stimulate sales during a lamp slump season. You give a temporary discount to your consumers. 7. Consumer Sweepstakes Consumers submit their names so that you include them in the list of prize contestants. This is done by giving tickets to your consumers. At your own schedule you carry out draw lots and the best winner is awarded a prize. 8. Buy Back Allowance You give consumers rewards for the previous trade deals based on the quantity they had purchased. 9. Free Trials You invite potential consumers to try your products without any payments hoping that they buy them. Through it, you create new demand for your products. Go ahead and use these sales promotion techniques in your business.
http://www.selfgrowth.com/articles/sales_promotionsure_way_of_increasing_consum ers_brand_loyalty

2.1 Different forms of sales promotion can erode or build brand loyalty. Promotional strategies need to be in sync with the company's brand image in order to be effective and not detract from brand loyalty. For example, if Godiva chocolates, which has built its brand on an image of quality and imported elegance, used promotional strategies that featured discount coupons or videos of punk rockers, the sales promotion would erode its brand loyalty. To enhance customer loyalty to its products, a company's promotion needs to reflect the established brand identity, capitalize on the product's advantages without compromising truth and integrity, and appeal to the consumer desires that have established the brand in the first place i.e., for Godiva, elegance, quality, and exclusivity.

2.2 Consumer sales promotions that might induce impulse purchases include limited-time-only sales, limited edition products, and products that the consumer is already looking to purchase as collectibles. For example, people interested in Coca-Cola collectibles buy virtually anything with the Coca-Cola logo displayed on it, from salt and pepper shakers to tee shirts. Collectibles are irresistible to those who have established an ongoing collection. The forms of sales promotion that are more effective at persuading consumers to switch brands are those that compare their product with that of a competing brand and point out its features that the other brand does not have. S

Disadvantages of Sales Promotion

While sales promotion is a powerful and effective method to produce immediate short term positive results, it is not a cure for a bad product or bad advertising. In fact, a promotion is speed up the killing of a bad product.

1. Increased price sensitivity 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. Thus, the routine sales at the market price are lost and the profit margin is reduced because of the discounts to be offered during sale-season.
The Diwali Bonanza Offers on electronic goods.

2. Quality image may become tarnished: If the promotions in a product category have been rare, 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.
The Smyle Powder offer of Buy 1 and get 2 free went on and on. Ultimately people stopped asking for the product as the on-going sales promotion strategy made the customers perceive it to be a cheap and an inferior product.

3. Merchandising support from dealers is doubtful: 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.

4. 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, which is difficult to maintain. Heavy use of sales promotion, in certain product categories, may be responsible for causing brand quality image dilution.

Advantages of Sales Promotion

Sales promotions have a significant effect on the behaviour of consumers and trades people. Such promotions can bring in more profits for the manufacturers because they permit price discrimination.

1. 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.

2. 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.

3. Effect on trade behaviour:

Short-term promotions present an opportunity and encourage dealers to forward buy. This forward buying ensures that retailers wont 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. Buy 2 dozen shampoo sachets & get 2 sachets free.

4. 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. Such factors have to be taken into consideration while providing incentives to the customers. In mid 80s, Philips decided to launch a special project in Tamil Nadu and Andhra Pradesh for their rural buyers. So, for the Tamil Nadu market, they created a special campaign The Super Star of the House and made the cine idol Rajnikant their brand ambassador as in that state he is popularly known as Superstar. Whereas, in Andhra Pradesh, they launched their brand as Mega Star of the House as Chiranjeevi was taken as their brand representative. Sales promotion was done by organizing various super shows and mega-shows for the masses in states of Tamil Nadu and Andhra Pradesh respectively. Both these campaigns became a major success.

Definition of Sales Promotion

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. 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.

Difference Between Advertising and Sales Promotion

Advertising and Sales Promotion are different. They have differences in there use and utility. WIll try to explain it with example of HUTCH (Orange) to facilitate our understanding.

ADVERTISING By using a variety of persuasive appeals, it offers reasons to buy a product or service.

SALES PROMOTION Besides giving reasons in the form of different appeals, they offer incentive to the consumers to buy the product or service now.

For new users, 1HUTCH no is given free for 1 month & sms is free for 3 Eg: Good Network, Promises and months. Delivers. Appeals are emotional or functional in Appeals are rational nature.

Eg: the current ad of Wherever you go, our network follows It justifies whatever it says. Time-frame is long term. Time frame is short term. The primary objective is to create an To get sales quickly or to induce trial. enduring brand image. Indirect and subtle approach towards Direct in approach to induce persuading customers to buy a product consumers to buy a product or service or service. immediately by temporarily changing the existing price-value relationship of the product or service.
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