SALES PROMOTION

WHAT IS SALES PROMOTION ?

Sales promotions refers to diverse tools usedusually as a short term measure to stimulate sales or ensure greater purchase of a particular product or service

WHY THE HUGH SURGE IN RECENT TIMES?

While promos have always been an integral part of marketing, there has been a tremendous increase in promos in recent times.

Presently, with any article we buy, there is another one--- free.

The world over, promotions spend has been increasing exponentially, while the ad spend has been going down. As per A G Nielsons study, not only have promotions been increasing, but the nature of promotions has also become more complex.

 Till 90s, promos were relatively simplerecipe books, measuring jars, jugs, pans i.e. low value items with low incentivsation

This has given way to coupons, big contests, in-magazines samples, on-line schemes
Additionally, in .earlier times promos were applied for certain limited product categorylargely consumer goods Presently, it is being applied to all product categories---consumer goods, industrial goods, cars, entertainment, travel, hospitality, medical, insurance &..education.

EXAMPLES OF PROMOS
--Buy a chocolate; get a crayon free --Buy a pack of cooking oil; get a pack of atta --Buy a toothpaste; get a bottle of Listerine free --Clearance sale; rock bottom prices --Get cash back on credit card usage --Easy loans ;zero interest loans; lowest EMI --Exchange your old car; get loyalty bonus

 --Scratch & win

--Rewards for withdrawing cash from ATMs --Buy Park Avenue trousers; get a belt free --Buy from our retail stores ;get bonus points --Buy a CD player; get two tickets to World Soccer

--Buy one; get one free

--Rewards for transferring funds

 Apart from above factors, the media costs are also rising and the media is getting increasingly fragmented
Hence, advertisement is becoming costlier and it is losing its edge as far as impact is concerned. The cos, therefore, find promos an easy way out. The consumers inclination towards impulse purchase has also increased over the last several years. This propensity gets compounded when goods are available at reduced prices. Small scale fringe players find promos an easy way to get market share from established players. They cannot afford to advertise on a big scale. Small retailers have switched to self-service.

WHY SUCH HEAVY DEPENDANCE ON PROMOS?

This is a natural response to the development in present times. As society opens up, as competition increases, as people become more aware, as purchasing goes up the choices available to the consumer increases exponentially In such a situation over-production is inevitable and, because the consumers have a vast choices, their lack of interest and enthusiasm is bound to compel the manufacturers to offer price discounts. The marketing personnel are also under tremendous pressure to deliver on quaterly targets. In some cos the incentives and compensation is linked directly to the sales.

PROMOS COMMUNICATE VALUE

Like advertising and personal selling promos also communicate a value proposition Promos not only communicate value but also change price-value equation in favour of consumers. The consumer, who had so far assigned a particular value to the offer, now find extra value in it. Thus promos serve the dual function of enhancing the value as well as communicating the value.

 Difference between advertisement and sales promotion

Advertisement gives a reason for purchasing a product Sales promotion gives an incentive for purchasing a product The incentive is invariably MONETARY The impact of advertising is long lasting; the impact of sales promotion is limited to shorter period. The objectives are very different. AdvtStrong positioning, brand building, loyal consumers, Promos----increasing sales within a specified time period. Advt can build loyalty, promos cannot. Advt builds strong value proposition, promos change the value proposition.

PURPOSE OF SALES PROMOTION

Sales promotions measure vary in their objectives: Sales promotions yield more reliable and quicker results than advertising. Sales promotions tend to attract deal prone customers who switch among brands when the deal becomes attractive. Sales promotion enhances the co-operation amongst channel partners. Small competitors, with low market share, tend to rely heavily on sales promotion as they cannot afford heavy advertising budgets. In fact, they find it very difficult to place their stocks on the shelf without resorting to sales promotions.

TYPES OF PROMOTION
Consumer Promotion

Trade promotion
Business promotion

Sales Force promotion

Manufacturers, distributors, wholesalers, service providers, trade associations, non-profit organizations---all use sales promotions. Like advertising, sales promotion too, is becoming a clutter. The companies are therefore under increasing pressure top devise innovative promotions to rise above the clutter.

CONSUMER SALES PROMOTION --Coupons --Premium Offers --Bonus Packs/Multiple packs --Hyundai offers free petrol --Free offers by tour operators --Introductory offer on Maruti Swift --Temptation prices : Deccan airways --Freebies on credit card --Free samples

 Demonstration
--Door-to-door demos --School demos --Demos at retail store --Demos to key people

Trade Fair & exhibitions

Contests Visual Merchandising/Display Sales promotion on the internet

 Historically, sales promotion and advertisement have been used in a particular proportion. For last two decades sales promotions have played an increasingly important role The reasons are: INTERNAL Promotion is now accepted by the top management as a legitimate and necessary tool to achieve the sales objective. There are qualified managers to manage sales promotion as a sophisticated marketing measure Pressure on product managers and regional heads

 EXTERNAL FACTORS Increase in number of competing brands Increase in competitors activities Price oriented customers Low differentiation among brands Rising costs amd media clutter Legal issues

SALES PROMOTION
DEFINE SALES PROMOTION OBJECTIVE Invariably, the sales promotion objective are a part of a larger marketing objective FOR CONSUMERS-The objective for consumers is to achieve larger consumption, inducing trials among non users, attracting customers prone to switching ,etc FOR TRADE- the objective for retailers is to carry higher levels of stock, a larger variety of stock, newer variety of products, divert their capital into your business, increasing wider distribution, building brand loyalty FOR SALES FORCE- Increasing trade relations, support to newer or slow moving products, increasing distribution, finding new prospects, newer markets

PROMOTIONS/Contd
SELECTING THE PROMOTION TOOLS While selecting the promotion tools, the co should take into account the objectives, market, consumers, time period, duration, completive situation etc MAIN TOOLS USED ARE Lucky Draw, contests, Quantity discount, Prizes, Discounts, points on purchase, cash refund Sales promotion a) General type

b) Franchise Building type

Franchise building type aim at building the preference of the consumers towards the brand-impart a message along with a deal

PROMOTIONS Contd/ Sales Promotions and Advertising It has been seen generally that sales promotion is more effective when launched with an advt campaign. A stand alone promotion does not produce the desired results as effectively as with advt campaigns THE SALES PROMOTION MUST BE A PART OF AN OVERALL MARKETING PLAN

PROMOTIONS/Contd
SELECTING TRADE PROMOTION TOOLS Trade support is very necessary for success of a promotion campaign Manufacturers need trade support -- For wholesalers and retailers to carry their stocks --For wholesalers and retailers to lift additional quantity --To induce the wholesalers and retailers to push their brands --For wholesalers to increase their distribution Earnings from promotions constitute a major source of income for the trade.

PROMOTIONS Contd/ DRAWBACKS --How does co ensure control over its stockspricing and distribution? --How does a co avoid dumping? -- How does a co ensure inventory control? -- How does a co avoid cross-territory distribution?

PROMOTIONS Contd/ The cos must also consider a) The size of incentive b) The target group for incentives c) Geographical territory chosen for promotions d) Duration of promotion e) Terms and conditions of participations