However, hasty decisions regarding sales promotion objectives may sometimes produce adverse effects for the firm in the long run. Sales promotion tools used to boost short-term customer buying and engagement or enhance long-term customer relationships. Competitive pressure also calls for the use of SP. (i) The trade is motivated to carry the brand. 1. of the total promotional budget. The annual expenditure for sales promotion is rising rapidly. Thus, they will get the benefit of additional business. To make slow moving products fast moving ones. Therefore, it is necessary to classify sales promotions into two broad categories – sales promotions aimed at consumers and sales promotions aimed at distribution channels (which is more commonly referred to … 4. However, sales force is expensive and companies are looking forward to managing them in an efficient and effective manner. To illustrate, National offers Rs.500 off on its grinder mixer if a consumer brings his own old grinder mixer. Briefly review how the main tools of sales promotion (e.g., sampling and couponing) can be used in global markets. The common problems are non-availability of premium/differing quality of premium item. Producers may distribute gifts to consumers to increase sales of products. There was a joint concert of Nescafe and Samsung. Between February 26th and 28th CII has organised the International Engineering & Technology Fair (IETF) for businesses in engineering and manufacturing industry to promote Business-2-Business (B2B) networking (CII, 2014). Premium products are sold on pull factor, and a promo works on a push factor. The type of objectives will vary with the target market. Sales Representative Level Promotion 13. For example, a 15 to 60 percent off on clothes before some festive season in retail shops are examples of sales or sales promotion. Instant gratification is what the users of FMCG brands seek from promo. The most common objectives under pro-active category are: 1. Number of entries received for the consumer contest, etc. It requires a substantial media budget over and above the freebies. Sales-promotion involves a lot of expenditure. Each and every business is different and therefore, the type of sales promotion used by each business needs to be different. Even mass media coupons can help advertisers to know the effect by considering the redemption rate. The discount period should not be less than 10 days. The types of sales promotion techniques used by the company depend upon the sales promotion objectives set by the company. Another reason for the rise in BTL is the lead given by the market leader such as HUL who would like to battle the slowdown of their top-line. It consists of mostly collection of those short-term incentive tools, which are designed to stimulate purchase of a particular product or service. Only consumers postpone their purchases till an off-season price-off is announced. Samples are defined as offers to consumers of a small amount of a product for trial. The No. The brand which is constantly on sales promotion is vulnerable to a better offer. (c) When there is intensive competition on consumer sales promotions. The final step is to evaluate the results of the programme in order to determine the effectiveness of the programme. Many of you must be confused about promotion and sales promotion. Techniques 8. It gives extra incentive to the customer to make a purchase. 3. To gain additional market share or additional revenue. Incentives are something of financial value added to an offer to encourage some obvious behavioural response. Sales promotion activities include special offers, displays, demonstrations, and other nonrecurring selling efforts that aren’t part of the ordinary routine. This activity aims at attracting consumers to other or newer brands, seasonal and unseasonal goods. The distribution channel is offered sales inducements to motivate them to support a brand by providing it a more than their usual push. To reduce post-purchase dissonance, promos can be used. Phoenix International, the Delhi-based shoe company has been offering four pair of shoes with every purchase of Rs.1,500 and two pairs with a purchase of Rs.800. What part of their arsenal will they use? Terms of Service 7. Consumer promotions are directed towards the consumer and are strongly prevalent in the FMCG category. This structure can lead to problems if a single l arge customer buys many different company products. The product manager type organisational structure in which product managers are constantly goaded to sell more has given a boost to SP. 6. Evaluating the Sales-Promotion Results, Sales Promotion – Managing Trade Promotions, Just as there is advertising clutter because of a large number of a. dvertising messages, we also have a promotion clutter on account of a large number of promotional tools used. Apart from inducing trials, coupons are used to retain the existing customers. A free automatic camera is given free with every Samsung refrigerator, a portable colour Akai TV free with a 21-inch Akai TV, etc. In-pack premiums are separately given, where the retailer has to extend cooperation. When promos are on par amongst the brands, they tend to pick the brand on the basis of offer. Sales promotion is that “something extra” (2 + 2 = 5). Coupons are used for consumer convenience goods. Moreover, distributing samples to customers also involves expenditure. It aims at stimulating consumers. Advertising has reached the target audience when they were away from the store. For example- The Confederation of Indian Industry (CII) organises several business and trade fairs on specific industries. The first difference is Personal Selling is an element of promotional mix, where salesman visits the customer and displays the goods in order to initiate purchase. Themes must be measurable objectively and be relevant to the company’s sales curve. (xi) Point-of-purchase (POP) display and demonstrations. The contest will be held on a branded channel on Youtube and will use other social media like Facebook and Twitter. 1. Instead of giving instant gratification, the consumers are made to wait to see whether they have won some coveted prize. Those tools which carry a selling message from one category, e.g., free samples, coupons, gifts related to the product, form one category. 2. Consumers have started looking for value. The big three advertising groups are WPP, Interpublic and Omnicom who put together, account for 43.7 per cent of global advertising and marketing services. The retailers are poor in administration of complete schemes, whereas the wholesal­ers are poor at generating the primary demand. Sales promotion refers to temporary incentives offered by an organization to either their customers or their resellers, with the intention of increasing the sales of their products. Some goals are easier for accomplish­ment than others (e.g., territory potential may be different and hence, high potential leads to easy accomplishment of goals.). In case of low-involvement products, we can in-pack premiums. The question that needs consideration is whether exchange offers ensure loyalty. Direct marketing is used to send coupons to a selected list of users. (e) When we decide to embark upon aggressive sale campaign. Promos try to maintain their effectiveness by one-upmanship. Increase units sold per representative. Couponing has the advantage over direct rebates in the sense that couponing does not make the ‘cheapness’ explicit. Zip Sip brand of flavoured milk? What succeeds for one product may not succeed for other products. Here, sales representatives are made to compete amongst them to motivate them to achieve higher goals and benefit the organisation. Sales Promotion in International Marketing! The reusable package itself serves as a premium. Learn about:- 1. The marketer has to determine the size of the incentive, conditions for participation, duration of promotion, the distribution vehicle and timing of promotion, total sales-promotion budget and the incentive cost in order to arrive at a full programme. Brand expectations are built by Ford by asking participants to identify celebrities inside the car, and to win a foreign trip. 2. Such a shift has several reasons. Large sales force with a hierarchical order calls for contests for different groups, and eligibility criteria restrict the participation to each group. Sales promotions are short-term incentives to buy products. Samples help consumers verify the quality of the product. Promos can be evaluated by comparing sale volume across 3 time periods – pre-promo, during the promo, post-promo. Promos have limited reach and cannot change brand perceptions across the entire spectrum of customer uni­verse, even if supported by the company. 4. SALES PROMOTION: - Consists of a diverse collection of incentive tools, mostly short term, designed to stimulate quicker or greater purchase of particular products or services by consumers or the trade. Sales promotion has dual objectives; 1. Even price-off may tell upon the quality, because the manufacturer is likely to cut corners somewhere. Many were aggrieved when they did not get Madonna’s audio cassette on Pepsi Drink’s Crowns. Short purchase cycles mean short-term effects. The campaign should be directed to the consumers for whom it is meant. It can arouse enthusiasm, create a buying mood or spark an immediate reaction from consumers, dealers and the firm’s sales­person. Marketers must be on the lookout for ways to rise above the clutter. Sales volume should not be the only goal of each contest. Couponing gets a boost in a competitive environment. Coupons have four advantages- (1) Regular buyers are limited to one reduced price pack, so that the subsidy to existing buyers is reduced, (2) Coupons do not dilute the brand value, (3) The customer tends to resist paying the normal price again with normal rebates. He may have a good sales force. Sales Force and Promotion 1. Agencies of late have set up BTL divisions, but these lack depth. Sales promotion, in other words, is a marketing activity that adds to the basic value of the product or services for a limited period of time and directly stimulates purchasing by the target audience. Sales Promotion Tools and Techniques – 12 Commonly Used Tools: Coupons, Free Samples, Price-Off Offer, Fairs, Exhibition, Free Gifts, Competitions and a Few Others. Once the marketing strategy assigns promotion-mix the role of using “pull-push” in case of sales promotion and only “pull” in case of advertising, the promotion objectives have consumer as well as trade orientation, and the sales promotion strategies focus on different consumer promotions and trade deals. The time for buying has arrived. A premium may be inside the package, outside it or received through mail. It is an attempt to squeeze maximum out of promos. On the close of the contest, wide publicity is given to achievers and their photos are flashed. 7. Such salesman are sales-force. Marketers employ a remarkable variety of sales promotion tools in marketing. There are tools like Sales Meetings, Sales manuals , sales contests, incentives and many more. It is, therefore, crucial that these contests are handled properly. The Basis of Consideration in Trade Promotion are: (a) The capabilities of the parties. The retailers were formerly reluctant to handle coupons because passing coupons to distributors, who in turn passed them on to the company, and receiving pay­ments thereafter took a lot of time. In the mid-90s, promos were just some trivial giveaways. Novel themes – the focus is on recreation and fun linked with the current sales scenarios. Thus, sales-promotion is used at the time of introducing a new consumer product, to secure maximum dealer stocking, display space and attention of consumers. These coupons are either advertised by pro­ducers/retailers in newspapers or distributed in weekly flyers via mail across households. Copyright 10. There is a risk of brand devaluation if SP is done in excess. (ii) At the level of dealers and distribution, it is called trade promotion, e.g., free goods, display contests, dealer sales contests, push money, etc. It should also take into confidence the trade channels. Too much of it affects the long-term brand equity. Agencies must sell a generic concept of BTL to clients. Channel pilferage is very common here. But healthy promos will strengthen the brand. The manufacturers can use three methods to measure the effectiveness of sales-promotion-. Of late, consumer durables are being sold in India on sales promotion. To develop favourable consumer experience with the product. They improve sales / profitability. They may be distributed door to door, by mail or they may be inserted in packages. Samples help consumers verify the quality of the product. What constitutes a sale – whether an order, or a delivery or payment received? User 6. India suits this definition right now. Major Decisions and Other Details. In-pack premium has a con­straint. We should pre-empt competition in using the promos. Samples. There are certain inherent conflicts. Sales promotion was so far treated just as a tactical tool. It is like turning a brand into a commodity, and sells it on price sensitivity. 1. The value of a freebie should not exceed the value of the product itself. The company must make sure that the benefit of the scheme should reach the consumers for whom the scheme is meant. Trade incentive could be price off, free goods and allowances. Promotion is not only addressed to consumers but also to dealers. Soon, thereafter, further activities are planned to avoid dipping sales later after the closure of the contest. What would be the role of promotion-mix depends directly on the marketing strategy, and on the marketing objectives. Revenues from activities like direct marketing promotions, PR and research are on the rise. But because it pays rich dividends, sellers have accepted it as an important item in the marketing-mix. 5. One maxim is, do promote, but not at the cost of brand equity. 5. BPL has sought to build value around the brand by offering a package of product on low monthly installments. Those who look at SP tools in a store setting are very good prospects, or else they would not have been in-store in the first place. For example- Big Bazaar issues coupons for selected items in their weekly flyers that are distributed via mail or along with newspapers. This holds true even for the Indian market. The original price and the bargain price must be stated. The focus of advertising to create reason for purchase the focus of promotion is to create an incentive to buy. There is no ‘fair’ or ‘just’ contest. It is also used to keep customers away from the competitive products. We'll cover promotions to increase sales, to encourage repeat business, and to boost brand awareness. So basically, these are different tools with purpose of encouraging consumers, dealers as well as the company’s sales force. This is called a construct. Contests and freebies are resented because these distort the competition, and divert the attention of the consumer from the core product. 3. Trading stamps are given by the seller to consumers. Sometimes, coupons may be part of magazine or newspaper advertisements. A visit to your nearby supermarket will reveal numerous sales promotion schemes of various products, simultaneously vying for our attention. Consumer incentives could be samples, coupons, free trial and demonstration. Tropicana’s brand aware­ness was increased by a phone-in contest by Pepsi. Sometimes, staffers other than sales representatives should be included in the contest. SP is to be measured by pre-testing it, monitoring it during implementation and by post-testing. To help launch a new product (say Cello instead of Hello on telephone and get the gift, identify independent personality and get the Alphonso mangoes). A sweepstakes calls for consumers to submit their names for a draw. Increase sales on average per account. Free samples are small and packaged portion of the (main) merchandise distributed for free. The real thrust came in 1999. By themselves, they cannot build brand perception. Many of these schemes are dealer loaders, e.g., merchandise deals, discounts, buying and selling allowance, premium or push money and POP materials. Report a Violation 11. These rewards can be given for individual performances and for special achievements. Here, performance is measured with respect to: 5. Personal meeting with the executives are arranged. (h) POP material and its display need supervision. (d) Regular supplies of products / gifts during the pendency of the scheme. A contest is to be held by Ogilvy one Worldwide to test how well one understands people and one’s creativity. This monitoring covers brand / premium availability, brand visibility, movement of the brand at the retail outlets on day-to-day basis, competitor’s countermoves, etc. The Sales Promotion tools are directed towards Consumers (Consumer promotion tools), Dealers or middlemen (Trade promotion tools), and Sales force. Today, sales promotion is a necessity and not a luxury. Couponing is used to build a relationship with the customers. Overenthusiastic representatives may resort to dumping, overloading inventories, cheating and neglecting of customer service. Limitations. Why Use Sales Promotion? A marketing man today wants a short-term increase in sales of the current year, rather than waiting to build the brand over a period of five years, by which time he may or may not be in the organisation. Producers of new brands or innovative products are introduced by holding fairs and exhibitions. Advertising has four characteristics: it is persuasive in nature; it is non-personal; it is paid for by an identified sponsor; and it is disseminated through mass channels of communication. Direct themes could be obtaining new accounts or improving the market share. The first step is setting out an objective for sales force. Tools and Programmes 9. Promos need mainstream advertising support if they are expected to change brand perception. to promote the sale of an established product, to stimulate customers to switch brands; and. Say, a cheap ice cream cone offered at McDonald’s attracts people inside and then they can try the other items on the menu. The quality must be specified. When the decision is to discontinue a product, or close down the business. Samples are defined as offers to consumers of a small amount of a product for trial. The scheme must be novel and innovative. It may dilute the carefully cultivated brand equity. The schemes are all product specific. Types 10. Consumer promotion takes care of the strong competitive brand. The lots are drawn and the winners get prizes. One has to communicate with the consumer through advertisements and POPs at the retail level. Free samples are given to consumers to generate their interest in the product. Specific marketing objectives – If these objectives are spelled out clearly, an effective solution can be conceived. Marico is concentrating on hair dressers and beauty parlours to reposition Parachute hair oil as a hair-styler. Marketers should also know the brand does not need any promo. Sales-force promotion Manufacturers appoint salespersons to sell or distribute their products. Demonstration is required when products are complex and of a technical nature. To get you started with this worthwhile strategy, here are 15 sales promotion ideas, accompanied by real examples, and categorized by the business goals they can help you achieve. Promotion is tactical and short-term. A reusable container can be reused after the product is reused. Same prizes for each contest are to be avoided. Rewards may be in cash or in kind or a mix of the two. Premium refers to goods offered either free or at low cost as an incentive to buy a product. The nature of promotional offers has changed. Before uploading and sharing your knowledge on this site, please read the following pages: 1. The main consumer promotion tools include samples, coupons, demonstration, contests, cash refund offer, premium, etc.