11. sales promotion

8/2/2019 11. Sales Promotion

1/17

Sales promotion is a direct and instant inducement aimed at immediateincrease in sales


2/17

What is Sales Promotion?Sales promotions consist of a collection ofincentive tools, mostly short term, designed to

stimulate quicker or greater purchase of particularproducts or services by consumers or the trade.


3/17

Sales promotion Trends show that across the globe the share of sales promotion

activities in the total promotion budget has been constantly going up,while that of advertising is getting reduced.

Until mid 1990s promotions were generally low value items. Thepresent decade has seen a major change in the nature of promotions big contests, buy one get one free etc


4/17

Why do marketers resort to sales promotions so

heavily?

Pressure to perform from quarter to quarter

rising cost of mass media and fragmentation of media

Inventories building up and cost of inventory holding goesup

Impulse purchase by shoppers have also increased

Fringe players often employ sales promotion to get some

market share from established players


5/17

Difference between advertising and sales

promotion1. Advertising is an indirect and

subtle approach towardspersuading consumers to try aproduct and generating a

desire for it2. Impact of advertising is

lasting

3. Powerful communication ofvalue offered

4. Objective of advertising isstrong brand positioning,building brand loyalty

1. Sales promotion is a directopen inducement toconsumers to buy the productinstantly

2. Impact is limited to a shortperiod

3. Sales promotion changes theprice value equation of theproduct in favor of the

consumer4. Sales promotion aims atincreasing sales in theimmediate future


6/17

The two main components of Sales promotions Trade promotion aimed at the channel members, to push

the products through the intermediaries, persuade them tocarry more units than the normal level, persuading them to

stock new brands etc.

Consumer promotion To encourage and induce the trialof the product, generate consumer interest which should

lead to trial, increase the rate of purchase


7/17

Sales Promotion TacticsConsumer-directed Free Samples

Coupons

Cash refund offers

Premiums

Price offs / Exchange offers

Consumer contests skillcontest, sweepstakes, games

Patronage rewards

Free trials

Tie-in promotions

Trade-directed

Price offs

Allowances Free goods

Sales contests

Spiffs

Trade shows

Specialty advertising


8/17

Sales promotion for the Consumer

Free samples market entry mode to encourage customer trial ex saffolaweight management rice, Meswak tooth paste, Yakult pro biotic drink

Coupons certificate for price reduction, distributed through newspaper,point of purchase, direct mail etc. ex Dominos pizzas

Cash refunds Consumer gets a cash refund on next purchase or gets itthrough mail after sending proof of purchase example: on hotel bookings

Premiums Extra quantity of same product or separate item absolutelyfree. Ex- Colgate toothbrush free with Colgate paste

Exchange schemes Bring back old and take home the new. Example BigBazar.

Consumer contests quiz, coin a slogan, suggest a logo, suggest a flavour

etc example: Maggi, lays Patronage rewards related to consumers frequency and intensity of

purchase example: airlines

Tie in promotions Two or more brands team up to increase the intensityof attraction for the customers. Freebies for booking through credit cards


9/17

Trade promotion tools Price offs A straight discount off the list price

Allowance An advertising allowance or a display allowance to arrangea special display

Free goods extra merchandise

Trade shows and conventions

Sales contests

Spiffs special paid incentive for fast sales

Specialty advertising distributing useful, low cost items bearingcompanys name and logo like pens, notepads, bags, calendars, keychains etc. Examples Doctors given pens notepads etc by pharmacompanies


10/17

Limitations of Sales promotions Effective only for short term sales increase

Competitors may quickly copy or better an offer andCustomers may switch brands based on the relative

attractiveness of the offers

Customers may hesitate to buy brands without suchpromos (Automobile manufacturers offering 0% interesthave found it difficult to wean the customers off the

incentives) Image of the brand may suffer (while advertising builds a

brand, sales promotion dilutes it)


11/17

Sales promotions used extensively in the car markets Interest free loans, corporate tie-ups, free insurance, free audio system,

attractive discounts, exchange offers

1. Zen Estilo discount up to 40,000 and 6% rate of interest as against 13%prevailing rate

2. GMs first car Spark came with free insurance and cash savings amounting toRs.35,000

3. Fiat gave gifts worth Rs.25,000 with its hatchback Palio stile4. Toyota offered free insurance and road tax with Corolla (promotion amounting

to 1lakh)

5. Fusion offered interest free loan of Rs.5 lakh for 3 years or Rs.40,000 discount

6. Ikon free insurance and free MP3 player

7. GM Corsa came with 1,2,3 offer one year free insurance, 2 year warranty, 3 year

free service8. Mahindras Renault Logan came with a discount of Rs.40,000

9. Maruti offered to all its customers Rs.20,000 loyalty bonus for exchanging theirexisting Maruti for a Versa through Maruti true value stores

10. Hyundai offered petrol coupons free along with Hyundai Santro or i10


12/17

Using Sales Promotions

Establish objectives

off loading stocks,,

Induce trial, induce repeat purchase etc

Select tools - coupons, samples

Develop program - How much to discount

Pretest

Implement and control

Evaluate results


13/17

Sponsorship of events Works as a unique communicative vehicle in the cluttered

marketing communication space

India's biggest property developer DLF grouppaid US$50million to be the title sponsor of the tournament for 5 years

from 2008 to 2013.

Femina Miss India, Standard Chartered Mumbai Marathon,Lakme Fashion Week, MRF Motor rallies

Pepsi, Coke and Hero Honda sponsoring sport events

Ambush marketing (Coke was the official sponsor 1996 worldcup and Pepsis advertisement slogan was Nothing official

about it)


14/17


15/17

Why Sponsor Events? To identify with a particular target market or life

style To increase brand awareness To create or reinforce consumer perceptions of key

brand image associations To enhance corporate image To create experiences and evoke feelings To express commitment to community

To entertain key clients or reward employees To permit merchandising or promotional

opportunities


16/17

Ideal Events

Audience closely matches target market

Event generates media attention

Event is unique with few sponsors

Event lends itself to ancillary activities

Event enhances brand image of sponsor


17/17

Important questionsWhat is Sales Promotion? Explain the different types

of Sales promotions directed towards the Consumersand towards the traders.

What are that advantages and disadvantages of salespromotions

11. sales promotion

Documents