SALES PROMOTION

BySUMANA

Tools Of Sales Promotion

To increase the sales of a product, the producers or manufacturers use various measures like free samples, bonus, etc. These measures are called the tools or

techniques of sales promotion.

LIST OF TOOLS

• Free samples: These are distributed to attract consumers to try out a new product and thereby create new customers. Some businessmen distribute samples among selected persons in order to popularize the product.

Common examples - shampoo, washing powder, coffee powder, etc.

• Premium or Bonus offer: This is a reward given to the existing customers. This tool will help increase the sales of the product among the existing customers itself.

A milk shaker along with Nescafe, mug with Bourn vita, toothbrush with 500 grams of toothpaste might be some examples of this tool.

• Exchange schemes: It refers to offering exchange of old product for a new product at a price less than the original price of the product. This is useful for drawing attention to product improvement.

Most common example for this tool is - 'Bring your old mixer-cum-juicer and exchange it for a new one just by paying Rs.500'

• Price-off offer: Under this offer, products are sold at a price lower than the original price. This type of scheme is designed to boost up sales in off-season and sometimes while introducing a new product in the market.'Rs. 2 off on purchase of lifeboy soap, Rs. 15 off on a pack of 250 grams of Taj Mahal tea, Rs. 1000 off on cooler' etc., are some of the common schemes.

• Coupons: Sometimes, coupons are issued by manufacturers either in the packet of a product or through an advertisement printed in the newspaper or magazine or through mail. These coupons can be presented to the retailer while buying the product. The holder of the coupon gets the product at a discount. Best example for this is coupons distributed by the pizza restaurants like dominos, pizza hut, etc.

• Fairs and Exhibitions: Fairs and exhibitions may be organized at local, regional, national or international level to introduce new products, demonstrate the products and to explain special features and usefulness of the products. Apart from this small stalls are also placed in popular locations where the products are sold in smaller quantity to attract more customers.

• Bonus points: certain retail shops will have a scheme which will require the customer to be a member of the shop and to acquire membership card for the same. And every time the customer makes a purchase bonus points are added to the card and at the end of the year gifts are given for the points earned. Example – coffee day bonus points card

• Money Back offer: Under this scheme customers are given assurance that full value of the product will be returned to them if they are not satisfied after using the product.

This creates confidence among the customers with regard to the quality of the product. This technique is particularly useful while introducing new products in the market.

• Scratch and win offer: To induce the customer to buy a particular product 'scratch and win' scheme is also offered. Under this scheme a customer scratch a specific marked area on the package of the product and gets the benefit according to the message written there.

Exchange offer

Bonus offer

Price-off offer

Scratch and win offer

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.

• Effect on consumer behavior 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. 

(E.g.)With every 500g pack of Tang, you get a free Tang glass. Offer valid only till stocks last.

• Effect on trade behavior

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. 

• Luring New Customers with Price By offering a reduced price on a popular item,

you can lure customers away from competitors, which may ultimately help turn them into regular shoppers. For example, if you own a small electronics store that's competing with a large retailer, offer a discounted price on a popular cell phone model for a limited time. If you serve the customers well during the purchase process, they may be willing to come back.

• Gaining Community Favor Create a good name for your business by staging

a promotion that supports a worthy cause. For example, if your town needs a new fire engine or police car, donate a portion of customer purchases at your business to the cause. You'll be helping your community, which is a win-win for everyone and may lead to more business for you.

• Providing Information A sales promotion can help you provide

information to potential customers that aids them in making a decision. This can be beneficial for products or services that are complicated or are unfamiliar to consumers. For example, if you're a financial planner and you're attempting to gain clients in the area of retirement planning, a free seminar allows you to explain what you do and how some of your investment products work.

Disadvantages Of Sales Promotion

• 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.

(E.g.)‘The Diwali Bonanza Offers’ on electronic goods.

• 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.

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

Difference Between Sales Promotion And Advertisement

ADVERTISEMENT SALES PROMOTION

By using a variety of persuasive appeals, it offers reasons to buy a product or service. E.g.: Good Network, Promises and Delivers.

Besides giving reasons in the form of different appeals, they offer incentive to the consumers to buy the product or service now.e.g. For new users, 1 no. is given free for 1 month & sms is free for 3 months.

Appeals are emotional or functional in nature.E.g.: the ad of “Wherever you go, our network follows”

Appeals are rational

Contd……..

Time-frame is long term. Time frame is short term.

The primary objective is to create an enduring brand image.

To get sales quickly or to induce trial.

Indirect and subtle approach towards persuading customers to buy a product or service.

Direct in approach to induce consumers to buy a product or service immediately by temporarily changing the existing price-value relationship of the product or service.