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SALES PROMOTION
• WHAT IS SALES PROMOTION ?• Sales promotions refers to diverse tools used—usually 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 Nielson’s study, not only have promotions been increasing, but the nature of promotions has also become more complex.
• Till 90s, promos were relatively simple—recipe 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 category—largely 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.
• Advt—Strong 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.
• to increase thec sales performance.
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 --Demos at retail store• --School demos --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 PROMOTIONDEFINE SALES PROMOTION OBJECTIVEInvariably, 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 stocks—pricing 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
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