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8/2/2019 11. Sales Promotion
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Sales promotion is a direct and instant inducement aimed at immediateincrease in sales
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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.
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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
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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
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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
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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
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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
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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
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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
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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)
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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
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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
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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)
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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
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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
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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
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