TECHNIQUES OF SALES PROMOTIONS
| Consumer market sales promotions | Trade sales promotions | Sales force sales promotions |
| Price discounts | Off-Invoice Allowance | Sales contests |
| Price pack deals | Buying allowance | Incentives |
| Rebates/refunds | Display and advertising allowance | Awards and prizes |
| Continuity programs | Buy back allowance | Premiums (gifts) |
| Coupons | Bill back allowance | Sales meetings |
| Samples | Count and recount allowance | Training |
| Contests and sweepstakes | Slotting allowance | Sales manuals etc. |
| Premiums and advertising specialties | Merchandise allowance | |
| Free trials | POP displays | |
| Brand placement | Cash rebate | |
| Event sponsorship | Free goods | |
| Product warranties | Trade coupons | |
| Exchange offers | Dealer listing | |
| Internet promotions | Dealer loaders | |
| Low interest financing | Sales contests | |
| Free service camps | SPIFFS (push money) | |
| | Incentives | |
| | Sales training programs | |
| | Trade shows | |
CONSUMER SALES PROMOTIONS
Sales promotions directed at the end-user, whether by the manufacturer or the retailer, are called consumer sales promotions. Manufacturer announced promotions to consumers are based on ‘pull’ strategy of the manufacturer and retailer announced promotions to consumers constitute ‘push’ strategy of the retailer.
Objectives of consumer market sales promotions
¨ Stimulate trial purchase
§ Pantene when it was launched did a lot of sampling, to stimulate trail purchase. Their efforts have surely shown results, with Pantene being one of the top selling brands in
¨ Stimulate repeat purchases
In-package coupons good for the next purchase, or the accumulation of points with repeat purchases, can keep consumers loyal to a particular brand.
The most prominent frequency programs are found in the airline industry where competitors try to retain their most lucrative costumers by enrolling them for various perks such as frequent flyers can earn free travel, hotel stays, gifts etc.
¨ Stimulate larger purchases
Price reductions or two-for-one sales can motivate consumers to stock up on a brand, thus allowing firms to reduce inventory or increase cash flow.
Many soaps brands are doing sales promotions to stimulate larger purchases. When people generally come to buy soaps, and see the offers like,
Fairglow, buy 3 get 1 free,
Lux buy 3 get 1 free,
¨ Introduce a new brand
Because sales promotions can attract attention and motivate trial purchase, it is commonly used for new brand introductions.
¨ Combat or disrupt competitors strategies
Because sales promotions often motivate consumers to buy in large quantities or try new brands, they can be used to disrupt competitors marketing strategies. If a firm knows that one of its competitors is launching a new brand or initiating a new advertising campaign, a well-timed sales promotions offering deep discounts or extra quantity can disrupt the competitor strategy. Add to the original discount an in-package coupon for future purchases, and a marketer can severely compromise competitor’s efforts.
§ When Godrej did sales promotions to increase it washing machine sales Samsung to protect its market also introduced sales promotions.
Godrej gave a rebate offer and a free VIP suitcase. So Samsung also introduced the rebate offer and gave a camera free.
¨ Contribute to Integrated Marketing Communications
In conjunction with advertising, direct marketing, public relations and other programs being carried out by a firm, sales promotions can add yet another type of communication to the mix. Sales promotions suggest an additional value, with price reductions, premiums, or a chance to win a prize. This is an additional and different message within the overall communication effort.
Techniques of consumer sales promotions
¨ Price discounts or price-off deals.
Price deals are probably the most commonly used promotional techniques. A price deal for a customer means a reduction in the price of the promoted product and the consumer saves money on purchase.
§ Colgate fresh energy ice blue gel (Colgate
Price discounts are communicated through POP advertising, window displays, sales people, advertising in newspapers, magazines and TV ads.
Determining the quantum of discount depends on the consumer’s price perceptions and may be difficult to decide.
Such promotions work very well in gaining the attention of consumers, particularly at the point of purchase among similar brands and may also encourage unplanned or impulse buying. If there are three different models of a product and because of the discount offered the price of the higher end model is appears, not too high to the consumer as compared to the lesser priced model, then the consumer may buy the higher end model.
Titan watches
Objective: make the high end product seen cheaper.
Branded watches are a high value product. Titan watches are expensive compared to many other branded watches available. Hence in case a sales promotion offer like some rupees off is available on the watch, the consumer finds the high priced high quality product cheaper and so buys that instead of the cheaper one.
The main advantage of this tool is that it has a very Strong consumer response
Such discounts offer immediate value and strong consumer response.
The Flexibility and convenience of implementation is another advantage. Price offers are extremely flexible in the sense that the producer has total control on the number of units being promoted and the market area in which the offer will be given. If different packs of the same brand are available, the marketer can choose the one size that is not selling well.
A discount offer may rapidly lose its advantage if competitors announce a similar offer. In fact, competitors are very likely to retaliate leading to the danger of triggering a promotion wall in which no one benefits except the consumer.
Such discounts are short term and are unlikely to produce any long-term gains because the incentive is to purchase now by creating sense of urgency. When the discount is withdrawn the sales may fall below the level of pre-promotion period. And in the long run the sales would return to pre-promotion period level.
¨ Price pack deals
Price pack deals are also called value packs.
They can take any of the two forms: one is bonus pack and banded pack.
In case of a bonus pack, an additional quantity of the same product is offered free when the standard pack size of the product is purchased at the regular price.
§ Godrej colour gloss triple action shampoo, offers 20% extra free. 100ml +20ml.
§ Sunsilk shampoo (HLL) 400ml bottle gives 33% more free.
§ New Ever youth lemon face wash, by Cadilla Health care Ltd. Offers 20% Extra with 60 ml 12 ml free.
§ Lotus Herbal Ltd’s Fresh Apricot scrub, 25% extra, communicated as 7.5 ounces at 6 ounce Price.
§ Dettol shaving cream (Reckitt Benckiser (India
§ Bisleri – 20% extra free
A variation of this offer is when the marketer develops special packs of the product containing more quantity but the price is proportionately low. This is a method to “load” the consumer up with the product. This technique is often used to introduce a new large size of the product or to encourage continued usage and also to increase consumption.
The offer is termed as “banded pack” when 2 or more units of the products are sold at a reduced price compared to the regular price.
Pepsodent toothpaste special pack a 150gm toothpaste + a 100gm toothpaste and a G.I.Joe international character, all in 1 pack at a low price of just Rs., which saves Rs.81/-
Another variation of this technique is “buy 1 get 1 free” or some similar offer, it could be “same for less” or “more for the same.”
§ Fairglow – buy 3 get 1 free,
The main advantage of this tool is that extra product may encourage increased usage and help sustain the habit. Also among other similar brands, a bonus pack stands out at the point of sale.
¨ Refunds And Rebates
Refund is the repayment of total money paid for purchase, while the rebate represents repayment of only part of the money paid for the purchase. Refund offers seems to work very well in guaranteeing the trial of a product or service since there is no risk involved for the customer because of the promise of total refund of the purchase amount.
Refunds and Rebates play an important role in the consumer durable segment because the product price is reduced to a great extent because of the rebate offer.
§ Whisper
Objective: To increase product trials
After having launched it new product whisper ultra thin, confident about the product quality and confident about offering the promised product, to increase its trail and usage has started the money back offer.
The money back offer is a very effective tool in making the consumer try the product in 2 ways, firstly because the consumer feels that the company will launch such a scheme only if it is possible for it to offer such quality and so is become confident that the product will be satisfactory.
And secondly he is more willing to try because if he does not like the product he has the option to get his money back.
¨ Coupon
A coupon entitles a buyer to a designated reduction in price for a product or service. Coupons are the oldest and most widely used form of sales promotions. Coupons bear an expiry date and cannot be redeemed after the cut off date.
Coupons can be of 3 types:
- Direct to the consumer
- Media distributed
- Product distributed.
The main Advantages of coupons are:
- Encourage brand switching
- Stimulate trial for a product
- Take off the attention from price
§ Fair and lovely dark circle removal cream to create more product trials has coupons in the newspapers and magazines which avail you of Rs.10/- off on a 40 gm pack.
¨ Contests And Sweepstakes
Contests and sweepstakes can draw attention to a brand like no other sales promotions technique.
A contest has consumers compete for prizes based on skill or ability. Winners in a contest are determined by a panel of judges or based on which contestant comes closest to a predetermined criterion for the contest. Contests tend to be somewhat expensive to administer because each entry must be judged against winning criteria.
Contests were very often used earlier where people has to write slogans, poems, stories etc. generally “I like the product because …” and the best ones won prizes. But off lately, contests are becoming less and sweepstakes increasing. People are more willing to play on luck rather than participate by showing their abilities.
§ Nokia India Pvt. ltd.
Promotion: Nokia Sms Challenge-august, 2001
Objective: To establish nokia phones as the most SMS-friendly phones in the market
City:
Strategy: Tie-ups with 15 premier outlets preceded and asked them to SMS a pre-decided line to a particular number, the time taken by a participant was the determinant of the contest, the person taking the shortest tome would be gifted a Nokia 3310 phone.
A sweepstake is a promotion in which winners are determined purely by chance.
Consumers need only to enter their names in the sweepstakes as a criterion for winning. Some popular types of sweepstakes also use “scratch-off cards”.
Contests and sweepstakes often create excitement and generate interest for a brand, but the problems of administering these promotions are substantial.
One problem is that the game itself may become the consumer’s primary focus, while the brand becomes secondary. The technique thus fails to build long-term affinity for the brand.
§ Britannia khao world cup jao campaign has taken the market by a swing.
Under the offer you collect points available on Britannia biscuit packets and exchange 100 points for a scratch card, which has various gifts and the 100 world cup tickets. The offer was actually introduced during the last world cup and had shown phenomenal results. Sale increased tremendously; there was an increase in the sales by 25%, claims the company. So it is being done this year too. This year too the contest is showing good results.
Contests-cum-sweepstakes:
Elle 18
Promotion: Elle 18 valentine’s day promotion, feb 2002
Objective: to use valentines’s day platform to communicate with th etarget audience of Elle 18
City:
Strategy: Upon the purchase of Elle 18 products worth a certain amount, a scratch-card was given out. this could entitle the person to a number of gifts and hampers. The highlight of this was the ‘Cinderella Activity” which invited those customers who had bought products worth a pre-decided amount to try put a glass slipper. The lucky few, whose feet fit, were awarded dinner dates.
¨ Sampling
Getting consumers to simply try a brand can have a powerful effect on future decision-making. Sampling is a sales promotion technique designed to provide a consumer with an opportunity to use a brand on a trial basis with little or no risk. Saying that sampling is a popular technique is an understatement. Sampling is particularly useful for new products, but should not be reserved for new products alone. It can be used successfully for established brands with weak market share in specific geographic areas.
Techniques used in sampling:
· In-store sampling
Lakme has in-store trail products. Since it in the cosmetics market it is very essential to provide samples, many stores in Mumbai from time to time have Lakme sampling offers. Where they allow you to try the product and then buy it.
· Door-to-Door sampling
Whisper have done door-to-door sampling, sampling through schools, newspapers, etc. even now after so many years of its launch it does sampling because of the new target base that gets added every year.
Pantene also does door to door sampling.
· Newspaper sampling
Again Whisper and Pantene have done sampling through the newspapers.
· On-package sampling
Fair glow, a lot of free Fairglow soaps were available with many other products, especially other HLL products.
· Mobile sampling
Many road shows and mobile vans distribute free products or offers.
Free Movie tickets, disco passes, pens…are often distributed.
¨ Trial offers
Trial offers have the same goal as sampling – to induce consumer trial use of a brand- but they are used for more expensive items.
Ex: exercise equipment, appliances, consumer electronics, etc. the expense to the firm of course can be formidable. Segments chosen for this sales promotion technique must have high sales potential.
¨ Premiums and advertising specialties
Premiums
They are items offered free or at a reduced price, with, the purchase of another item. Many firms offer a related product free.
There are 2 options available for the use of premiums:
- A free premium provides consumers with an item at no cost, the item is included in the package of the purchase item.
- A self-liquidating premium requires a consumer to pay most of the cost of the item received as a premium. In this promotion offer the consumer is required to send a specified sum of money along with a proof of purchase to claim the premium.
Premiums have become very common today. Many companies are offering lots and lots of premiums. The main advantage of Premiums is that they offer not only that one product but also another product, which may influence the customer, a lot to buy the product. Especially if the other product is worth it.
Also new products are given free with established brands to stimulate trial of the new brand.
§ Ponds – buy Ponds cold cream 100ml and get a ponds body lotion 50ml pack free.
Buy Good Knight expert refill pack and get 3 Nyle shampoo sachets free.
§ Pepsodent toothpaste – buy 100gm and get 4 Clinic Plus sachets free.
Advertising specialties
Popular advertising specialties are caps, t-shirts, toys, mugs, mouse pads, pens, calendars, etc.
Advertising specialties have 3 key elements:
A message placed on a useful icon, and given to consumers with no obligation.
§ Pepsodent toothpaste 100gm pack get free dental insurance worth Rs.1000, this is a very effective strategy because it is giving you’re the guarantee that nothing can happen to your teeth. The Rs.1000 insurance speaks a lot for its brand and its product thrust.
§ Buy a Fairglow fairness cream and get a mirror free.
Many other kids products are influence a lot by such specialties especially liked by the kids like tattoos, masks, tazo, cricket bats etc. hence products that have such offers sell more than the other brand available.
§ Ruffles lays, get free Tazo,
§ Rasna, get free Prankies
¨ Continuity/frequency Programmes
In recent years, one of the most popular sales promotion techniques among consumers has been “frequency Programmes”. The main objective of such Programmes is encouraging repeat purchases or repeated visits to particular retail shops. Frequency Programmes offer consumers discounts or free product rewards for repeat purchase or patronage of the same brand or company.
§ Shoppers stop
Objective: reward the loyal customer.
Shoppers stop started the “First Citizens’ Club” and enrolled customers as ‘members’ of the shoppers club by charging a fee of Rs.150. The customers were entitled to a variety of benefits by collecting points.
¨ Brand placement
Brand placement often referred to, as product placement is the sales promotions technique of getting a marketer’s brand featured in movies and television shows. The use of a brand by actors and actresses or the mere association of the brand with a popular film/ television show can create a positive image and have a huge impact on the sales of a brand.
Marketers and advertisers used to think that brand placements affected only consumers’ perceptions of a brand, much like advertising. But recent brand placements have shown that the technique can have a sales impact like a traditional sales promotions.
Brand placement has varying results; if the brand name is spoken aloud the impact can be dramatic but less obvious placements, referred to as background placements are considered by some as a waste of money.
§ Coke in Yaadein , Pepsi in Khushi
§
¨ Event sponsorship
When a firm sponsors or co-sponsors an event such as a rock concert, a cricket match, etc. the brand featured in an event immediately gains credibility with the event audience. The audience attending an event already has a positive attitude and affinity for the contest – they choose to attend. When this audience encounters a brand in this very favourable reception environment, the brand benefits from the already favourable audience attitude.
§
Project: Lakme Makeover promotion –January 2002
Objective: to present the amazing qualities of Lakme range of cosmetics
City:
Strategy: tie-ups with select outlets preceded the actual event. They served as the venues for makeovers that were conducted live on the spot. During the course of the promotion, a fashion show, featuring the 3 models that represent the range of the promotion, a fashion show featuring the 3 models that present the range, was also organized. This event led to a considerable increase in the actual sales of the products.
§ Coke and Pepsi keep sponsoring cricket matches.
¨ Exchange offers
If a family bought a refrigerator 10 years ago and the machine is still giving reasonable service then the family is unlikely to buy a newer and more advanced version of the refrigerator unless they get rid of the older one by selling it to someone. No one in our country is prepared to throw it as junk. Same thing is true for a number of products such as televisions, microwave ovens, washing machines, cars, two-wheelers, computers, etc.
This segment of present owners is sizeable enough yet to sell new brands to those who already own a similar product is not easy. To attract this segment, manufacturers regularly announce exchange offers.
Consumer durables market is the one where exchange offers are used the most. Almost all the TVs, Refrigerators, Washing Machines, etc. have exchange offers.
§ Samsung
On exchanging old TV for a new Samsung Plano, upto Rs. 5000 off.
On exchanging old TV for a new Samsung Hitron Digital, upto Rs. 3000 off.
On exchanging old refrigerator for a new Samsung refrigerator, upto Rs. 8000 off.
¨ Internet promotions
They are the most recent form of sales promotions. They are promotions that are done via the Internet. It is becoming increasingly popular because of the large use of Internet. But still it has a lot to develop.
TRADE PROMOTIONS
Sales promotions can also be directed at members of the trade – wholesalers, distributors, and retailers. It is intended to stimulate demand in the short run and help push the product through the distribution channel more immediately. Effective trade promotions can generate enthusiasm for a product and contribute to the loyalty distributors show for the brand. With the massive proliferation of new brands and brand extensions, manufacturers need to stimulate enthusiasm and loyalty among members of the trade and also need a way to get the attention of the buyers suffering from information overload.
Objectives for promotions in the trade market
Generally speaking, when marketers devise incentives for the trade market, they are executing a push strategy – i.e. sales promotions directed at the trade help push a product into the distribution channel until it ultimately reaches the consumer.
¨ Obtain initial distribution
Because of the proliferation of brands in the consumer market, there is fierce competition for shelf space. Sales promotion incentives can help a firm gain initial distribution and shelf placement. Like consumers, members of the trade need a “ reason to choose” one brand over the other when it comes to allocating shelf space. A well conceived promotion incentive might sway them.
¨ Increase order size
One of the struggles in the channel of distribution is over the location of inventory. Manufacturers prefer that members of the trade maintain large inventories so that the manufacturer can reduce inventory-carrying cost. Conversely, members of the trade would rather make frequent, small orders and carry little inventory. Sales promotions techniques can encourage wholesalers and retailers to order in large quantities, thus shifting the inventory burden to the channel.
¨ Encourage co-operation with consumer market sales promotions
It does a manufacturer no good to initiate a sales promotion in the consumer market if there is little co-operation in the channel. Wholesalers may need to maintain larger inventories and retailers may need to provide special displays or handling during consumer market sales promotions. To achieve synergy, marketers often run trade promotions simultaneously with consumer promotions.
¨ Increased store traffic
Retailers can increase store traffic through sales promotions or events. A promotion that generates a lot of interest within a target audience can drive consumers to retail outlets.
Techniques of trade sales promotions
¨ Allowances
§ Off-invoice
Here marketers allow wholesalers and retailers to deduct a set amount from the invoice they receive for merchandise. This programme is really just a price reduction offered to the trade on a particular marketers’ brand for a specified short promotional period. The incentive for the trade with this programme is that the price reduction increases the margin (and profits) a wholesaler or retailer realizes on the off-invoiced brand.
This scheme is in general available for many products, where if the bill amount is above a certain amount you get a certain percentage discount. The % varies from around 2% to 10%, from company to company and also from time to time.
§ Buying allowance
It is similar to the off-invoice allowance. It is a discount for the purchase of the promoted product during the specified period on the purchase of certain minimum quantity of the product. This trade incentive is often used to gain more distribution or to maintain the existing one.
§ Display and advertising allowance
The retailer is required to arrange the product display in a prominent show-window or offer discount to consumers and advertise this offer in the local newspaper or arrange a point-of-purchase display on the shelf corner. The retailer earns the incentive only after meeting the conditions set by the manufacturer.
§ Buy back allowance
Manufacturers sometimes announce a buy-back allowance to encourage re-stocking by retailers. This promotion immediately follows another type of deal offered to resellers and offered some incentive for new purchases. When the manufacturer realizes that after the initial deal the inventory levels at the retail level are quite low or depleted, such an offer helps in building the inventory level with retailers to normal.
§ Bill back allowance
The manufacturer offers a discount for every item purchased during the promotion period. At the end after the promotion is over, the dealer counts the discount per unit for all the items bought during the promotion period, adds any additional promotional allowances as stipulated by the manufacturer and submits the statement. He also needs to submit the bill for all such items.
§ Count and recount allowance
This allowance consists of an offer of certain amount of money to retailers for each unit of promoted product sold out of their stocks during a specified period of time. The sales person concerned counts the opening stock with each retailer at the start of promotion and a final recount is made at the end of the promotion period. It can be used to ensure that resellers are not out of stock. The deal is easy to implement and the allowance is paid only on product units sold from the retailer’s shelves.
§ Slotting allowance
These are the fees that a retailer charges the manufacturers to make available the space on the shelf for their new products. Retail store owners say that the number of brands in each category is multiplying, there is increasing competition and margins are decreasing, hence they have no option but to ask for a fee to keep the product on their shelf and use the money to improve their shelf design and promotion, etc.
¨ Merchandise allowance
In the form of free products packed with regular shipments, are payments to the trade for setting up and maintaining displays. The payments are typically far less than manufacturers would have to spend to maintain the displays themselves.
Some of the schemes operating in town are:
§ Buy Cadbury’s products worth Rs.3000/- and get 30 any chocolates worth Rs.5 free.
§ Buy a box of Munch and get 1 Munch free.
¨ POP displays
Point-of-purchase displays i.e. product displays and information sheets are useful in reaching the consumer at the point of purchase and often encourage retailers to support ones brand. POP promotions can help win precious shelf space and exposure in a retail setting. From a retailer’s perspective, a POP display should be designed to draw attention to a brand, increase turnover, and possibly distribute coupons and sweepstake entry forms.
Companies do P-O-P displays as and when they have sales promotion schemes going on.
Some companies that do a lot of P-O-P displays on a regular basis are Gillette, Vicks, Duracell, Pepsi, Coke
¨ Cash rebate
This is a form of delayed value promotion for the retailer. Only after the proof of performance is furnished, the retailer is given a cheque for the amount of discount.
Once a retailer has met the laid down conditions, the rebate is given to the retailer. The advantage of this method is that the rebate is given only after the retailer has performed to qualify for the rebate.
¨ Free goods
A free goods promotion is a deviation from straight price cut. The promotion offer to trade is in the form of extra quantity of purchased product “free”. For example, the manufacturer offers one case of free goods with the purchase of 12 cases of the product. There may or may not be any limit on the quantity of the purchase during the promotion period. If the retailer purchases 36 cases of the product, then he gets 3 cases of the same product free.
Free goods deal often encourages resellers to stock more during the promotion period. For the manufacturer, it is an excellent promotion because it costs less than it otherwise appears.
§ Buy 24 Close Up toothpaste and get 1 free.
§ Buy Cadbury’s products worth Rs.3000/- and get 30 any chocolates worth Rs.5 free.
¨ Dating
Manufacturers of seasonal products often use dating as a technique of sales promotions. Dating is not a direct type of allowance such as free goods or cash. Manufacturer extends the facility to retailers to purchase a certain quantity of product now but the billing is done after a period of time. It is not only the billing, the retailer purchases the product at some reduced price during the promotion period, however, the goods are shipped at a later date.
¨ Trade coupons
It is a manufacturer initiated sales promotion, however, the coupon distribution is undertaken by retailers, either through local print medium or in some other manner. The important thing about such coupons is that they can be redeemed only at the distributing store. There is an agreement between the retailer and the manufacturer that some agreed allowance will; be paid to the retailer. Generally this is in the form of re-imbursement of some amount of money to the retailer for each coupon redeemed. The distributing retailer gets the double benefit due to the increase in store traffic and the incentive of reimbursement from the manufacturer. This is a string incentive to the retailer to arrange displays and promote the coupon offer.
¨ Dealer loaders
A dealer loader is a premium that the manufacturer gives to the retailers for buying a certain quantity of a product. There are generally 2 types of dealer loaders – buying loader and display loader.
A buying loader is given to the retailer on purchase of a specified quantity of a particular product.
A display loader is the premium given to the retailer for the window display. After the promotion period is over, the item or items, are given to the retailer as a free premium.
¨ SPIFFS (also called ‘push money’)
It is a monetary reward given to the salesforce of the dealers to sell a manufacturers product. For example, a manufacturer of washing machines may offer Rs.500 to each sales person who sells the manufacturers’ brand of washing machine. The SPIFF money varies as does the willingness of the dealers to allow the salesforce to accept the offer. Dealers who carry product brands of different manufacturers generally hesitate to allow such offers.
¨ Incentives
Incentives to the members of the trade include a variety of tactics like awards in the form of travel, gifts, or cash bonuses for reaching targeted sales levels that induce retailers and wholesalers to give a firms’ brand added attention. The incentive does not have to be large or expensive to be effective.
Another form of trade incentive is referred to as ‘push money’ i.e. SPIFFS.
¨ Sales-training Programmes
An increasingly popular trade promotion is to provide training for retail store personnel. This method is used specially for consumer durables like personal computers, exercise equipment, etc. the increased complexity of these products has made it important for manufacturers to ensure that the proper factual information and persuasive themes are reaching consumers at the point of purchase. For personnel at large retail stores, manufacturers can hold special classes that feature product information, demonstrations, and training about sales techniques. Another method to give information would be the use of videotapes and brochures.
Hewlett Packard
Promotion: Mystery shopper program
Objective: to revitalize the distribution chain, audit retailers and the competitive situation.
City:
Strategy: aimed at the dealers, the objective of this promotion was top revitalize the distribution chain, audit retailer and competitive situation. Mystery shoppers visited the retail outlets to ascertain merchandising and retailer-consumer interaction.
¨ Trade shows
At trade shows, related products from many manufacturers are displayed and demonstrated to members of the trade. Literally, every industry has trade shows. Their representatives are there to explain the products and services and perhaps make an important contact for the sales force. The use of trade shows must be carefully coordinated and can be an important part of the business market promotional programme. Trade shows can be critically important to a small firm that cannot afford advertising and has a sales force too small to reach all its potential customers.
SALES FORCE PROMOTION
Sales promotion directed towards the sales people is referred to as sales force promotions. These schemes are intended to motivate sales people to put in more efforts to increase sales, increase distribution, promote new or seasonal products, sell more deals to resellers, book more orders, develop prospects lists and build up morale and enthusiasm. Some of these activities are meant to prepare the sales people to do their jobs well and include sales meetings and manuals, training programmes, sales presentations, film and slide shows etc. Prize distribution to winners is the more tangible aspect of any such programme.
Objectives of sales force promotion schemes are:
¨ Increase sales volume
¨ Introduce a new product
¨ Reducing selling costs
¨ Offset competitive promotions
¨ Improve working habits
¨ Develop new prospect lists etc.
Tools used in sales force promotions
¨ Sales meetings
Sales meetings are generally organized for sales people form one area, region or district more frequently, usually once a month, once in two months, or quarterly. These meetings bring together sales people from different territories of the nation and are considered a popular way of educating sales people. There is a varying mixture of business and pleasure.
Educational material of sales meetings generally focuses on product knowledge , selling skills and motivation of the sales force. The programme often includes formal lectures, quiz shows, etc. The purpose is to generate interest and enthusiasm and the winners are awarded prizes and certificates.
§ Max Healthcare
Objective: to celebrate the annual day of Max-India and instill a sense of pride amongst the employees for being exclusive Max-team members.
City:
Strategy: presentations, reviews and their vision for the future marked the evening. An address by the chairman, Mr.Analjit Singh and the award ceremony were the highlights. The vent itself was held in park royal,
¨ Sales Manuals
Training materials such as manuals, visual aids, flip charts, programmes, learning books are most useful to sales people. Sales manual may be long or short depending upon the type of the products manufactured and sold by the company. The sales manuals usually contain product details, applications, manufacturing processes, prices, sales techniques etc. Some companies also have house journals that reports about the company programmes, new products, research activities, new polices, awards, promotions, etc.
In any firm where personal selling is critical for the sale of the product incentives to the sales people become very important. Incentive programmes most often used by the company include paid vacations within or outside the company, cash rewards, prizes, honour awards, merit certificates for excellent performance etc.
¨ Training
¨ Sales contests
¨ Incentives
¨ Awards and prizes
¨ Premiums (gifts)
Consumer-cum-Dealer-cum-Sales force sales promotions:
Nokia
Promotoion: perfect 10 contest
Objective: to attract channel partners, salespersons., an prospective buyers
City: 15 cities
Strategy: the contest was three fold - for consumers, dealers, and sales personnel. A large number of activities were organized. Dealer road shows, mass media consumer competition and intensive merchandising were undertaken. Lucky draws were conducted and the participants get to win some great prizes also.
SALES PROMOTION BUDGET
The allocation of monetary resources to sales promotion is determined by the promotional strategy of the firm.
In most cases, first the total amount of money for promotion is determined then it is budgeted for different activities. Before deciding the money allocated to sales promotion, the management should evaluate relevant factors such as type of product, its stage in PLC, the market situation, level of competitive activity, etc. All these factors, alone or in combination, can significantly affect the promotional budget. There are five important techniques that are commonly used to allocate funds to sales promotion.
¨ Percentage of sales method
The percentage of sales method to allocate the funds is probably most popular among companies. In this approach, the budget is determined by taking a fixed percentage of sales. The sales figure taken could pertain to the previous year, or the average of several past years. This percentage could also be based on the forecasted sales of the year under consideration.
¨ Unit of sales method
This method is commonly used by companies dealing in high-priced products, generally consumer durable goods such as four and two wheeler auto-manufacturers, refrigerators, washing machines, microwave ovens, entertainment electronics and many other items.
Instead of rupee value of sales, as in the previous method, the base is the physical volume of either the past or anticipated sales. This figure of units is then multiplied by a fixed amount of money to reach the budget amount. For example, the manufacturer might allocate Rs. 2000/- per unit for sales promotion.
¨ Competitive parity method
Many marketers match or base their sales promotion budget to that of the major competitors. The logic attributed to this method is that the collective minds of the companies in the industry probably generate promotion budget that are close to optimal and any departure from the industry norms may lead to promotion war.
¨ All you can afford method
In using this approach to budget allocation, the amount that is leftover after all other relevant allocations have been made, is earmarked for sales promotion. This approach is used, generally, by companies with small budget, or by some other companies, large as well as small, when they are introducing a new product. It is merely an availability oriented budget and quite unsophisticated. Apparently, there is no realisation that in a competitive market situation, sales promotion mainframe sales in many ways.
¨ Objective end task method
As mentioned earlier, the promotion budget is determined by the overall promotional strategy. Objective end task method approach is the one which is driven by strategy. This is also the most popular technique to decide the sales promotion budget. The promotion manager starts by making a thorough study of the market, the product, competition and consumer behaviour in order to set up appropriate promotion objectives. These objectives may relate to increasing short-term sales, introducing a new product, stimulate trial, increasing distribution, etc., within a specified period of time. Next step is to determine how much money would be necessary to accomplish each task involved in achieving the objectives. If the costs happen to be more than the money available, then either the promotion objectives adjusted or more funds are made available from the contingency reserve or by reducing the budgets of the other promotional activities.
SALES PROMOTION EVALUATION
Measurement of results in any area of business activities related to the objectives that are set. To accomplish this, set of evaluation criteria is laid down before the implementation of the sales promotion programme. A number of these objectives are directly related to sales. In all such cases, the measurement does not pose any complexity and the sales based techniques can be used with relative ease. For instance, it is quite easy to measure the sales effect before, during and after the sales promotion. In case of objectives not related to sales, such as trial purchase, or changing consumer awareness and attitude as resultant increase and perceived value of the product, measurement is more difficult. In certain types of promotion, the reseller support is important and can have significant effect on marketer's promotion performance.
¨ Pretesting
How sales promotion is to be communicated and what would be communicated to the target groups is important and can be pre-tested. For example the pre-tested may find out what is likely to be the perceived value and the risk. A customer considers whether it would be wise to buy an unknown brand of sport shoes at a 45% discount. In this offer was there a risk of buying an unfamiliar brand? The pre-test can be conducted to assess these factors by using focus groups and consumer panels. Another approach, ballot method, consists of kneeling a ballot paper to a list of consumers. They are requested to evaluate different illustrated promotion is and vote for the most light and return the ballot to the firm. A relatively expensive but more accurate method is a portfolio test. A portfolio of sales promotion is prepared and shown to consumers in person and the responses are noted.
To test consumers behaviour responds such as trial purchase, repeat purchase, etc., pretesting consists of experimenting in certain markets for individual stores in a market. All other factors remain the same; only the sales promotion device being tested is the variable that is manipulated.
It is often quite helpful to evaluate the responses of resellers before implementing the promotion programme. The simplest ways to visit several important retailers and wholesalers, discuss the programme and seek their opinion and suggestions. This may prove to be quite favourable in case the support of resellers is considered to be of paramount importance for promotion results.
¨ Concurrent testing
This testing is done when the sales promotion is in progress. Concurrent testing the permit the promotion manager to modify the sales promotion, if needed
This type of testing is conducted in terms of sales data which can be obtained on a weekly or monthly basis. If the promotion is a consumer contest and the consumer is not require to purchase anything, the response to promotion can be adjudged by the number of entries received at some interval and if need be, the contest period can be extended. In case of a coupon distribution programme, similar approach can be adopted by keeping track of coupons redeemed.
¨ Post testing
Post-testing is done after the promotion period is over. To assess the changing consumer awareness and attitude, telephone calls, questionnaire mailed to the consumers and personal interviews can be used. In these methods, the most expensive is the personal interview method and the least expensive is the mail. The information sought pertains to the promotion event. In case of samples on premiums distributed through retail stores, intercept interviews at the Point of
To measure the sales affect, sales figures before the promotion period can be compared with figures at the end of promotion and one month after the promotion ends. Suppose that the promotion objective was to increase sales by 30 percent in certain period and the pre-promotion sales for a similar period were worth 5 million rupees. The sales jumped to in excess of 5.6 million in the promotion period. This would show that the objective was achieved. It is very likely that in the ensuing month after the promotion, the sales will come down to say 3.5 million rupees. In the sales return to 5 million rupees on the long run, then perhaps the sales jump is because of brand features and deal prone customers. However, if the regular sales settle at 5.5 million rupees on the long run, then definitely the promotion prove successful in increasing the long run sales by attracting new customers and we have also attracted customers away from other competing brands.
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