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Sales Promotion

Horlicks Bonus Offer

Objective of the Campaign: As the sales of Horlicks were down in the first

half of 1985 in Madras, the objective of the campaign was to boost the

sales.

Promotion: The promotion was through T.V, Press advertisement, and by

promotional posters.

The promotion was having two parts:

yA newly available 500gm bottle of Horlicks was offered for the usualprice of a 450gm bottle.

yThe 1kg bottle was offered at Rs. 2.50 off the normal retail price.

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Result: The promotional campaign seemed to be very much successful as

the sales in Madras increased by 44% during the month of Sep and Oct

Sales Promotion: Sales promotion refers to short-term incentives, other

than advertising & personal selling, aimed at stimulating market demand

for products. It is used to implement other promotional effortssuch as

advertising & personal selling.

For exwhen Pepsi launched promotion on its large 1 litre bottle

offering 33% extra free, the buyers felt the need to respond quickly to

take advantage of the special offer.

Merits of Sales Promotion:

a)Attention Value: Sales promotion techniques,such as discounts,rebate, offering gifts, etc. are helpful in attracting new customers.

Numerous brands have flooded the market & helps in pulling in the

customers.

b)Useful in Introducing New brands: Sales promotion techniques areextremely useful when a new product is to be launched. Free

samples distributed at thisstage attract buyers & stimulate

consumer trial.

c)Synergy in TotalPromotional efforts: Sales promotion activities aredesigned to supplement the personal selling & advertising efforts

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used by a firm & add the overall effectiveness of the promotional

effort of the firm.

Limitations of sales Promotion:

a)Reflects Crisis: If a firm frequently relies on sales promotion, itmay give the impression that it is unable to manage itssales or

that there are no takers of its product.

b)Spoils Product Image: Use ofsales promotion tools may affectthe image of a product. The users may start feeling that the

product is not of good quality or is not appropriately priced.

Planning forSales Promotion Programmes:

1)Defining the Sales Promotion Target: In thisstep the potentialconsumers for the sales promotion are decided. It can be directed

towards ultimate end users, or towards its own sales force.

2)Defining Sales Promotion Objective: From the target consumer salespromotion objectives can be determined. Different types of

objectives can be set.

3)Setting the Budget: Sales promotion budget must be approvedbefore the campaign is commenced. The budget must highlight the

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total administrative cost of promotion as well the total incentive

cost.

4)Developing Sales Promotion Strategy: Numerous decisions are to betaken in developing a sales promotion strategy like size of the

incentive, duration of incentive and timing of promotion.

5)Selecting the Type of Sales Promotion: All sales promotion methodscan be classified in the above stated three broad categories. In these

categories the sales promotion methods varies wide and far.

6)Coordinating the Plan: Elements of promotion mix supplements theefforts of each other so it is essential that sales promotion activities

must be well coordinated with other elements of the promotion mix,

like:

a)Advertising and sales promotion plansshould be integrated.

b) The sales force should be communicated with all promotions

well in advance and trained to implement them.

c) For the special events, publicity should be generated.

7)Evaluating Sales Promotion Effectiveness: Before implementing thesales promotion, pretesting of the programme is to be done.

Pretesting means testing the sales promotion programme before it is

implemented. The approaches to sales promotion evaluation include

consumer panels, consumer surveys and experiments.

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Types of Sales Promotion:

A.CustomerPromotion: Here the target beneficiaries are thecustomers. Here the offers are offered directly to the ultimate

customers. Such an offer is always for a short period.

B.Trade Promotion: Here the target is the middlemen. They arebeing offered the incentives with the hope that they will stock

more and push the product to the customers. Tools used are

price or merchandise allowances, promotion allowances, and

perhapssales contests.

C.Sales Force Promotion: This type emphasis to increase and boostup the morale of the sales people. They are offered commissions,

bonuses and other incentives for increased salesso that they

work delicately.

Objectives of Sales Promotion:

A.Generate Consumer Interests: This is one of the most vital objectivein marketing, particularly in the case of new products and those

products which are mature and hence do not excite the interests of

the consumer. Free trails are very common in industry, particularly

in cosmetics and premium range of toilet soaps and shampoos. For

exDove a premium brand of HUL, urges consumers to try the 7

day test to convince them of the claim made by the company.

B.EnquiryGeneration:Another objective ofsales promotion is togenerate enquires from the target market. This is used when a new

product or model is being launched in the market.

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C.Build CustomerTraffic: Shoppers Stop, a leading garment andaccessoriesstore in the country organizesseveral events and

festivals. Such special sales, festival sales, are designed to build

consumer traffic at the retail outlets.

D.Motivate Customers to Repeat TheirPurchases: Several companiesuse promotion tools like First citizens club and cumulative purchase

card which promises the customer a free product on redemption of

purchase points.Likewise, Citibank,Visa, Mater Card etc offer its

members redeemable points for every purchase made on the credit

card.

E. Increasing rates ofPurchase: The firm may offer a large pack or amultipack at a lower price than the competition or its own smaller

units. The net effect of thisstrategy is to make the consumer stocks

the companys product brand above normal levels.

CommonlyU

sed SalesPr

omotionA

ctivities:

a)Rebate: Offering products at special prices to clear off excessinventory. Exa car manufacturer offers to sell a particular brand of

car at a discount of Rs.10000, for a limited period.

b)Discounts: Offering products at less than list price. Exa shoecompanys offer of Discount up to 50%.c)Refunds: Refunding a part of price paid by customer on some proof

of purchase,say on return of empty foils or wrapper.

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d)Product Combination: Offering another product as gift along withthe purchase of a product,say offer; Get 128 KB memory card free

with a Digicam

e)QuantityGift: Offering extra quantity of product commonly used bymarketer of toiletry products. For exa shaving creams offer of

40% extra.

f) InstantDraws & AssignedGifts: For exScratch a card or Burst acracker and instantly win a refrigerator, car etc.

g)LuckyDraws: For exthe offer of a bathing soap to win a gold coinon lucky draw coupon.

h)Sampling: Offer of free sample of a product; say a detergentpowder or toothpaste to potential customers at the time of launchof a new product.

i) PackagedPremium: In this type ofsales promotion, marketers packsome gifts inside the product package. The gifts create a lure to buy

the product.

j) Full Finance @0%: Many marketers of consumer durablessuch aselectronic goods, automobiles, etc offer easy financing schemes. For

ex12 easy installments, 4 upfront and 8 to be paid as post-dated

cheques.

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k)ContainerPremium: This category ofsales promotion is also verypopular with the marketers of products like jam, detergents, and

soaps. In these schemes, the marketer devisesspecial containers for

packaging the product which could be used by the consumer for

some use.

Selected Types of Sales Promotion Directed at Middlemen

1.Training: The manufacturer provides training for the personnel ofthe middlemen.

2.Trade Allowances orSpecial Offers: Middlemen are given discountsor rebates on purchasing during certain time periods.

3.Point ofPurchase Displays: The manufacturer gives the retailer afully equipped display for its product and sets it up.

4.Push Money: Middlemen are given bonuses for pushing the brandof a particular manufacturer.

5.Sales Contests: Prizes or bonuses are distributed if certainperformance levels are met.

6.Free Merchandise: Discounts or allowances are provided in the formof merchandise.

7.D

emonstration Models:A free item is given to the wholesaler orretailer for demonstration purposes.