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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.
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