Sales Promotion

Lesson 24

Sales Promotion

Suppose you go to the market to buy soap. The shopkeeper suggests that if you buy two soap cakes, an extra soap cake will be given to you free of cost under buy 2 get 3 scheme. You feel attracted to buy as by doing so you are saving money on one soap. Moreover, soap is an item which is required on a regular basis, and so you can keep the extra two cakes to be used later. This is an approach of increasing sale of a product and it is quite different from what you have learnt in the earlier two lessons. Let us learn more about it in this lesson.

24.1 Objectives
After studying this lesson, you will be able to: explain the meaning of sales promotion; state the objectives of sales promotion; describe the various tools used in sales promotion; recognise the role of each tool in promoting sales; and describe the importance of sales promotion in business.

24.2 Meaning of Sales Promotion

Every businessman wants to increase the sale of goods that he deals in. He can adopt several ways for that purpose. You might have heard about lakhpati bano, win a tour to Singapore, 30% extra in a pack of one kg, scratch the card and win a prize etc. You might also have seen gifts like lunch box, pencil box, pen, shampoo pouch etc. offered free with some products.

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There are also exchange offers, like in exchange of existing model of television you can get a new model at a reduced price. You may have also observed in your neighbouring markets notices of winter sale, summer sale, trade fairs, discount upto 50% and many other schemes to attract customers to buy certain products. All these are incentives offered by manufacturers or dealers to increase the sale of their goods. These incentives may be in the form of free samples, gifts, discount coupons, demonstrations, shows, contests etc. All these measures normally motivate the customers to buy more and thus, it increases sales of the product. This approach of selling goods is known as Sales Promotion. You have learnt about advertising and personal selling in the earlier lessons. Personal selling involves face-to-face contact with specific individuals, while advertising is directed towards a large number of potential customers. They also help in increasing sales of goods. Thus, advertising can be used as means of communication to inform potential customers about the incentives offered for sales promotion. Personal selling can as well include communication of the incentives to individual customers. But, sales promotion differs from advertising and personal selling in terms of its approach and technique. Sales promotion adopts short term, non-recurring methods to boost up sales in different ways. These offers are not available to the customers throughout the year. During festivals, end of the seasons, year ending and some other occasions these schemes are generally found in the market. Thus, sales promotion consists of all activities other than advertising and personal selling that help to increase sales of a particular commodity.

Intext Questions 24.1

Answer the following in the space provided after each question. a) What is meant by Sales Promotion? ______________________________________________________________ ______________________________________________________________ ______________________________________________________________ b) How can advertising help sales promotion? ______________________________________________________________ ______________________________________________________________ ______________________________________________________________ ___________________________________________________________________________

24.3 Objectives of Sales Promotion

You have learnt that the main objective of sales promotion is to increase sales. However, there are also some other objectives of sales promotion. The objectives are:

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i. To introduce new products ii. To attract new customers and retain the existing ones iii. To maintain sales of seasonal products iv. To meet the challenge of competition Let us learn about these objectives in details. (i) To introduce new products: Have you ever heard about distribution of free samples? Perhaps you know that many companies distribute free samples while introducing new products. The consumers after using these free samples may develop a taste for it and buy the products later for consumption.

(ii) To attract new customers and retain the existing ones: Sales promotion measures help to attract or create new customers for the products. While moving in the market, customers are generally attracted towards the product that offers discount, gift, prize, etc on buying. These are some of the tools used to encourage the customers to buy the goods. Thus, it helps to retain the existing customers, and at the same time it also attracts some new customers to buy the product. (iii) To maintain sales of seasonal products: There are some products like air conditioner, fan, refrigerator, cooler, winter clothes, room heater, sunscreen lotion, glycerin soap etc., which are used only in particular seasons. To maintain the sale of these types of products normally the manufactures and dealers give off-season discount. For example, you can buy air conditioner in winter at a reduced price. Similarly you may get discount on winter clothes during summer. (iv) To meet the challenge of competition: Todays business faces competition all the time. New products frequently come to the market and at the same time improvement also takes place. So sales promotion measures have become essential to retain the market share of the seller or producer in the product-market.

Intext Questions 24.2

Which of the following statements are true and which are false? a. Discount on price is allowed only for those products of which sales tend to decline. b. Sales promotion schemes are announced only when new products frequently come in the market. c. Free samples are distributed to induce customers to try out new products. d. Customers want to buy air-conditioners in summer to get the benefit of off-season discount. e. Sales promotion helps to retain existing customers as well as create new ones.

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24.4 Tools of Sales Promotion

To increase the sale of any product manufactures or producers adopt different measures like sample, gift, bonus, and many more. These are known as tools or techniques or methods of sales promotion. Let us know more about some of the commonly used tools of sales promotion. (i) Free samples: You might have received free samples of shampoo, washing powder, coffee powder, etc. while purchasing various items from the market. Sometimes these free samples are also distributed by the shopkeeper even without purhasing any item from his shop. These are distributed to attract consumers to try out a new product and thereby create new customers. Some businessmen distribute samples among selected persons in order to popularize the product. For example, in the case of medicine free samples are distributed among physicians, in the case of textbooks, specimen copies are distributed among teachers.

(ii) Premium or Bonus offer: A milk shaker along with Nescafe, mug with Bournvita, toothbrush with 500 grams of toothpaste, 30% extra in a pack of one kg. are the examples of premium or bonus given free with the purchase of a product. They are effective in inducing consumers to buy a particular product. This is also useful for encouraging and rewarding existing customers. (iii) Exchange schemes: It refers to offering exchange of old product for a new product at a price less than the original price of the product. This is useful for drawing attention to product improvement. Bring your old mixer-cum-juicer and exchange it for a new one just by paying Rs.500 or exchange your black and white television with a colour television are various popular examples of exchange scheme. (iv) Price-off offer: Under this offer, products are sold at a price lower than the original price. Rs. 2 off on purchase of a lifebouy soap, Rs. 15 off on a pack of 250 grams of Taj Mahal tea, Rs. 1000 off on cooler etc. are some of the common schemes. This type of scheme is designed to boost up sales in off-season and sometimes while introducing a new product in the market. (v) Coupons: Sometimes, coupons are issued by manufacturers either in the packet of a product or through an advertisement printed in the newspaper or magazine or through mail. These coupons can be presented to the retailer while buying the product. The holder of the coupon gets the product at a discount. For example, you might have come across coupons like, show this and get Rs. 15 off on purchase of 5 kg. of Annapurna Atta. The reduced price under this scheme attracts the attention of the prospective customers towards new or improved products. (vi) Fairs and Exhibitions: Fairs and exhibitions may be organised at local, regional, national or international level to introduce new products, demonstrate the products and to explain special features and usefulness of the products. Goods are displayed and demonstrated and their sale is also conducted at a reasonable discount. International Trade Fair in New

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Delhi at Pragati Maidan, which is held from 14th to 27th November every year, is a wellknown example of Fairs and Exhibitions as a tool of sales promotion. (vii) Trading stamps: In case of some specific products trading stamps are distributed among the customers according to the value of their purchase. The customers are required to collect these stamps of sufficient value within a particular period in order to avail of some benefits. This tool induces customers to buy that product more frequently to collect the stamps of required value. (viii) Scratch and win offer: To induce the customer to buy a particular product scratch and win scheme is also offered. Under this scheme a customer scratch a specific marked area on the package of the product and gets the benefit according to the message written there. In this way customers may get some item free as mentioned on the marked area or may avail of price-off, or sometimes visit different places on special tour arranged by the manufacturers. (ix) Money Back offer: Under this scheme customers are given assurance that full value of the product will be returned to them if they are not satisfied after using the product. This creates confidence among the customers with regard to the quality of the product. This technique is particularly useful while introducing new products in the market.

Intext Questions 24.3

A. Match the tools/techniques with their objectives. Tools / Techniques 1. Free Samples 2. Exchange Schemes (a) (b) Objectives To induce customers to buy a product more frequently. Useful for drawing attention towards product improvement. When a new product is to be introduced To boost up sales in off-season.

3. Price-off offer 4. Trading stamps

(c) (d)

_____________________________________________________________________________

24.5 Importance of Sales Promotion

The business world today is a world of competition. A business cannot survive if its products do not sell in the market. Thus, all marketing activities are undertaken to increase sales. Producers may spend a lot on advertising and personal selling. Still the product may not sell. So incentives

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need to be offered to attract customers to buy the product. Thus, sales promotion is important to increase the sale of any product. Let us discuss the importance of sales promotion from the point of view of manufacturers and consumers. From the point of view of manufacturers Sales promotion is important for manufacturers because i. ii. iii. iv. it helps to increase sales in a competitive market and thus, increases profits; it helps to introduce new products in the market by drawing the attention of potential customers; when a new product is introduced or there is a change of fashion or taste of consumers, existing stocks can be quickly disposed off; it stabilizes sales volume by keeping its customers with them. In the age of competition it is quite much possible that a customer may change his/her mind and try other brands. Various incentives under sales promotion schemes help to retain the customers.

From the point of view of consumers Sales promotion is important for consumers because i. ii. iii. iv. v. the consumer gets the product at a cheaper rate; it gives financial benefit to the customers by way of providing prizes and sending them to visit different places; the consumer gets all information about the quality, features and uses of different products; certain schemes like money back offer creates confidence in the mind of customers about the quality of goods; and it helps to raise the standard of living of people. By exchanging their old items they can use latest items available in the market. Use of such goods improves their image in society.

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Intext Questions 24.4

Given below are some statements, which are wrong. Correct them in the space provided below each. a. Money back offer helps customers to improve their status in the society and so it is important to them. _________________________________________________________________ _________________________________________________________________. b. Existing stock can be quickly disposed off by sales promotion when dealers want to compete in the market and that is why it is important to them. _________________________________________________________________ _________________________________________________________________. c. The importance of sales promotion is appreciated by consumers because they cannot change over to new brand of goods. _________________________________________________________________ _________________________________________________________________. d. Dealers consider sales promotion to be important because it involves cheaper rates being offered to customers. _________________________________________________________________ _________________________________________________________________. e. For consumers sales promotion has no importance even if it provides information about improvement in quality of goods because that does not bring monetary benefit. _________________________________________________________________ _________________________________________________________________. ___________________________________________________________________________

24.6 What You Have Learnt

Sales promotion consists of all promotional activities other than advertising and personal selling to increase sales of a commodity. Objectives of Sales Promotion o To introduce new products o To attract new customers and retain the existing o To maintain sales of seasonal products o To challenge the competition Tools / Techniques used in Sales Promotion Free samples

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SALES PROMOTON ANALYSIS OF LUX SOAP

RETAILER (1)SALES PROMOTION SCHEMES OFFERED ON LUX

Schemes_
Cash refund Cross promotion Price off Prizes
5.0% 10.0%

Product bundling

30.0%

40.0% 15.0%

The primary analysis found that Price off is the best sales promotion schemes offered on Lux (40% of the retailers agreed on this). Product Bundling was the next best with 30% of the retailers in favour of the same.

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(2)NORMAL DURATION OF SALES PROMOTION SCHEMES

Duration
1 month- 3 months 15 days 1 month More than 3 months

25.0%

60.0%

15.0%

The primary analysis found that 1 month 3 month is the normal accepted duration of sales promotion schemes (60% of the retailers agreed on this). More than 3 months was the next best with 25% of the retailers in favour of the same.

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(3)HOW OFTEN SALES PROMOTION SCHEMES ARE OFFERED ON LUX

Frequency
3 months 6 months 6 months 1 year Less than 3 months

20.0%

5.0%

75.0%

The primary analysis found that Less than 3 months is the general perceived frequency for sales promotion schemes offered on Lux (75% of the retailers agreed on this). 3 months 6 months was the next best with 20% of the retailers in favour of the same.

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(4)AFFECT ON SALES OF LUX DUE TO SALES PROMOTION SCHEMES

Affect_on_Sales
Cant say Increase in sales No affect

10.0% 15.0%

75.0%

The primary analysis found that sales promotion schemes offered on Lux caused an Increase in sales (75% of the retailers agreed on that). Cant say was the next best opinion with 15% of the retailers in favour of the same.

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(5)COMMUNICATION OF SALES PROMOTION SCHEMES

Communication
Through print media Through wholesalers Through electronic media Through sales representatives
15.0% 25.0%

40.0% 20.0%

The primary analysis found that Wholesalers were the best medium of communication of sales promotion schemes (40% of the retailers agreed on that). Sales representatives was the next best with 25% of the retailers in favour of the same Page

(6)LEVEL OF SERVICING DURING SALES PROMOTION - COMPARISION WITH COMPETITORS

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Comparision_with_competitors

Inferior and more frequent Similar and more frequent Superior and less frequent Superior and more frequent

10.0%

45.0%

35.0%

10.0%

The primary analysis found that the level of servicing during sales promotion vis--vis competitors was Superior and more frequent (45% of the retailers agreed on that). Similar and more frequent was the next best with 35% of the retailers in favour of the same.

(7)AFFECT OF SALES PROMOTION SCHEMES ON DIFFERENT AGE GROUP

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Affect_on_perception_on_age_group

26-45 46 -60 16-25

30.0%

55.0%

15.0%

The primary analysis found that 26-45 age group were the most affected by sales promotion (55% of the retailers agreed on that). 16-25 age group was the next best with 30% of the retailers in favour of the same

(8)PROBLEMS FACED DURING & AFTER SALES PROMOTION SCHEMES

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Problems_faced
Handling problem Stock out Improper information

10.0%

45.0%

45.0%

The primary analysis found that Stock out and Handling problem were major problems faced during and after sales promotion schemes (with 45% of the retailers in favour of the same)

(9)INCENTIVES PROVIDED DURING SALES PROMOTION SCHEME

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Incentives_provided
Cash discount Gifts Prizes Others
10.0%

25.0%

55.0%

10.0%

The primary analysis found that Cash discount is the best incentive provided during sales promotion scheme offered on Lux (55% of the retailers agreed on that). Prizes was the next best with 25% of the retailers in favour of the same.

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(10)BEST SALES PROMOTION SCHEME

Best_schemes
Cash refund Price off Product bundling Scratch card
10.0% 15.0%

20.0%

55.0%

The primary analysis found that Price off is the best sales promotion schemes offered on Lux (55% of the retailers agreed on that). Product Bundling was the next best with 20% of the retailers in favor of the same

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CONSUMERS ANALYSIS

(1)MOST PREFFERED CRITERION FOR SOAP SELECTION

Most preffered criterion

Advertisement Brand value
6.25% 3.75% 15.0% 13.75% 2.5%

Fragrance of soap
7.5%

Price Promotional schemes Benefits Color of soap Packaging Word of mouth

10.0%

12.5%

28.75%

The primary analysis found that Price is the most preferred criterion for soap (28.75% of the consumers agreed on that). Brand Value was the next best with 15% of the consumers in favour of the same. Page

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(2)PERCEPTION ABOUT LUX

Perception about Lux

Beauty soap Nothing specific Soap for all Soap of filmstars
15.0%

50.0% 23.75%

11.25%

Page

The primary analysis found that the major perception about Lux is that as a Beauty Soap (50% of the consumers agreed on that). Soap for all was the next best with 23.75% of the consumers in favour of the same

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(3)RECOLLECTION OF ANY ADVERTISEMENT OF LUX

Recall of current advertisement

No Yes.

8.75%

91.25%

The primary analysis found that advertisement recall of Lux was Yes for 91.25% of the consumers and No for 9.75% of the consumers Page

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(4)MOST EFFECTIVE MEDIUM OF SALES PROMOTION

Most effective medium for promotion

Personal selling Advertising Sales promotion
10.0%

31.25%

58.75%

The primary analysis found that Advertising is the most effective medium for sales promotion (58.75% of the consumers agreed on that). Sales Promotion was the next best with 31.25% of the consumers in favour of the same.

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(5)PREFERENCE OF PROMTIONAL SCHEME

Preference of promotional schemes

Discount coupons Free trial Scratch card
6.25% 12.5% 3.75% 6.25%

Cash refund Cross promotion Price off Prizes

13.75%

42.5%

15.0%

The primary analysis found that Price Off is the most preferred promotional scheme (42.5% of the consumers agreed on that). Cross Promotion was the next best with 15% of the consumers in favour of the same.

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(6)PERCEPTION ABOUT CHANGE IN QUALITY DURING SALES PROMOTION SCHEME

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Perception about change in quality

Superior No change
6.25%

93.75%

The primary analysis found that the perception about change in quality during sales promotion scheme was Superior (93.75% of the consumers agreed on that). No change was the next best with 6.25% of the consumers in favour of the same

(7)TYPE OF IMPACT

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Type of impact
No change in buying behavior Buy it during sales promotion offer Continue buying even after sales promotion offer is scrapped Makes you switch to Lux

13.75%

26.25%

38.75%

21.25%

The primary analysis found that the type of impact of sales promotion was Continue buying even after sales promotion offer is scrapped (38.75% of the consumers agreed on that). No change in buying behaviour was the next best with 26.25% of the consumers in favour of the same.

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(8)COMMUNICATION OF SCHEME

Communication of schemes
Through companys stall Through electronic media
11.25%

3.75%

Through print media Through sales representatives

26.25%

58.75%

The primary analysis found that the communication of schemes should be Through electronic media (58.75% of the consumers agreed on that). Through print media was the next best with 26.25% of the consumers in favour of the same

(9)PROBLEMS FACED DURING SALES PROMOTION SCHEMES

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The primary analysis found that Stock Out is the biggest problems faced during sales promotion schemes (42.5% of the consumers agreed on that). Any other was the next best with 21.25% of the consumers in favour of the same.

(10)COMPARISION WITH COMPETITORS

Comparison with competitors

Similar and less frequent Similar and more frequent
3.75%

Superior and less frequent Superior and more frequent

35.0% 48.75%

12.5%

The primary analysis found that Luxs promotion schemes were Superior and more frequent vis--vis its (48.75% of the consumers agreed on that). Similar and more frequent was the next best with 35% of the consumers in favour of the same

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(11)AFFECT ON AGE GROUP

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Affect on age group

Adults Older people Youngsters Adults
6.25% 2.5%

Kids

32.5% 56.25%

2.5%

The primary analysis found that Adults were the most affected upon by sales promotion 56.25% of the consumers agreed on that). Youngsters was the next best with 32.5% of the consumers in favour of the same.

12)PRICE OF SOAP

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Price
Dissatisfied Neutral Satisfied Very satisfied
7.5%

Satisfied

42.5% 32.5%

2.5% 15.0%

The primary analysis found that the customers perceived the price of soap to be Satisfactory (42.5% of the consumers agreed on that). Neutral was the next best with 32.5% of the consumers in favour of the same.

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(13)DISTRIBUTION NETWORK

Distribution Network
Neutral Very satisfied Dissatisfied Satisfied

21.25%

47.5%

26.25%

5.0%

The primary analysis found that the customers perceived the distribution network of soap to be Satisfactory (47.5% of the consumers agreed on that). Very Satisfied was the next best with 26.25% of the consumers in favour of the same

(14)QUALITY

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Quality
Neutral Satisfied Very satisfied Dissatisfied Satisfied

23.75%

47.5%

12.5%

7.5% 8.75%

The primary analysis found that the customers perceived the quality of soap to be Satisfactory (47.5% of the consumers agreed on that). Neutral was the next best with 23.75% of the consumers in favour of the same.

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(15)ADVERTISING

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Advertising
Dissatisfied Neutral Satisfied

17.5%

56.25% 26.25%

The primary analysis found that the customers perceived the advertising of soap to be Satisfactory (56.25% of the consumers agreed on that). Neutral was the next best with 26.25% of the consumers in favour of the same

(16)PROMOTIONAL SCHEMES

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Promotional Schemes
Satisfied Very satisfied Dissatisfied Neutral

21.25%

7.5%

63.75% 7.5%

The primary analysis found that the customers perceived the promotional schemes of soap to be Satisfactory (63.75% of the consumers agreed on that). Neutral was the next best with 21.25% of the consumers in favour of the same.

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9.CONCLUSION

Companies need to systematise information flow regarding sales promotion activities particularly at dealer - retailer level. Ensuring proper information flow and devising checks and measures to reduce misappropriations and implementation flows should be considered critical aspects for the success of sales promotion activities by the companies. As retailing is fragmented, direct reach by companies is next to impossible. Through dealers and proper feedback mechanism, companies keep in touch with the market. From the study it was found that smaller retailers felt neglected and not enthused to implement the schemes, particularly when additional handling, stocking, accounting was required on the part of a retailer without compensatory margins. It can be seen that the retailer and consumer perceptions matched with respect to preferences of schemes, underlying motivations and role of mass media. This implies that the retailer would be a rich source of information about the consumer and the likely response to sales promotion activities. Developing a system to tap such responses from time to time both at retailer and consumer level would be helpful for planning future sales promotion activities. In order to build trust and commitment companies should tap preferences, perceptions of retailers as well as consumers.

APPENDIX RETAILERS QUESTIONNAIRE

(1)What are the sales promotion schemes offered on Lux ? (a)Price off (b)Discount coupons (c) Product bundling (d)Contests (e)Scratch card (f)Cross promotion (g)Cash refund (h)Prizes (i)Free trial (j)Any other

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(2)What is the normal duration of the sale promotion scheme offered by Lux? (a)Less than 15 days (b)15 days 1 month (c)1 month- 3 months (d)More than 3 months

(3)How often sales promotion schemes are offered on Lux? (a)Less than 3 months (b)3 months 6 months (c)6 months 1 year (d)More than 1 year (4) Affect on sales of Lux due to sales promotion schemes offered ? (a) Increase in sales (b) Decrease in sales (c ) No affect (d) Cant say

(5)How is the sales promotion scheme communicated to you? (a) (b) (c) (d) (e) Through wholesalers Through sales representatives Through print media Through electronic media Through Manufacturer

(6) Level of servicing during sales promotion? (a) Very Prompt (b) Prompt (b) Moderate (c) Slow (d) Very slow

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(7) Comparison of sales promotion scheme offered on Lux with competitors?

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(a)Superior and more frequent (b)Superior and less frequent (c)Similar and more frequent (d)Similar and less frequent (e)Inferior and more frequent (f) Inferior and less frequent

(8) Perception of which age group gets most affected due to sales promotion schemes offered? (a) (b) (c) (d) (e) 8-15 yrs 16-25 yrs 26-45 yrs 46 -60 yrs 60 and above

(9) What are the problems faced during and after the sales promotion schemes? (a) (b) (c) (d) Handling problem Stock out Improper information Leftover

(10) What are the incentives provided to you during sales promotion schemes? (a) (b) (c) (d) (e) Prizes Sponsored tour Gifts Cash discount Lucky draw` coupons

(11) Which sales promotion schemes you think is the best for you to handle? (a)Price off (b)Discount coupons (c) Product bundling (d)Contests (e)Scratch card (f)Cross promotion (g)Cash refund (h)Prizes (i)Free trial (j)Any other

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CONSUMERS QUESTIONNAIRE (1)Which brand of bathing soap do you use ?............................................................................................

(2) Is the same brand of soap used by your other family members? If not , which brand of bathing soap do they use?......................................................................................

(3) How would you rank following criterion for selecting a bathing soap ? (a) Color of soap (b) Fragrance of soap (c) Brand value (d) Price (e) Benefits (f) Packaging (g) Word of mouth (h) Advertisement (i) Promotional schemes

(4) What comes in to your mind when you think about Lux ? (a) Soap of filmstars (b) Beauty soap (c) Nothing specific

(5) Can you recall any current advertisement of Lux ? (a)Yes. (b) No. (6) Which is the most effective medium for promoting the product? (a) (b) (c) (d) (e) Advertising Sales promotion Public relation & Publicity Personal selling Internet

(7) Out of total 100 points, allot the points according to your preference on the

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following promotional schemes? (a) Price off (b) Discount coupons (c) Contests (d) Scratch card (e) Cross promotion (f) Cash refund (g) Prizes (h) Free trial

(8) Do you perceive any change in quality of Lux during the sales promotion scheme? (a) Superior (b) Inferior (c) No change

(9) What type of impact does the sales promotion scheme on Lux creates on you? (a)Makes you switch to Lux (b)Buy it during sales promotion offer (c)Continue buying even after sales promotion offer is scrapped (d) No change in buying behavior

(10)How is the sales promotion scheme communicated to you? (f) (g) (h) (i) Through sales representatives Through print media Through electronic media Through companys stall

(11)What are the problems faced during and after the sales promotion schemes? Page (e) Stock out (f) Improper information

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(g) Gifts not received (h) Coupons not encashed (i) Any other

(12) Comparison of sales promotion scheme offered on Lux with competitors? (a)Superior and more frequent (b)Superior and less frequent (c)Similar and more frequent (d)Similar and less frequent (e)Inferior and more frequent (f) Inferior and less frequent

(13) In your family which age group gets most affected due to sales promotion schemes offered? (f) (g) (h) (i) Kids Youngsters Adults Older people

(14) How do you rate Lux on following parameters?

Very satisfied

Satisfied

Neutral

Dissatisfied

Very dissatisfied

(a) Price (b) Distribution Network (c) Quality (d) Advertising (e) Promotional Schemes

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Sales Promotion

Intext Questions 24.4

Given below are some statements, which are wrong. Correct them in the space provided below each. a. Money back offer helps customers to improve their status in the society and so it is important to them. _________________________________________________________________ _________________________________________________________________. b. Existing stock can be quickly disposed off by sales promotion when dealers want to compete in the market and that is why it is important to them. _________________________________________________________________ _________________________________________________________________. c. The importance of sales promotion is appreciated by consumers because they cannot change over to new brand of goods. _________________________________________________________________ _________________________________________________________________. d. Dealers consider sales promotion to be important because it involves cheaper rates being offered to customers. _________________________________________________________________ _________________________________________________________________. e. For consumers sales promotion has no importance even if it provides information about improvement in quality of goods because that does not bring monetary benefit. _________________________________________________________________ _________________________________________________________________. ___________________________________________________________________________

24.6 What You Have Learnt

Sales promotion consists of all promotional activities other than advertising and personal selling to increase sales of a commodity. Objectives of Sales Promotion o To introduce new products o To attract new customers and retain the existing o To maintain sales of seasonal products o To challenge the competition Tools / Techniques used in Sales Promotion Free samples

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Premiums or Bonus offer o Exchange schemes o Price-off offer o Coupons o Fairs and Exhibitions o Trading stamp o Scratch and win offer o Money Back offer Importance of Sales promotion For manufacturers Increases the volume of sales Helps to introduce new products in the market Enables quick disposal of existing stocks For consumers Goods are available cheaper rate Financial benefits to the customers Generates awareness about new brands Stabilizes the volume of sales Creates confidence in the mind of customers regarding quality Raise standard of living

24.7 Terminal Exercise

1. 2. 3. 4. 5. 6. 7. 8. 9. Define Sales Promotion. State the importance of Sales Promotion from the point of view of manufacturers. State the importance of Sales Promotion from the point of view of consumers. List any six tools used in Sales Promotion State the objectives of Sales Promotion Explain the meaning of Sales Promotion. Why is Sales Promotion necessary? Explain any two techniques of Sales Promotion, with example. State any two objectives of Sales Promotion. Explain Price off offer and Free-Samples as techniques of Sales Promotion.

10. Explain how Sales Promotion techniques help in promoting sales. 11. A toothpaste company is giving 250 grams toothpaste free with a pack of 500 gm toothpaste. Name this technique of sales promotion. What is the specific objective of this scheme? Explain two more schemes of Sales Promotion other than this.

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12. To introduce new products, to create new customers and retain the existing ones, to remain competitive are the objectives of Sales promotion. Explain how? 13. Define Sales Promotion. What are the objectives of Sales Promotion? 14. Explain the term Sales Promotion. Discuss any four techniques of Sales Promotion? 15. Sales Promotion is important both for manufacturer and consumers. Explain how?

24.8 Key to Intext Questions

24.1 a) Sales Promotion refers to all activities other than advertising and personal selling that help to increase sales of a particular commodity. b) Advertising can be used as a means of communication to inform potential customers about incentives for sales promotion. 24.2 a) False b) False c) True d) False e) True 24.3 1. (c) 2. (b) 3. (d) 4. (a) 24.4 a. Exchange offer as a sales promotion measure helps consumers to improve their status in the society and so it is important to them. b. The importance of sales promotion to dealers lies in the fact that existing stocks can be quickly disposed off when there is change in the fashion or taste of consumers. c. To the dealer, sales promotion is important because customers are thereby induced not to change over to new brands. d. Sales promotion is important to consumers as goods are available at cheaper rates. e. For consumers, sales promotion is important because it provides information about improvement in quality of goods.

Activity For You

i. Make an enquiry from the nighbouring market retailers at what time they offer stock clearance

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sale and why. ii. Collect information through advertisements in newspapers and magazines regarding various sales promotion schemes introduced by manufacturers.

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REFERENCES 1. Kotler Phillip, Marketing Management : Analysis, Planning, Implementation and Control, 9th ed., Prentice Hall of India, 1997. 2. Strang Roger, Sales Promotion fast growth faculty management, Harvard Business 3. Review, 1976. 4. www.indiainfoline.com 5. hul.co.in 6. Aradhna Krishna, Imran S. Curriuun and Robert W. Shoemaker, Consumer Perceptions of 7. Promotional Activity, Journal of Marketing, Vol.55 (April 1991), pp.4-16. 8. Huff Lenard C., Alden Dana L., An Investigation of Consumer Response to Sales 9. Promotions in Developing Markets: A Three Country Analsysis, Journal of Advertising 10. Research, May/June, 1998, Vol. 38, Issue 3, p.47-57. 11. Op. Cit 1. 12. Page Moreau, Aradhna Krishna, Bari Harlam, The Manufacturer-retailer-consumer triad: Differing perceptions regarding price promotions, Journal of Retailing, 77 (2001), pp.547-569. 13. Barbara E. Kahn and Jagmohan S. Raju, Effects of price promotions on variety seeking and reinforcement behaviour, Marketing Science, Vol.10, No.4, Fall 1991, pp.316-337. 14. Kotler Phillip, Marketing Management : Analysis, Planning, Implementation and Control, 9th ., Prentice Hall of India, 1997. 15. Strang Roger, Sales Promotion fast growth faculty management, Harvard Business 16. Review, 1976. 17. VANSCOM Database, Vikram Sarabhai Library, IIMA. 18. India infoline.com 19. Amrish Choudhry and others, Marketing Communications Project Report, Mudra Institute of Communications and Advertising, February 2002. 20. Aditya Kajriuwal and others, Marketing Communications Project Report, Mudra Institute of Communications and Advertising, February 2002. 21. Agencyfaqs.com (web site)