Chapter- 16

Sales Promotion

17.1
Sales promotion collectively comprises the tools used to promote
sales in a given territory & time.They are shot term in nature &
Are designed to to stimulate quick sales.
• Importance of sales promotion to a marketer is attributed to
the following reasons:
• Fast growing market

• Increasing competition among brands

• The maturing and standardization of products

17.2
Factors Contributing to Growth of Sales
Promotions:
(a) Growing consumerism in India and an upwardly mobile
Indian market
(b) Heightened inter-firm rivalry within the industry
(c) Trade’s resistance to invest additional resources in the product
mix of different companies
(d) Fragmentation of viewers and readers arising out of multiple
television channels, newspapers and magazines
(e) The mass media cost has been on the rise and most companies
find sales promotion as a more cost effective alternative
(f) With technologies and products getting standardized,
differentiation between firms has got blunted and price wars
have now become a reality in most consumer goods
17.3
 Sales Promotion Helps
(i) Helps in securing trial and defending shelf space against
competition;
(ii) Smoothens out the manufacturing capacities of firms in
such a way that the peaks and the valleys are
minimized;
(iii) Provides opportunities to manufacturers to reach out to
market segments with differing price sensitivity;
(iv) Adds excitement to the in-store merchandizing of
consumer goods;
(v) Motivates trade to keep more and push more of those
brands that are on promotion

17.4
Consumer promotion Vehicles used
objectives
(a) Generate trial: Coupons
(i) New products Discount sales
(ii) Related products Free samples
(iii) Brand switchers Contest demonstrations
(b) Enquiries Gifts
Mail in coupons
Catalogue offers
(c) Repurchase On-pack coupons
Mail in coupons
Continuity promotions
(d) Traffic building Special events
Annual sales
Festival sales
Retailer coupons
(e) Increased rate of Multipacks
purchase Special price for two
Information on new usage situations

17.5
 Trade Promotions

Objectives Vehicles

•High margins
(a) Inventory building •Allowances for
additional shelf
space and merchandizing
•Returns allowance
(b)Promotional support •Joint promotion
•Sales contests
•Merchandize allowance
•Subsidy for promotion
budgets

17.6
Sales Promotion
• Sales promotion and the Brand’s stage in its life cycle-
• Introductory Stage- advertising helps awareness creation &
brand positioning while sales promotion induces trial
• Growth Stage- Advertising helps competitive differentiation &
market expansion,while sales promotion helps to create and
reward loyalty.
• In Maturity market advertising helps reminding customer about
product availability,while promotion helps maintain customer
loyalty and attract new customers.
• Planning the Sales promotion Programmes- Considerable time
in planning and a long term analytical planning approach which
involves –
• Review of the Product Market Situation –Marketer should
examine trends in his brand sales and product category sales.
• Consumer Purchase Patterns
• Distribution methods 17.7
Planning the Sales promotion Programmes
• Identification of Opportunities & Threats
• Deciding on Sales Promotion Objectives
• Deciding on Sales Promotion Budgets- next question comes how
much to spend ?
1) Direct fixed & variable costs- costs of physical distributing
samples,placing advertisements,& point of purchase material.
2) Likely Market Responses-
a) Redemption rates
b) Displacement rates
c) Acquisition rates
d) Stock up rates
e) Conversion Rates
f) Product line effects 17.8
Set up control Mechanisms to ensure
effectiveness of the campaign
• Sales Promotion and Brand Image
• Imitation on the sales promotion front leads to promotion wars
& lowering of margins.

Firm loses market

Reduce Promotions share.Others gain market
Win-Win
share

Firm’s Strategic
options
Firm wins market Nobody wins:-
Maintain / Enhance share market share
Promotions constant, profit
margins erode

Industry’s strategic response 17.9