UGC NET Study Notes on Sales Promotion

Sales Promotion

• Sales promotion is a tool of promotion which aids personal selling and advertising efforts. It is the process of persuading a potential customer to buy the product. Sales promotion includes all those marketing activities that increase the sales of a particular product.
• Sales promotion includes free samples, gifts, rebate, instant draws, packaged premium, contests, discounts, sales and dealers incentives, public relation activities, exhibitions and fairs, etc. Sales promotion are those activities that stimulate market demand for the products.
• Sales promotion is different from personal selling which is the persuasion of customers by the salespersons to buy a certain product. It is also different from advertising which is any paid form of nonpersonal presentation and promotion of ideas, goods and services.
• Sales promotion deals with non-recurring and non-routine methods in contrast with personal selling or advertising. Sales promotion activities aimed at coordinating and supplementing advertising and personal selling.

Some sales promotions are aimed at customers, and others are targeted at intermediaries and at the firm’s sales force. When undertaking a sales promotion, there are several factors that a business must take into account:

1. What does the promotion cost? Will the resulting sales help in curbing the cost and at the same time generate maximum profit for the firm?
2. Is the sales promotion consistent with the brand image? A promotion that heavily discounts a product with a premium price might do some long-term damage to the brand.
3. Will the sales promotion attract customers who will continue to buy the product once the promotion ends?

Objectives of Sales Promotion

Sales promotion techniques are used to achieve the objectives that are as follows:

1. to increase sales volume by inducing the customers to buy more.
2. to attract new customers to buy the product.
3. to generate a good public image of the product as well as the firm.
4. to introduce new products in the market by creating awareness about the product through sales promotion techniques.
5. to create goodwill among the present as well as prospective customers.
6. to retain the old customers by various sales promotion means.

Types of Sales Promotion Activities

Sales promotional programs may broadly be classified into:

1. Consumer Sales Promotion – Any sales promotion activity that is done keeping the end customer in mind is known as consumer sales promotions. This type of programme is conducted to increase the consumer’s knowledge of the product, or it may be conducted to attract new customers. Sometimes, this type of sales promotion is also conducted to retaliate against a competitor’s sales promotion activities. The techniques of promotion used are free samples, coupons, contests, price reduction, demonstration, etc.
2. Dealers Sales Promotion – If the promotional techniques are focused on dealers, traders, wholesalers, distributors or agents, retailers, then it is known as trade promotion or dealers sales promotion programme. These activities may include extra cash or trade discounts on the basis of orders placed. They are also known as trade promotion.

Techniques of Sales Promotion

The techniques of sales promotion used by firms are discussed as under:

1) Rebate or Price-off Offer – In order to increase sales, many businesses offer price off offer to the customers. The product is offered at a price that is lower than the normal price. For example, during the winter season, ACs, coolers may be offered at 20% to 30% off.

Rebate offer is a type of partial refund given for a limited period of time only. For example, soft drink companies offered rebates are the code behind the label sent to them.

2) Free Samples – Sampling is an excellent way to introduce the new product in the market and at the same time to increase awareness of the product. Distribution of samples is popular in the case of cosmetics, some food items and other similar products. Distribution of samples might be of higher cost to the company, but it is quite successful in the various types of sales promotion.

3) Discount coupons – It is a commonly used technique to motivate people to purchase when they think the price is high or it can be incentive to buy the product above the competitors. The coupons are issued by direct mails or through dealers also through newspapers and magazines. The holders of the coupons can go to the retailers and get the product at a cheaper price.

4) The exchange offers – It means the exchange of an old product with the new one after the payment of the exchange price fixed by the manufacturer. Such offers are very common in the case of scooters, cars, electrical appliances like TVs, irons, washing machines, refrigerators, etc.

5) Assured Gifts – Some manufacturers offer instant draws and assured gifts to their customers when they make purchases. This type of scheme may be like: scratch a card and instantly wins a car, bike, electric iron, etc. on the purchase of a refrigerator.

6) Contests – There are different types of contests to motivate the customers to try the product. Contests can be simple as winning a gift through spinning the wheel, or it can be an in house game in a retail store, or it can be an online contest for which users have to enter their information.

7) Product Bundling – It refers to putting a combination of products on sale for the same price. For instance, a Dove shampoo might be bundled with a Dove body wash; a Colgate toothpaste is bundled with the toothbrush.

8) Financing – Companies which have huge resources generally act as Financiers. They allow customers to purchase a product on EMI. As a result, the customer having lack of complete money will likely purchase the product using financing options.

9) Free Trials – This type of sales promotion techniques is widely used by online media providers which offer a free trial to the customers before they purchase the product. For example, online service providers like Netflix, Amazon Prime and others are known to give free trial programs of up to a month so that the customer can know more about the product, he/she can try it and then purchase.

10) Container Premium – Several firms use container premium to push the sale of their products. For example, Bournvita, Kissan jams, etc. are made available in special containers which can be reused in the kitchen after the product has been consumed.

11) Public Relations – It strives for creating a good image of the enterprise in the eyes of the customers and the society. These activities are not aimed at immediate demand creation. This type of sales promotion technique is useful in the creation of good relationships with customers.

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