 Sales Promotion:- Sales promotion is an indispensible part of marketing.

 The ultimate objective of the marketer is to sell the product that is produced in the factory.

 Similar to advertising, sales promotion is a type of marketing communication.

 Advertising is generally used to reach a disparate target audience, who get a broad view of a brand’s
attributes.

An advertisement may or may not result in a sales transaction. However, sales promotion is
designed to ensure just that.

 Sales promotion can be defined as ‘Media and Non–Media marketing pressure applied for a
predetermined, limited period of time in order to stimulate trial and impulse purchase, increase consumer
demand, or improve product quality’.

 It can also be defined as ‘A marketing discipline that utilizes a variety of incentive techniques to structure
sales related programmes, targeted to consumers, trade, and / or sales levels that generate a specific,
measurable action or response for a product or service’.

 Sales promotion aims directly at inducing purchasers to buy a product. It involves Demonstrations,
Contests, Price-off, Coupons, Free Samples, Special Packaging and Money Refund Offers.

 Sales promotion is not only aimed at end users, but also at wholesalers and dealers.

 Selecting the right trade promotion tool at a given time requires a study of the market of competitors’ sales
promotion strategies, and of the expectations of dealers and wholesalers.

 Sales promotion activities also cover the Business and Sales teams of the company.

Ex:- Participation in trade shows and conventions, sales contests, promotional material, incentives in
cash or kind etc.

 An organization has to look at all the links between itself and the end consumer in determining its
promotional strategy.

 Sales Promotion Tools in the Marketing Mix:- The marketing mix includes Four major Ps – Product, Price,
Promotion and Place. Many more Ps have been added over a period of time, which includes Perceptions,
People and Packaging.

 When we talk about Promotion, we include Advertising, Public Relations, Personal Selling and Direct
Marketing.

1. Advertising:- Advertising is the most visible tool of sales promotion. Advertising is also known as Mediated
Communication as it uses one or more mass media.

 Advertising is a technique through which a manufacturer is able to have a direct link with existing and
potential consumers of a brand.

2. Public Relations:- Public relation is a wide field and is of great importance to the marketer, as, any marketer
if becomes effective in developing the public relation with its existing and potential customer then it
generally enjoys a great brand image and sales.

3. Direct Marketing:- In the device of direct marketing, the manufacturer interfaces with the customer
directly, snapping off the supply chain between the company and the end user.

 Consumer Promotions:- Consumer promotions are those promotional activities and schemes which are
aimed at the consumer either directly by the manufacturer or in co–ordination with the supply chain.

1. Promotion Offers:- Two or more brands are tagged together to generate more sales.

Ex:- McDonald and Coca Cola.

2. Coupons:- A coupon is a price reduction offer to a consumer either at present or on future purchases.

Ex:- Domino’s, Big Bazar. Etc.

3. Price–Offs:- This kind of promotion offers a consumer a certain percentage of discount that is generally
reflected on a price–tag.

 The old price is crossed out and the discounted one stamped in to assure the customer of the value transfer
on purchase.

4. Premiums:- These are prizes, gifts and special offers that the consumers are offered at the time of
purchase.

 It is important to offer a premium that enhances the manufacturer or retailer’s image. Cheap premiums
can be humiliating to the purchase.

 The principle to remember while deciding on a premium is that the item must be able to build a rational or
emotional involvement with the product or service, to which the premium is attached.

5. Contests and Sweepstakes:- Generally a person becomes eligible to enter a contest after he / she makes a
purchase whereas to enter a sweepstake, a person may or may not make a purchase.

6. Refunds and Rebates:- Refunds and Rebates are offered to consumers or to the traders, following the
purchase of a product.

 In this case, the consumer is expected to pay full price against purchase and then to present the proof of
purchase; the manufacturer then reimburse a portion of the purchase price.

7. Sampling and Trial offers:- Many a times sampling and trials of new products are made to initiate new
purchases.

Ex:- Car manufacturers and dealers often announce a trial run on new brands.

8. Loyalty Programmes:- Loyalty programmes are initiated by companies to express their bond with loyal
customers.

Ex:- Loyalty bonus and Loyalty points.

 Trade Promotions:- The supply chain forms the backbone of any marketing program.

 Every product can not be sold directly by the manufacturer to the customer.

 Trade promotion tools are hence aimed at building a robust relationship with Wholesalers and Dealers.

 The trade promotion is aimed at the trade, to achieve broadly the following aims:-

1. To encourage storing of the manufacturer’s merchandise in the stores.

2. To ensure higher visibility of the merchandise vis-à-vis other similar products.

3. To enthuse the trader to push a particular merchandise at the cost of competing products.

4. Often to create excitement about reaching the target sales.

5. To build loyalty for manufacturers in case of stiff competition.

 Techniques used for Trade Promotion:-

1. Trade Deals:- Under this scheme, the manufacturer offers discounts, free goods (as bonus), higher
commissions if a target is reached, gift in kind, holidays at exotic places or better credit facilities.

2. Co–operative Advertising tip–ups:- Here the retailers advertise the product of a manufacturer with some
financial support from the manufacturer.
  This trend is very common and effective in cases of cost intensive products like automobiles and electronic
items.

3. Participation in Trade fairs and Trade shows:- Traders are the backbone of a company’s supply chain.

 In order to educate them on the latest techniques and displays, many manufacturers take their traders to
trade fairs, seminars and workshops, which helps them in providing the right exposure, besides building a
rapport with them.

4. Direct Stimulation of Trader’s Sales team:- The sales team of a retailer is encouraged to push a brand of a
particular manufacturer against competing brands, with special incentive from the company side.

5. POP Display:- POP (Point of Purchase) forms a very significant part of the sales promotion scheme.

 The connect helps in reinforcing the brand message. POP materials include banners, signs, dispensers,
racks, display cartons, price card etc.

6. Push–Money:- Push–Money, also known as spiffs, is a monetary benefit paid to a retail outlet based on
units sold over a period of time.

7. Dealer Loader:- This is a premium given by a manufacturer to a dealer for buying a certain quantity of
merchandise.

8. Industry Tie–ins:- Many a times, tie-ups between and among business partners are organized to promote
certain products.

Ex:- Buying a fridge of a particular brand and getting an iron of another brand as a gift.

9. Event Sponsorship:- Companies either use events revolving around their brands or sponsor sports, fashion,
social or national events.

 The basic aim behind event management is to create top-of-the-mind recall through stressing a corporate
identity and also to be seen as being associated with a worthy cause.

10. Celebrity Endorsements:- Involving celebrities, works for both the sponsor and the celebrity.

 It assures more participation from people, good media coverage for the company and a better public
image for the celebrity, who wishes to be seen endorsing a public sentiment or a cause.

Even many companies in the social sector invite celebrities from various fields to be their brand
ambassadors.

 Objectives of Sales Promotion:- Sales promotion objectives are consistent with marketing objectives.

 They may vary with the type of target market and points of channel.

• The objectives for retailers may be to carry new items, encourage off-season buying, offset competitive
promotions, build brand loyalty and so on.

• The objectives for the sales force may be to encourage a new product or modes, stimulate off-season sales,
persuade more prospective buyers, and so on.

• The objectives for consumers may be to encourage more usage and purchases of a large number of units
and attract competitors’ brand users.

 In spite of these several objectives, there are three fundamental objectives of sales promotion. These are:-

1. Informing:- To educate the consumer about the product. The consumer must have some knowledge about
the product, they should, therefore, be informed of the new product and it’s benefits.

2. Persuading:- Sales persons persuade consumers to buy products. They develop or reinforce a favorable set
of attitude and influence their buying behavior. They supply comparative information on various products
so that consumers may be willing to purchase the products promoted by them.
3. Reminding:- Reminding leads the firm to reinforce the previously satisfactory behavior of the customer. For
this purpose, it provides suitable knowledge for recollection. Reminding the consumers of their past
satisfaction will persuade them to stay with the product and prevent them from shifting to competitors.

 Sales Promotion Budgets:- It is extremely important to determine sales promotion budgets before
resorting to sales promotion activities.

 The resources and sales potentials are estimated before the formulation of budgets.

 Sales promotion budgets should be adequate, so that they might achieve promotion objectives.

 The following methods are used in order to decide upon the sales promotion budget:-

1. Arbitrary Budgeting Method:- Some marketing managers use this method based on trial and errors.

2. Percentage–of–Sales Technique:- A formula is framed to fix the budget level, which is generally 0.5% of the
sales, which may be increased up to 1.0% in a competitive environment.

 But this method is not very logical as sales promotion is the cause and not the effect of sales.

 If the sales have increased because of external factors, the increase in sales promotion budget has no
logical background for it.

 However, this method of budgeting is commonly used in sale promotion activities.

3. Maximum Possible Expenditure:- The expenditure on sales promotion is a sort of long–term investment,
which may enhance the name & fame of the company.

 Hence, many companies, specially the new ones, favour maximum expenditure on sales promotions.

 Many a times, a competitive environment also dictates that there should be maximum possible
expenditure on sales promotion activities.

4. Return on Investment Method:- The total expenditure on all sorts of promotion is fixed on the basis of the
return on investment.

 The ROI of the past five to ten years is averaged to arrive at the standard rate of return.

 The maximum limit on the promotion budgets is discounted on this basis. The promotion budget is then
rationally divided into sales promotion, personal selling, publicity and advertising.

 The total expenditure on sales promotion is fixed on the basis of objectives and tasks.

 The marketing manager choose the technique which is best capable of enabling him to attain the
objectives.

 The sales promotion objectives & budgets are decided at the time the objectives & budgets of other
methods of promotion are evaluated and fixed.

 The expenditure on sales promotion and other methods is also determined on the basis of expenditure
trend in the industry.

 Competition is also another important factor which determines the volume of expenditure on sales
promotion.

 The responsiveness of the budget is evaluated on the basis of the return in industry on promotion
expenditure.

 The market share of the company is also taken as a guide for fixing the amount of expenditure.

 A crude evaluation of the responsiveness may be done by the comparative analysis method of additional
promotion expenditure and additional sales realization.
  However, it is difficult to evaluate the impact of promotion expenditure as a whole because of the different
sales promotion activities, cost of production & sales, quality of the product, promotional plans and
external environmental variables.

 The responsiveness also varies in accordance with the life cycle of the product.

 Industry sales are less responsive to promotion during maturity and more responsive to promotion during
the introduction and growth phase.

 Evaluation and Control of Sales Promotional Strategy:- Sales promotional strategies should be evaluated at
the stages of Implementation & Final Performance as implementation control will suggest improvements
during the application of the promotional strategy, while performance control will be a guide for the
future.

 Implementation control covers Initial Planning, Objectives, Promotional Packages, and Printing of Special
Premium & Packaging Materials, Distribution of Retailers etc.

 It is said that 95% of implementation control has improved sales results, although very few firms adopt this
strategy.

Most of the manufacturers believe only in performance control.

 Performance or Sales results are evaluated in the light of planned objectives.

 Consumer panel data, consumer surveys and consumer experiments are also used to evaluate the
performance of a particular mode of promotion or form of sales promotion.

 These evaluation techniques show how far the sales promotion techniques have been effective in
increasing sales through motivating consumers & sellers and point the way to improve in sales promotion.

 Personal Selling:- Personal selling can be defined as “Face-to-face interaction with One or More prospective
purchasers for the purpose of making presentations, answering questions and procuring orders”.

 Personal selling is an ancient art. Effective sales people today however have more than instinctic; they are
trained in methods of analysis and customer management.

Personal selling is the most effective tool at later stages of the buying process, particularly in
building up buyer preference, convection, and action. Personal selling has three distinctive qualities:-

i. Personal Interaction:- Personal selling creates an immediate and interactive episode between two or more
persons. Each party is able to observe the other’s reactions.

ii. Cultivation:- Personal selling also permits all kinds of relationships to spring up, ranging from a matter-of-
fact selling relationship to a deep personal friendship.

iii. Response:- The buyer may feel under some obligation for having listened to the sales talk.