In this article we will discuss about the main steps and methods of sales promotion.
Main Steps Involved in Sales Promotion:
The following are the main steps involved in sales promotion:
1. Establishing Objective:
This sales promotion is established and derived from the basic business and marketing objectives.
These objectives can be classified as under:
(a) For Consumers:
(i) To encourage bulk purchases through better offers.
(ii) To attract switchers from competitors.
(b) For Retailers:
(i) To persuade retailers to carry new products.
(ii) To encourage stocking of required products.
(iii) To encourage off-season buying.
(iv) To build up brand loyalty and offset competitive promotions.
(v) To gain entry into new retail outlets.
(c) For Sale Force:
(i) To encourage support of a new product.
(ii) To encourage off-season sale.
(iii) To encourage more sale prospects.
2. Selecting Consumer Promotion Tools:
Following factors should be taken into consideration while selecting consumer promotion tools:
(i) Type of market
(ii) Objectives of sales – promotion
(iii) Competition in the market, and
(iv) Cost effectiveness of each promotional tool.
The following promotion tools regarding consumers are generally used:
(i) Free Sample
(ii) Coupons
(iii) Free gift premium incentives
(iv) Money refund offer
(v) Free trials and other prices
(vi) Purchase displays and demonstrations, and
(vii) After sales services.
3. Selecting Trade Promotional and Tools:
Different types of trade promotional tools are used due to following reasons:
(i) To persuade the wholesaler and retailers to carry the brand.
(ii) To encourage the wholesaler and retailers to carry more units of the product than the normal ones.
(iii) To encourage the wholesalers and retailers to promote the brand by price reduction, product display etc.
(iv) To motivate and encourage the wholesalers and retailers to push up their products.
4. Selecting Business and Sales Force Promotion Tools:
The business and sales promotion tools are useful to motivate sales people to make greater efforts. These tools are used to take business leads, to impress and reward customers.
Such promotion tools can be the following:
(i) Trade shows and conventions
(ii) Sale contests
(iii) Specialty Advertising
5. Developing the Program:
Different Promotional tools can be developed as marketer does have several variables to consider, while deciding a particular incentive.
These can be explained as under:
(i) Size of the Incentives:
A marketer must have to determine the size of the incentives and for this minimum size of incentives must be fixed.
(ii) To Establish Conditions:
The marketer has to decide whether the incentives should be offered to everyone or to the selected groups.
(iii) To Decide the Duration of the Programme:
The marketer is to decide the duration of the promotion programme.
(iv) To Decide about Distribution Vehicle or Media:
The marketer has to decide about the distribution vehicle or media i.e., it will be distributed in package, in stores, by mail, through advertising or through websites.
(v) To decide the sales promotion budget.
6. Pretest the Programme:
Generally, the sales promotion programmes are designed on the basis of past experience. The pretest of the programmes is carried out to know- (a) whether the promotional tools are appropriate, (b) whether the presentation method is efficient and (c) whether the size of the incentives is proper.
7. Implementation and Control of Promotion Programme:
The marketer should prepare implementation and control programme for every promotion strategy, Marketer must keep in mind the lead time prior to launch the promotion programme.
8. To Evaluate Results:
The following methods can be used to evaluate the results:
(i) Sale Data Method:
Under this method, sales data is collected from various sources. After analyzing the available data, it is decided how the different people took advantages of promotional tools and impact on sales can be observed.
(ii) Consumer Survey Method:
Consumer survey method, consumer survey method in used to know that how customers recall the promotion schemes. What they think about the schemes. How many took an advantage of promotion programme. It can also be observed by this method that how the promotion programme influenced their behaviour in selection a particular brand.
(iii) Experimentation:
The sales promotion can also be judged with the help of experimentation method. For example, certain set of customers can be sent coupons to promote and evaluate their behaviour towards particular product. In September 2012, De Decor home furnishing fabrics Manufacturer Company sent discount to selected customers, who replied this advertisement by SMS.
Types, Methods or Tools of Sales Promotion:
For a marketer resorting to sales promotion, a variety of tools and techniques are available. Sales promotion letters, catalogues, point of purchase displays, customer service programmes, demonstrations, free samples, discounts, contests, sweepstakes, premiums and coupons are the commonly resorted methods of sales promotion.
Sales promotion can be divided into the following:
1. Consumer/Customer Promotion Methods:
Consumer promotion methods of sales promotion are the methods which directly encourage consumers to buy the product in more and more quantity.
These methods may be as follows:
(i) Distribution of Free Samples:
Under this method, the producer distributes free samples of the product to the consumer. They are also given to introduce a new product and expand the market. It increases the sales volume when the product is a new one to the customers. It is an effective device when the product is purchased often, i.e., soaps, detergents, tea or coffee etc. It is a method of demand creation.
Sampling gives a chance to the consumers to compare the products with other substitutes. Samples are given to doctors by medical representatives. Specimen copies of books are given to professors. The idea behind this is that they recommend their products for use to patients or students.
(ii) Coupons:
A coupon is a certificate that reduces price. When a buyer gives a coupon to the dealer, he gets the product at a lower price (Regular price is Rs 100; with a coupon it is Rs 80). Coupons (same as money) are accepted as cash by retailers. Coupons normally perform two specific functions for the manufacturer.
Firstly, they enthuse the consumers to exploit the bargain. Secondly, they serve as an inducement to the channel for stocking the items. The manufacturer thus succeeds in attracting consumers as well as in prompting the channel to stock the merchandise by introducing coupons.
They are useful for introducing a new product as well as for strengthening the sale of an existing product. According to John F. Luick and Zieglar, “A coupon is a certificate that when presented for redemption at a retail store, entitles the bearer to a stated saving on the purchase of a specific product.”
(iii) Price Reduction or Price off Promotion:
It stimulates sales during a slump season. It gives a temporary discount to the consumers, i.e., goods are offered at a rate less than the labelled rate. Fans are sold at reduced rates during rainy season.
For example, Hawkins pressure cookers have come up with several sales promotion schemes during the last few years.
(iv) Contests:
For sales promotion different contests are conducted by producers.
According to John F. Luick and W.L. Zieglar, “A contest is sales promotion device in which the participants compete for a prize or prizes on the basis of their skill in fulfilling a certain requirement, usually analytical or creative.”
In these competitions, questions are put to the customers. Sometimes pictures are printed to test the general knowledge of the customers and they are asked to give detailed description of these pictures. No fee is charged from the customers for participating in these competitions.
But they have to send empty packet of the product, cash memo, prescribed entry information form and necessary information. The purpose of these competitions is to find prospective customers and to circulate new product.
(v) Demonstration:
It is the instructions to educate the consumers in the manner of using the product. It is a promotional tool to attract the attention of the consumers. When products are complex and of a technical nature, demonstration is necessary, e.g., computers, field machinery, electrical, pumping set etc. Demonstration is done in front of consumers for mixer, wet grinder in retail shops etc.
(vi) Premium:
Premium method is also used to attract the consumers towards the product. In this method consumers are provided some other useful product freely alongwith the purchased product. This is an effective method which is practised today for sales promotion. The purpose of giving premium is to motivate new customers.
But its main purpose is to induce the old customers of that product. According to George Christopolous, “A premium is an item of merchandise that is offered at cost or at relatively low cost as a bonus to purchase of a particular product.”
According to Alfred Gross, “A premium is an article of merchandise or other thing of value offered as an inducement to purchase a product or service.”
The article of premium is packed in that packet and the information is written that the packet contains some article. Sometimes the information regarding premium item is printed on the packet or customers are directed to collect the premium item from the shopkeeper. Sometimes there is a coupon inside the packet which is returned to the shopkeeper and premium item is collected.
(vii) Money Refund Offer:
It is the most important method of sales promotion. If the purchaser is not satisfied with the product, money is refunded. It is stated on the package. It creates new users and strengthens brand loyalty.
(viii) Fairs and Exhibitions:
India is a country in which various fairs and exhibitions are organised in different times. These fairs and exhibitions are organised on local, regional, state, national or even at international levels. Businessmen and manufacturers take part in these fairs and exhibitions and display their goods. Since these fairs and exhibitions are visited by a large number of persons, businessmen and manufacturers get good opportunity for advertising their goods.
(ix) Special Prizes:
Under this method, every purchaser of the product is given a prize coupon during a certain period. All the coupons distributed during this period are put into a box and a lottery is drawn therefrom. The winners are given some attractive prizes. Thus, this scheme also compels the consumers to purchase and use the product.
(x) After Sale Service:
Under this method the producer gives a guarantee to customers to maintain the product for a certain specified period. After sale service and warranty increase the sale of the enterprise.
2. Trade Promotion Methods:
Trade promotion methods are also known as dealers promotion method. These include all the methods which are adopted with a view to encourage the dealers and distributors to purchase and resell the product in more and more quantity.
Dealer promotion methods include the following methods:
(i) Contests:
This method is aimed at stimulating and motivating distributors, dealers, sales-staff etc. This is an indirect way of boosting the sales. This type of contest is conducted at the level of retailers and wholesalers. This is in the form of window display, store display, sales (volume) etc. Prize is awarded for the outstanding achievements.
(ii) Buying Allowance Discount:
Buying allowance discount increases the sale of the manufacturer and the profits of the dealer. The buying allowance or discount is offered to the dealer to induce him to buy the manufacturer’s product. Such allowance or discount may be given at a fixed percentage on each minimum quantity of product purchased during a stated period of time.
(iii) Premium:
A premium is an article of merchandise or other thing of value offered as an inducement to purchase a product or service. Premiums are used by wholesalers to induce retailers to promote or push their products.
The objectives of premiums are generally to:
(a) Induce consumers to switch from a competitor’s product to the sellers,
(b) Induce consumers to try larger sizes of products,
(c) Increase off-season sales, and
(d) Introduce a new product.
(iv) Incentive:
In this method, producers announce some incentives to the dealer. It is also an effective tool for increasing sale. For this purpose, special prizes are fixed for dealers if they achieve their pre-determined targets.
(v) Loan Facility:
Under this method, the producer allows credit to their dealers, based on the quantity purchased by them. This enables them to purchase bulk quantity.
(vi) Advertising Allowance:
Under trade promotion methods advertising allowance is also given to the dealers. The allowance is offered to the dealer to display the manufacturer’s product. The allowance is given on the basis of space provided to display the manufacturer’s product in the shop.
(vii) Gift:
Under this method producers give attractive and useful articles to dealers against their order. The articles are transistors, radio, television set, clock, watch etc. Some manufacturers offer free holiday family tours to dealers who place more orders.
(viii) Training:
Through this method, producers train their dealers so that they may make more and more sales of product easily and smoothly.
(ix) Dealers Listed Promotion:
This is the most important method of sales promotion. Listing dealers is a part of advertisement. It is giving a list of dealers or retailers who stock the product or who are engaged in its promotion in the advertisement. For example, the advertisement of L.G. product in newspapers carries the names of the stockiest of their products. The consumer can buy the product from any one of the listed dealers. This method induces the dealers to stock the products.
(x) Point of Purchase Advertising:
The point-of-purchase display is the silent salesman that calls the attention of the customer to the product in the hope of initiating buying action. Point-of-purchase is also known as dealer hopes, dealer aids, dealer displays, merchandising and point-of-sale materials. Point-of-purchase advertising means advertising at the point of purchase by the consumers. It is generally at the level of retailer’s shop.
3. Combined Promotion Methods:
For sales promotion consumer’s promotion methods and trade promotion methods are applied. Both these methods are complementary to each other. The first is consumer’s promotion method which motivates the consumers to purchase. The second is trade promotion method which increases the business. For the success of any business both the promotion methods are necessary. Without consumers’ promotion trade promotion cannot run.
In the same way without trade promotion consumers’ promotion cannot run. They are not competitive of each other but are complementary. Like a man needs two legs to walk, both are compulsory for promotion. The work of sales promotion can be performed if there is balance between the planning’s of these two promotions. Therefore consumers’ promotion method and trade promotion methods should be implemented together for sales promotion. For good results it is necessary that a right balance should be set between them.
4. Sales Force Promotion Methods:
Sales force promotion schemes are necessary to increase the sale.
The tools for sales force promotions are:
(i) Bonus:
This is an encouragement incentive given to the sales people to sell more products to cross the quota or targeted sales. The manufacturer sets a target of sales for a year. If the sales force sell the product above the targeted sales, bonus is offered to them.
(ii) Contests:
Contests stimulate the salesmen to sell more product. This method is used to increase the sales. For this purpose prizes are given to the salesman who secures the maximum sales in sales contest.
(iii) Meetings:
Meetings are conducted by the producers for the purpose of educating, inspiring and rewarding the salesmen. Under this method new products and new selling techniques are described and discussed with the salesmen.
(iv) More Commission:
Sometimes the sellers are offered more commission by offering cash incentives and sometimes the sellers are given such goods that they may use them for personal purpose or for official jobs. In this regard, the example of Life Insurance Corporation is quite right.
For example, if the amount of insurance policy increases more than the set quantity the rate of commission is offered at 15% instead of 10%. Besides additional bonus is also given. If the field officer insures more than his quota increments are given and telephone facility is also provided.