2. Tools Of Sales Promotion
To increase the sales of a product, the
producers or manufacturers use various
measures like free samples, bonus, etc.
These measures are called the tools or
techniques of sales promotion.
3. LIST OF TOOLS
• Free samples: 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.
Common examples - shampoo, washing
powder, coffee powder, etc.
4. • Premium or Bonus offer: This is a reward
given to the existing customers. This tool
will help increase the sales of the product
among the existing customers itself.
A milk shaker along with Nescafe, mug with
Bourn vita, toothbrush with 500 grams of
toothpaste might be some examples of this
tool.
• 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.
5. Most common example for this tool is - 'Bring
your old mixer-cum-juicer and exchange it
for a new one just by paying Rs.500'
• Price-off offer: Under this offer, products are
sold at a price lower than the original price.
This type of scheme is designed to boost up
sales in off-season and sometimes while
introducing a new product in the market.
'Rs. 2 off on purchase of lifeboy 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.
6. • 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. Best example for
this is coupons distributed by the pizza
restaurants like dominos, pizza hut, etc.
7. • Fairs and Exhibitions: Fairs and
exhibitions may be organized at local,
regional, national or international level to
introduce new products, demonstrate the
products and to explain special features
and usefulness of the products. Apart from
this small stalls are also placed in popular
locations where the products are sold in
smaller quantity to attract more customers.
8. • Bonus points: certain retail shops will have a
scheme which will require the customer to be
a member of the shop and to acquire
membership card for the same. And every
time the customer makes a purchase bonus
points are added to the card and at the end of
the year gifts are given for the points earned.
Example – coffee day bonus points card
• 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.
9. 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.
• 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.
11. Advantages Of Sales Promotion
• Price discrimination
Producers can introduce price discrimination
through the use of sales promotions. They can
charge different prices to different consumers and
trade segments depending on how sensitive each
segment is to particular prices.
12. • Effect on consumer behavior
As sales promotions are mostly announced for a
short period, customers may feel a sense of
urgency and stop comparing the alternatives.
They are persuaded to act now rather than later.
(E.g.)With every 500g pack of Tang, you get a
free Tang glass. Offer valid only till stocks last.
13. • Effect on trade behavior
Short-term promotions present an opportunity and
encourage dealers to forward by. This forward
buying ensures that retailers won’t to go out of
stocks. As dealers have more than the normal
stocks, they think it advisable to advertise in local
media, arranged displays and offer attractive
promotion deals to consumers. These actions help
in increasing the store traffic.
14. • Luring New Customers with Price
By offering a reduced price on a popular item,
you can lure customers away from competitors,
which may ultimately help turn them into regular
shoppers. For example, if you own a small
electronics store that's competing with a large
retailer, offer a discounted price on a popular cell
phone model for a limited time. If you serve the
customers well during the purchase process, they
may be willing to come back.
15. • Gaining Community Favor
Create a good name for your business by staging
a promotion that supports a worthy cause. For
example, if your town needs a new fire engine or
police car, donate a portion of customer purchases
at your business to the cause. You'll be helping
your community, which is a win-win for everyone
and may lead to more business for you.
16. • Providing Information
A sales promotion can help you provide
information to potential customers that aids them
in making a decision. This can be beneficial for
products or services that are complicated or are
unfamiliar to consumers. For example, if you're a
financial planner and you're attempting to gain
clients in the area of retirement planning, a free
seminar allows you to explain what you do and
how some of your investment products work.
17. Disadvantages Of Sales Promotion
• Increased price sensitivity
Consumers wait for the promotion deals to be
announced and then purchase the product. This is
true even for brands where brand loyalty
exists. Customers wait and time their purchases
to coincide with promotional offers on their
preferred brands. Thus, the routine sales at the
market price are lost and the profit margin is
reduced because of the discounts to be offered
during sale-season.
(E.g.)‘The Diwali Bonanza Offers’ on electronic
goods.
18. • Quality image may become tarnished:
If the promotions in a product category have been
rare, the promotions could have a negative effect
about its quality image. Consumers may start
suspecting that perhaps the product has not been
selling well, the quality of the product is true
compared to the price or the product is likely to
be discontinued because it has become outdated.
19. • Merchandising support from dealers is doubtful:
In many cases, the dealers do not cooperate in
providing the merchandising support nor do they
pass on any benefit to consumers. The retailer
might not be willing to give support because he
does not have the place, or the product does not
sell much in his shop, or maybe he thinks the
effort required is more than the
commission/benefit derived.
20. • Short-term orientation:
Sales promotions are generally for a short
duration. This gives a boost to sales for a short
period. This short-term orientation may
sometimes have negative effects on long-term
future of the organization. Promotions mostly
build short-term sales volume, which is difficult
to maintain. Heavy use of sales promotion, in
certain product categories, may be responsible for
causing brand quality image dilution.
21. Difference Between Sales Promotion And
Advertisement
ADVERTISEMENT SALES PROMOTION
By using a variety of persuasive Besides giving reasons in the form of
appeals, it offers reasons to buy a different appeals, they offer incentive to the
product or service. consumers to buy the product or service
now.
E.g.: Good Network, Promises and e.g. For new users, 1 no. is given free for 1
Delivers. month & sms is free for 3 months.
Appeals are emotional or functional in Appeals are rational
nature.
E.g.: the ad of “Wherever you go, our
network follows”
Contd……..
22. Time-frame is long term. Time frame is short term.
The primary objective is to create an To get sales quickly or to induce trial.
enduring brand image.
Indirect and subtle approach towards Direct in approach to induce consumers
persuading customers to buy a product or to buy a product or service immediately
service. by temporarily changing the existing
price-value relationship of the product or
service.
