What is Sales promotion?
Sales promotion is an activity or bunch of activities planned and performed to increase or promote sales. The contemporary market is a consumer's or buyer's oriented market. Global market changed the market scene. In such a scenario, only advertisement doesn't works, personal selling and aggressive sales promotion schemes are to be used for growth in sales and market share. Thus, sales promotion is an important activity are function of sales management of increasing sales.
Sales promotion refers to those non-recurrent activities that are undertaken to increase sales. The literal meaning of the term used to increase the sales of a product or service.
In a narrow sense, it includes activities which are helpful in personal selling. In a broader sense, it includes all the activities which are undertaken for increasing sales. Considering this view point, sales promotion includes Advertisement, personal selling, bringing new products and improvement in marketing systems, discount offers, exchange offers, credit facilities, exhibitions, demo & test drive, etc.
As per various definitions, sales promotion includes only do that you did that are required to increase sales of a firm in a short period (short term incentives). These sales efforts are non recurrent/ irregular means to motivate consumers to purchase more and motivate traders to sell products in an effective manner.
Methods of Sales Promotion:
The main objective of sales promotion is to motivate traders for increasing sales and consumers for purchasing. The scope of sales promotion is quite broad and therefore various techniques are used for this purpose. The following techniques can be used for sales promotion:
(A) Consumer Promotion Methods:
Consumer promotion methods are directly related to consumers and motivate them to purchase more and more.
These methods are implemented in the residential areas, work places or at shops if retailers.
The main techniques include:
1. Distribution of Free Samples:
Free samples are distributed to the prospective consumers when a new product enters in the market. It is an important and effective method of sales promotion. With the help of samples, consumers can evaluate the product quality, use and utility and make purchase decisions.
FMCG( Fast Moving Consumable Goods ) products samples can be distributed directly to users but recommended or reference products like medicines or books can't be circulated directly among customers. Therefore, pharmacy companies distribute free medicine samples to doctors for prescription and book publishers provides specimen copy to teaches.
Following points to be considered under this method:-
(i) Samples should be actual representative of the product.
(ii) Samples should be attractive & assessable.
(iii) The words ‘not for sale' or ‘free sample’ should be written so that no misuse occurs.
2. Competitions/ Contest:-
Producers organised various competition for consumers before launching new products in the market, to beat competition, and to increase sales. To participate in such competitions, consumers need to show the cash memo or a part of the product packing. Winners are offered by cash prizes, gift products, or travelling packages and hotel stays. The competitions may be of following kinds:
(i) completing incomplete sentences about the product- for e.g. - I use Lux soap because‘______’.
(ii) give name of title on given picture of a product. The best name or title will be awarded by prizes.
(iii) Asking jingles/ few lines about the product. E.g.- ‘I am a Complain boy'.
(iv) Asking the consumers to solve riddles.
(v) Ask the consumers to write a letter about the products or a SMS(Text message).
3. Price Discounts:
Manufacturers offer price discounts to attract consumers on some occasions like festivals, New year, National days, etc. where they offer products on prices lesser than the ‘list price’, e.g. A shoe manufacturer offers upto 50%off or buy two and get one free. The products that are old-fashioned or which run out of trend and old stocks are sold with using this method.
4. Fairs and exhibitions:
This method plays an important role in sales promotion, products are displayed in an attractive manner in the fair and exhibition. Some brochures or handouts can be distributed regarding the product in such fairs to visit their stall. National Book fair, shoe fair, Swadeshi Melas, cooperative products and Handicraft Fairs and exhibitions are some examples.
5. Demonstration & After Sale Services:
Under this method manufacturers demonstrate the use of their products in their showrooms or fairs and exhibitions. The products of technical nature like computer, washing machine, kitchen appliances, etc. It helps in doubt clearance of consumer's myths.
The sellers offer consumers a free service and warranty after sales for a certain period. Due to this, during this period the consumers can avail maintenance, repairs, etc. for free. Consumers prefer those products which offer better after sales services.
(B) Trade Promotion Methods:
Trade promotion methods are those in which the middleman ( wholesalers, retailers, etc.) Are motivated to purchase bulk orders and sale further to the consumers.
The success of marketing depends upon the middlemen.
Following methods are used under this:
1. Sales Contests:
Various contests are organised to push the traders to increase sales. In this, the contests like highest sales, best seller, counter decoration etc. are organised. The winners receive prices from the producers.
2. Allowances:
The manufacturers offer various allowances to the middle man which include:
A. Purchase Allowances: Manufacturers offers disallowance to the traders for purchasing a fixed or particular quantity in a particular period, e.g. on the bulk order for rupees 150000 will be provided a certain amount of discount.
B. Product Allowance: When the trader purchase is the products only from a single manufacturer, such allowance is offered. For example instead of purchasing from different companies, the trader keep only single brand of clothing i.e. Bombay dyeing, then he is offered such allowances.
C. Decoration allowance: It refers to the part of the decoration expenses borne by the manufacturer, on behalf of the retailer. Consumers are attracted towards the shops when they see goods/products displayed in a creative manner.
3. Fashion show:
Manufacturers organise fashion shows to publicise the products offered by the the traders to consumers. In such shows, the products are displayed in an attractive manner, so that the consumers are motivated to purchase those products. Jewellery and automobile manufacturer's organise fashion shows from time to time.
4. Trade Premium:
Manufacturers offer the premium for purchasing and bulk orders are selling a particular quantity or amount of products; inform of expensive products like TV, silver, jewellery etc. for free.
5. Special Facilities/ Services:
Manufacturers offers credit facilities, buyback guarantee and repair services to retailers to motivate them to purchase goods. Credit facilities are offered for particular period, and you too with the middle man need not to worry about financial issues. Also, buyback guarantee are offered to them. The repair facility / service includes offering the service of repair of products in case of damaged by visiting their facility / showrooms.
Important points/ Points to Ponder:
Sales promotion is a supportive activity which helps to consumer in buying decision and motivates to buy more than capacity; at the same time it helps to retailers to facilitate their customers. All these reflect in sales growth and leading towards market leader. Sales promotion increases sales, helps to achieve success in competition, increases Goodwill, increases knowledge and trust of consumers, increases profit and helps to bring improvement in living standard. There are two methods of sales promotion:
1. Consumer Promotion Methods.
2. Trade Promotion Methods.
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