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GAGANDEEP SINGH
gagandsaluja is an unknown quantity at this point
 
gagandsaluja
Regional Manager at Hyderabad Industries Limited
 
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SALES PROMOTION - January 4th, 2009

Role of Promotions In Marketing
With an Emphasis on
Sales Promotion




TABLE OF CONTENTS

Sr. No. Topic Page Number
1 Introduction: Marketing and Marketing Tools 4
2 Role of Promotions 8
3 Promotion Objectives 13
4 Promotion Tools 17
5 A Case Study on Nestle 37
6 A Concluding Note 50
7 References 52
8 Annexures 53













In my project, “Role of Promotions in Marketing with an Emphasis on Sales Promotion”, I have endeavoured to comprehensively cover the various dimensions concerning the issue and present it to the best of my abilities and knowledge.

In today’s scenario of cutthroat competition, managing Integrated Marketing Communications (IMC) optimally is highly imperative. IMC is a way of looking at the whole gamut of the Marketing process from the viewpoint of the receiver, says Philip Kotler.

Companies must allocate the promotion budget over the 5 promotional tools – Advertising, Sales promotion, PR, Publicity, Sales Force and Direct Marketing. Within the same industry, companies can differ considerably in their allocations. Avon concentrates on Personal selling while Revlon spends heavily on Advertising. To each one his own success formula.

The basic fundamentals of The Promotional concoction of that magical Marketing potion have been dealt with at length. This theoretical knowledge has been supplemented with a live Sales promotion activity description conducted for Nestle India Limited.

Beyond the obvious benefits that Promotion and particularly Sales promotions render towards meeting marketing goals, I have endeavoured to ponder over certain pertinent questions arising on the flipside too.
Do frequent sales promotions hurt the brand equity or do they enhance the value delivered to the customers?
How can marketers plan their sales promotions so that they can increase and bolster the brand equity at the same time?

This project delves into these and other issues and endeavours to provide befitting answers.


Introduction


Let us gain a perspective from the very beginning- which a very good place to start- as sings Julie Andrews in The Sound of Music.

 What is Marketing?

• Marketing as a Concept

The concept of marketing is essentially a concept of customer orientation. For a long time it has been preached that customer is king. What this implies is that products/services are bought not merely because of their quality, packaging or brand name, but because they satisfy a specific need of a customer. It also implies that organizations have to provide services to their customer and that too without any obligations. In other words, marketing means understanding and responding to customer needs, prerequisite for any organization’s success. And this cannot be ignored by any organization in today’s competitive environment.
However, to be successful, any organization has to be competition oriented too. It has to continuously determine its competitive advantage and should take steps to further augment it. Thus, the marketing concept involves:
a) Customer orientation
b) Competition orientation
c) The ability to respond to environmental changes (changes in consumer needs, competition, government policy, technology, etc) before the competition.

• Marketing as a ‘PROCESS’

The process of marketing involves an exchange transaction between the buyer and seller. In this form, the origin of marketing can perhaps be traced to the first known human civilization. The barter system is well known to us. Today, in this system, money has replaced the commodity. What then is the difference between marketing and barter other than the means of exchange? The difference lies in the fact that marketing emphasis on the mutual satisfaction of both—the buyer and the seller. In this exchange transaction, the underlying assumption is the developing of a long-term relationship between them. The buyer’s gain is the satisfaction on the purchase and the subsequent consumption of the product, whereas the seller’s gain is the profit that he/she makes on such a transaction. If the buyer is not satisfied, then the transaction has been, at best, a selling transaction, and if the seller does not make a profit, then it has been a dumping transaction. Thus, to be termed as a marketing transaction, the exchange must result in mutual satisfaction to both the buyer and the seller. The essence of this is:
a) Marketing is an exchange process—both buyer and seller must have something to give to each other.
b) Both the buyer and the seller must gain.
c) It should result in a long-term satisfying relationship between both of them—relationship management is crucial to successful business.

• Marketing as a Managerial Function

Marketing as a managerial activity involves analyzing the market opportunities, planning the marketing activities, implementing marketing plans and setting control mechanisms in such a way that organizational objectives are accomplished at the minimum cost.

In other words, marketing is:
a) Understanding consumer needs
b) Environment scanning and market opportunity analysis
c) Development of a competitive marketing plan and strategy that an organization is able to satisfy not only the consumers needs but also achieve its own objectives
d) Implementation of the marketing plan and development of tactical plans to overcome problems at the market place
e) Development of control mechanisms

This perspective implies that in order to achieve competitive advantage, a firm needs to scan its external environment to spot market opportunities. Its marketing mix needs to fit the local market dynamics. Further, in order to ensure a high rate of customer acquisition and retention, firm’s marketing mix has to be customer centric.
Marketing management, therefore, is a critical function especially in highly competitive markets. It can provide the much needed competitive advantage to an enterprise, irrespective of its size and product mix.

 Marketing tools

The marketer’s task is to build a marketing program or plan to achieve the company’s desired objectives. The marketing program consists of numerous decisions on the mix of marketing tools to use. The marketing mix is the set of marketing tools the firm uses to pursue its marketing objectives in the target market. These tools are classified into four broad groups that are called the four Ps of marketing: product, price, place, and promotion.












The particular marketing variables under each P are shown in the figure. marketing-mix decisions must be made for influencing the trade channels as well as the final consumers. The following figure shows the company preparing an offering mix of products, services, and prices, and utilizing a promotion mix of sales promotion, advertising, sales force, public relations, direct mail, telemarketing, and Internet to reach the trade channels and the target customers.













The firm can change its price, sales force size, and advertising expenditures in the short run. It can develop new products and modify its distribution channels only in the long run. Thus the firm typically makes fewer period-to-period marketing-mix changes in the short run than the number of marketing-mix decision variables might suggest.

Note that the four Ps represent the sellers’ view of the marketing tools available for influencing buyers. From a buyer’s point of view, each marketing tool is designed to deliver a customer benefit. Also the sellers’ four Ps correspond to the customers’ four Cs.


Four Ps Four Cs
Product Customer solution
Price Customer cost
Place Convenience
Promotion Communication

Promotion means communicating with Individuals, groups, or organizations to directly or indirectly facilitate exchanges by informing and persuading one or more audiences to accept an organization’s products.
A variety of organizations spend considerable resources on promotion. Marketers indirectly facilitate exchanges by focusing information about company activities and products on interest groups (such as environmental and consumer groups), current and potential investors, regulatory agencies, and society in general. Some marketers use cause-related marketing, which links purchase of their products to philanthropic efforts for a particular cause favored by their target market. Marketers also sponsor special events, often leading to news coverage and positive promotion of an organization and its brands.
From this wider perspective, promotion plays a comprehensive communication role. Some promotional activities help a company justify its existence and maintain positive healthy relationships between itself and various groups. Although companies can direct a single type of communication—such as an advertisement—toward numerous audiences, marketers often design a communication precisely for a specific target market. A firm frequently communicates several different messages concurrently, each to a different group.








For maximum benefit from promotional efforts, marketers strive to properly plan, implement, coordinate, and control communications. Effectively promotional activities are based on information about customers and the marketing environment, often obtained from an organization’s marketing information system. How successfully marketers use promotions to maintain positive relationships demand largely on the quantity and quality of information an organization receives. Because promotion’s basic role is communication, we should analyze what communication is and how the communication process work

Promotion and the Communication Process

Communication can be viewed as the transmission of information. For communication to take place, both the sender and receiver of information must share some common ground. They must share a common understanding of the symbols, words, and pictures used to transmit information. Thus communication is defined as a sharing of meaning. Implicit in this definition is the notion of transmission of information because sharing necessitates transmission.
As the figure below shows, communication begins with a source. A source is a person, group, or organization with a meaning it intends and attempts to share with an audience. A source could be a salesperson wishing to communicate a sales message or an organization wanting to send a message to thousands of customers through an advertisement. A receiver is the individual, group, or organization that decodes a coded message, and an audience is two or more receivers.









To transmit meaning, a source must convert the meaning into a series of signs representing ideas or concepts. This is called the coding process, or encoding. When coding meaning into a message, a source must consider certain characteristics of the receiver or audience. To share meaning, the source should use signs that are familiar to the receiver or audience. Marketers who understand this realize how important it is to know their target market and to make sure that an advertisement, for example, uses a language that the target market understands.
To share a coded meaning with the receiver or audience, a source selects and uses a medium of transmission. A medium of transmission carries the coded message from the source to the receiver or audience. When a source chooses an inappropriate medium of transmission, several problems may arise. A coded message may reach some receivers, but not the right ones. Coded messages may also reach intended receivers in incomplete form because the intensity of the transmission is weak.
In decoding process, signs are covered into concepts and ideas. Seldom does a receiver decode exactly the same meaning that a source coded. When the result of decoding is different from what was coded, noise exists. Noise is anything that reduces the clarity and accuracy of the communication; it has many sources and may affect any or all parts of the communication process. Noise sometimes arises within the medium of transmission itself. Noise also occurs when a source uses signs that are unfamiliar to the receiver or that have a different meaning from the one intended. Noise also may originate in the receiver. A receiver may be unaware of a coded message when perceptual processes block it out.
The receiver’s response to a message is feedback to the source. The source usually expects and normally receives feedback, although perhaps not immediately. During feedback, the receiver or audience is the source of a message directed toward the original source, which then becomes a receiver. Feedback is coded, sent through a medium of transmission, and decoded by the receiver, the source of the original communication. Thus communication is a circular process.
During face-to-face communication, such as a personal selling situation or product sampling, verbal and nonverbal feedback can be immediate. Instant feedback lets communicators adjust messages quickly to improve the effectiveness of their communication. For example, when a salesperson realizes through the feedback that a consumer does not understand a sales presentation, the salesperson adapts the presentation to make it more meaningful to the customer. When mass communication such as advertising is used, feedback is often slow and difficult to recognize. Advertisers obtain feedback in the form of changes in sales volume or in consumers’ attitudes and awareness levels.
FLOW CHART OF HOW TO GO ABOUT DECIDING & EVALUATING PROMOTIONAL MIX

Research
Stage







Strategic
Stage


































Product Life-Cycle Stage
Promotional tools vary in cost effectiveness at different stages of the PLC.




















- In the Introduction/Infancy stage, advertising and publicity have the highest cost
effectiveness, followed by personal selling to gain distribution coverage and sales
promotion to induce trial.

- In the Growth stage, all the tools can be toned down because demand has its own
momentum through word of mouth.

- In the Maturity stage, sales promotion, advertising and personal selling all grow more
important in that order.

- In the Decline stage, sales promotion continues strong, advertising and publicity are
reduced and sales people give the product only minimal attention.

As we can see, Sales Promotion in specific is very important over the various stages of the Product Life Cycle.






Promotional objectives differ considerably from one organization to another and within organizations over time. Large organizations with multiple promotional programs operating simultaneously may have quite varied promotional objectives. Let’s have detailed look at some of the promotional objectives:

 Create awareness
A considerable amount of promotion is directed at creating awareness. For an organization introducing a new product, new brand, or brand extension, making customers aware is crucial to initiating the product adoption process. A marketer that has invested heavily in product development strives to create product awareness quickly in order to generate revenues to offset the high costs of product development and introduction.
Creating awareness is important for existing products, too. Promotional efforts may be aimed at increasing brand awareness, product feature awareness, and awareness of image related issues (such as organizational size or socially responsive behaviour). Some organizations are unsuccessful because marketers fail to generate awareness of critical issues among a significant portion of target market members.

 Stimulate Demand
When an organization is the first to introduce an innovative product, it tries to stimulate primary demand—demand for a product category rather than for a specific brand of product—through pioneer promotion. Pioneer promotion informs potential customers about the product: what it is, what it does, how it can be used, and where it can be purchased. Because pioneer promotion is used in the introductory stage of the product life cycle, which means that there no competing brands, it neither emphasizes brand names nor compares brand. Primary demand stimulation is not just for new products. At times an industry trade association, rather than a single firm, uses promotional efforts to stimulate primary demand.
To build selective demand, which is demand for a specific brand, a marketer employs promotional efforts on the strengths and benefits of a specific brand. Building selective demand requires promotional efforts that single out attributes important to potential buyers and the specific attributes of the brand. Promotional techniques are sometimes used to stimulate selective demand by differentiating the product from competing brand in the minds of potential buyers. Stimulating selective demand by increasing the number of product uses is sometimes accomplishes through advertising campaigns, as well as through free samples, coupons, and consumer contests and sweepstakes. Promotion for large package sizes or multiple-product packages are directed at increasing consumption, which in turn can stimulate demand.

 Encourage Product Trial
When attempting to move customers through the product adoption process, marketer may be successful at creating awareness and interest, but then a significant proportion of customers stall during the evaluation stage. Thus certain types of promotion, such as free samples, coupons, test drive or limited free-use offers, contests, and games, are employed to encourage product trial.

 Identify Prospects
Certain types of promotional efforts are directed at identifying customers who are interested in the firm’s product and are most likely to buy. A marketer may utilize a magazine advertisement with a direct response information form, requesting the reader to complete and mail the form to receive additional information. Customers who fill out information blanks or call the organization usually have higher interest in the product, which makes them possible sales prospects.

 Retain Loyal customers
Clearly, maintaining long-term customer relationships is a major goal of most marketers, because such relationships are quite valuable. Promotional efforts directed at customer retention can help an organization control its costs because the costs of retaining customers are usually considerably lower than those of acquiring new ones. Frequent user programs, such as relied on by airlines, hotels, aim at rewarding loyal customers and encouraging them to remain loyal.

 Facilitate Reseller Support
Strong relationships with resellers are important to a firm’s capability to maintain a sustainable competitive advantage. Producers generally want to provide support to resellers to maintain sound working relationships, and producers, in turn expect to get support for their products from resellers. When a manufacturer advertises a product to consumers, this promotion should be viewed by resellers as being strong manufacturer support. If the manufacturer promotes the new brand with free sample and coupon distribution in the retailer’s area, a retailer views these actions as strong support and is much likely to handle the product. To encourage wholesalers and retailers to increase their inventories, the manufacturer may provide special offers and buying allowances to resellers.

 Combat Competitive Promotional Efforts
At times a marketer’s objective in using promotion is to offset or lessen the effect of a competitor’s promotional program. This type of promotional activity does not necessarily increase the organization’s sales or market share, but it may prevent a sales or market share loss. A combative promotional objective is used most often by firms in extremely competitive consumer products markets, such as fast-food industry.
For example, a local departmental store may mail out coupons, redeemable only on Tuesdays and Wednesdays, to residents living within a two-mile radius of the store for the purchase of common items such as milk, bread, or eggs. To offset the effects of these coupons, a competing store could advertise in the newspaper that it will accept any store’s coupons on any day of the week.

 Reduce Sales Fluctuations
Demand for many products varies from one month to another because of factors such as climate, holidays, and seasons. A business, however, can’t operate at peak efficiency when sales fluctuate rapidly. When promotional techniques reduce fluctuations, a manager can use the firm’s resources more efficiently.
Promotional techniques are often designed to stimulate sale during sales slumps. For example, advertisements promoting price reduction of lawn care equipment can increase sales during fall and winter months. During peak season periods, a marketer may refrain from advertising to prevent over-stimulating sales to the point that the firm cannot handle all the demand. A pizza outlet might distribute coupons that are valid only Monday through Thursday because Friday though Sunday the restaurant is extremely busy.

To achieve the major objectives of promotion discussed above, companies must develop appropriate programs.

Thus in a nutshell:
Type of Promotion Intended Effect Consumer Contact Timing
Personal selling Sales Direct Short
Sales Promotion Sales Semi-Direct Short
Advertising Attitude/Behaviour Indirect Low-moderate
Direct Marketing Behaviour Semi direct Short
PR Attitude Semi-direct Long
Point of Sales/
Packaging Behaviour Direct Short




















Several promotional tools can used to communicate with individuals, groups, and organizations. When an organization combines specific elements to promote a particular product, that combination constitutes the promotional mix for that product. The five possible elements of a promotion mix are advertising, personal selling, public relations, direct marketing and sales promotion.












The four Possible Elements of a Promotion Mix are:
Advertising
Advertising is any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor. Advertisers include not only business firms, but also museums, charitable organizations, and government agencies that direct messages to target publics. Ads are a cost-effective way to disseminate messages, whether to build brand preference for Coca-Cola or to educate people to avoid hard drugs.

Advertising Objectives
The advertising objectives must flow from prior decisions on target market, market positioning, and marketing mix.
Advertising objectives can be classified according to whether their aim is to inform, persuade, remind, or reinforce. They aim at different stages in the hierarchy of effects.
• Informative advertising aims to create awareness and knowledge of new products or new features of existing products.
• Persuasive advertising aims to create liking, preference, conviction, and purchase of a product or service. Some persuasive advertising uses comparative advertising, which makes an explicit comparison of the attributes of two or more brands.
• Reminder advertising aims to stimulate repeat purchase of products and services.
• Reinforcement advertising aims to convince current purchasers that they made the right choice. Automobile ads often depict satisfied customers enjoying special features of their new cars.

The following qualities about advertising can be noted:
 Public presentation:
Advertising’s public nature confers a kind of legitimacy on the product and also suggests a standardized offering.
 Pervasiveness:
Advertising permits the seller to repeat a message many times. It also allows the buyer to receive and compare the messages of various competitors. Large-scale advertising says something positive about the seller’s size, power, and success.
 Amplified expressiveness:
Advertising provides opportunities for dramatizing the company and its products through the artful use of print, sound, and colour.
 Impersonality:
The audience does not feel obligated to pay attention or respond to advertising. Advertising is a monologue in front of, not a dialogue with, the audience.

Advertising can be used to build up a long-term image for a product (coca-cola ads) or trigger quick sales. Advertising can efficiently reach geographically dispersed buyers. Certain forms of advertising (TV advertising) can require a large budget, whereas other forms (newspaper advertising) do not. Just the presence of advertising might have an effect on sales: consumers might believe that a heavily advertised brand must offer “good value.”
The major advertising media along with their costs, advantages, and limitations are profiled in the table below.

























Public relations and Publicity

• Public Relations

Public Relations is a broad set of communications efforts used to create and maintain favorable relationships between an organization and its publics. An organization communicates with various publics, both internal and external. Public relations efforts can be directed toward any and all of these. A firm’s publics can include customers, suppliers, employees, stockholders, the media, educators, potential investors, government officials, and society in general.
Public relations efforts can be used to promote people, places, ideas, activities, and even countries. Public relations focuses on enhancing the image of the total organization. Assessing public attitudes and creating a favorable image are no less important than direct promotion of an organization’s products. Because the public’s attitudes towards a firm are likely to affect the sales of its products, it is very important for firms to maintain positive public perceptions. In addition, employee morale is strengthened if the firm is perceived positively by the public. Although public relations can make people aware of a company’s products, brands, or activities, it can also create specific company images, such as innovativeness or dependability. By getting the media to report on a firm’s accomplishments, public relations also helps a company maintain positive public visibility. Some firms use public relations for a single purpose and others for several purposes.

Public Relations Tools

Companies use a variety of public relations tools to convey messages and to create images. Public relations professionals prepare written materials, such as brochures, newsletters, company magazines, news releases, and annual reports that reach and influence their various publics. Public relations personnel also create corporate identity materials, such as logos, business cards, stationery, and signs that make firms immediately recognizable. Speeches are another public relations tool. Because what a company executive says publicly at meetings or to the media can affect the organization’s image, his or her speech must convey the desired message clearly.
Event sponsorship, in which company pays for part or all of a special event, such as a benefit concert or a tennis tournament, is another public relations tool. Sponsoring special events is an effective means of increasing brand recognition with relatively minimal investment. Except for the initial underwriting cost, event sponsorship can provide companies with considerable amounts of free media coverage. Organizations try to make sure that their products and the sponsored event target a consistent audience. Public relations personnel can also organize unique events to “create news” about the company. These can include grand openings with celebrities, prizes, hot-air balloon rides, and other attractions that appeal to their publics.
Certain public relations tools have traditionally been associated specifically with publicity, which is a part of public relations.

• Publicity

Publicity is communicated in news story form, about an organization, its products, or both, that is transmitted through a mass medium at no charge. Although public relations has a large, more comprehensive communication function than publicity, publicity is a very important aspect of public relations. Publicity can be used to provide information about goods or services, to announce expansions, acquisitions, research, or new-product launches, or to enhance a company’s image.
The most common publicity-based public relations tool is the news release, some-times called a press release, which is usually a single page of typewritten copy containing fewer than 300 words. A news release also gives the firm’s or agency’s name, address, phone number, and contact person. News release tackle a multitude of specific issues. A feature article is a longer manuscript (up to 3,000 words) prepared for a specific publication. A captioned photograph is a photograph with a brief description explaining the picture’s content. Captioned photographs are effective for illustrating new or improved products with highly visible features.
There are several other kinds of publicity-based public relations tools. A press conference is a meeting called to announce major news events. Media personnel are invited to a press conference and are usually supplied with written materials and photographs. Letters to the editor and editorials are sometimes prepared and sent to newspaper and magazines. Video- and audiotapes may be distributed to broadcast stations in the hope that they will be aired.

Advantages of Publicity-based public relations tools

The use of publicity-based public relations tools gas several advantages including credibility, news value, significant word-of-mouth communications, and a perception of being endorsed by the media. The public may consider the news more truthful and credible than an advertisement because the media is not paid to provide the information. In addition, stories regarding a new-product introduction or a new items and are likely to receive notice. Finally, the cost of publicity is low compared to the cost of advertising.

Limitations of Publicity-based public relations tools

Publicity-based public relations tools do have some limitations. Media personnel must judge company messages to be newsworthy if they are to be published or broadcast at all. Consequently, messages must be timely, interesting, accurate, and in the public interest. Many communications do not qualify. It may take a great deal of time and effort to convince media personnel of the news value of publicity releases. Although public relations personnel usually encourage the media to air publicity releases at certain times, they control neither the content nor the timing of the communications. Media personnel alter length and content of publicity releases to fit publishers’ or broadcasters’ requirements and may even delete parts of messages that company personnel view as most important. Furthermore, media personnel use publicity releases in time slots or positions most convenient for them. Thus messages sometimes appear in locations or at times that may not reach the firm’s target audiences. Although these limitations can be frustrating, properly managed publicity-based public relations tools offer an organization substantial benefits.
The appeal of public relations and publicity is based on three distinctive qualities:
1) High credibility: news stories and fectures are more authentic credible to readers than ads.
2) Ability to catch buyers off guard: public relations can reach prospects who prefer to avoid sales-people and advertisements.
3) Dramatization: Public relations have the potential for dramatizing a company or product.
Marketers tend to under use public relations, yet a well-thought-out program coordinated with the other promotion-mix elements can be extremely effective.

Personal selling

It means face-to-face interaction with one or more prospective purchasers for the purpose of making presentations, answering questions, and procuring orders. Personal selling is the most effective tool at later stages of the buying process, particularly in building up buyer preference, conviction, and action. Personal selling has three distinctive qualities:
1) Personal confrontation: personal selling involves an immediate and interactive relationship between two or more persons. Each party is able to observe the other’s reaction.
2) Cultivation: personal selling permits all kinds of relationship to spring up, ranging from a matter-of-fact selling relationship to a deep personal friendship.
3) Response: personal selling makes the buyer feel under some obligation for having listened to the sales talk.

Direct marketing

It refers to use of mail, telephone, fax, e-mail, or internet to communicate directly with or solicit response or dialogue from specific customers and prospects. The many forms of direct marketing — direct mails, telemarketing, internet marketing – share four distinctive characteristics. Direct marketing is:
1) Nonpublic: the message is normally addressed to a specific person.
2) Customized: the message can be prepared to appear to the addressed individual.
3) Up-to-date: a message can be prepared very quickly.
4) Interactive: the message can be changed depending on the person’s response.

Sales Promotion

Sales promotion is a variety of short-term incentives to encourage trial or purchase of a product or service by the consumers or the trade (retailers).
There has been increase in the sales promotion budgets of all organizations. Even smaller firms and retail outlets like Shopper’s Stops have had sales promotion campaigns. This growing significance can be attributed to the following:
a) Growing consumerism in India and an upwardly mobile Indian market.
b) Heightened inter-firm rivalry within the industry and in fact, in all sectors of the economy.
c) Trade’s resistance to invest additional resources in the product mix of different companies. This resistance is mainly because of most consumer companies enlarging their product mix to preempt competition and also to satisfy different consumer needs. Since the trade has limited sources they find it difficult to invest in all companies’ products. Hence, the trade also demands more incentives for any additional investment.
d) Fragmentation of viewers an readers arising out of multiple television channels, newspaper and magazines.
e) The mass media cost has been on the rise and most companies find sales promotion a more cost effective alternative.
f) With technologies and products getting standardized, differentiation between firms has got blunted and price wars have now become a reality in most consumer goods.

Benefits offered by sales promotions

• It helps in securing trial and defending shelf space against competition.
• Smoothens out the manufacturing capacities of firms in such a way that the peaks and the valleys are minimized.
• Provides opportunities to manufacturers to reach out market segments with differing price sensitivity
• Adds excitement to the in-store merchandizing of consumer goods
• Motivates the trade to keep more and push more of those brands that are on promotion

Types of sales promotion
Sales promotion can be grouped into the following:
A. Consumer sales promotions (Pull Strategy)
B. Trade sales promotions (Push strategy)
Consumer sales promotion methods encourage or stimulate consumers to patronize specific retail stores or try particular products. Trade sales promotion methods stimulate wholesalers and retailers to carry a producer’s products and to market these products more aggressively.

Consumer Sales Promotion Methods
Consumer sales promotion methods used by retailers are often aimed at attracting customers to specific locations, whereas those used by manufacturers are generally directed at introducing new products or promoting established brands. Various sales promotion like coupons, demonstration, frequent-user incentives, point-of-purchase displays, free samples, money refunds, premiums, consumer contest and sweepstakes have been discussed with advantages and disadvantages of each.

Coupons
A coupon is a written price reduction used to encourage consumers to buy a specific product. Coupons reduce a product’s price and are used to prompt customers to try new or established products, to increase sales volume quickly, to attract repeat purchasers, or to introduce new packages sizes or features.
Coupons are distributed on and in packages, trough freestanding inserts (FSIs), print advertising, direct mail, and in stores through shelf dispensers, electronic dispensers, and at checkout counters. According to a survey, consumers’ preferred methods of receiving coupons are through colour leaflets in Sunday newspaper (67%) and by mail (59%)


Advantages
1. Print advertisement with coupons are often more effective than non-promotional advertising for generating brand awareness. The larger the coupon’s cash offer, the better the recognition generated.
2. Coupons reward present product users, win back formers users, and encourage purchases in larger quantities.
3. As they are returned, coupons also let a manufacturer determine whether it reaches the intended target market.

Disadvantages
1. Fraud and Misredemption, which can be expensive for manufacturers. The approximate redemption rate is 2.3%, with 25% of coupons accepted being misredemptions.
2. Coupons are losing their value because so many manufacturers offer them, consumers have learned not buy without some incentive, whether it be a coupon, rebate or refund.
3. Brand loyalty among heavy coupon users has diminished, and many consumers only redeem coupons for products they normally buy. It is believed that about three-fourths of coupons are redeemed by people already using the brand on the coupon. Thus coupons have questionable success as an incentive for consumers to try a new brand or product and then continue using it.
4. Stores often do not have enough of the coupon item in stock which generates ill will towards both the store and the product.

Demonstrations
Demonstrations are excellent attention getters. Manufacturers offer them temporarily to encourage trial use and purchase of the product or to show how the product works. They can be highly effective for promoting certain types of products, such as appliances, cosmetics, and cleaning supplies. As the labour costs can be high, demonstration are not used widely.


Frequent-User Incentives
Many firms develop incentive programs to reward customers who engage in repeat (frequent) purchases. For example, most major airlines offer frequent-flyer programs through which customers that have flown a specified number of miles are rewarded with free tickets for additional travel. Frequent-user foster customer loyalty to a specific company or group of cooperating companies that provide extra incentive for patronage. They are favoured by service businesses, such as auto rental agencies, hotels and credit card companies as well as by consumer goods market.

Point-of-Purchase Displays
Point-of-purchase (P-O-P) materials include outside signs, window displays, counter pieces, display racks, and self-service cartons. These items, often supplied by products, attract attention, inform customers and encourage retailers to carry particular products. A retailer is likely is to use point-of-purchase materials if they are attractive, informative, well-constructed, and in harmony with the store.

Free samples
Marketers use free samples for several reasons: to stimulate trial of a product, to increase sales volume in the early stages of a product’s life cycle, or to obtain desirable distribution. Sampling is the most expensive of all sales promotion methods because production and distribution – at local events, by mail or door-to-door delivery, in stores, and on packages—entail very high costs. Free samples are generally not appropriate for slow-turnover products. Despite high costs, use of free samples is increasing. In agiven year, it is not unusual for three-fourths of all consumer product companies to use sampling.

Money refunds and rebates
With money refunds, consumers submit proof of purchase and are mailed a specific amount of money. Usually, manufacturers demand multiple product purchases before consumers qualify for refunds. With rebates, the customer is sent a specified amount of money for making a single purchase. These methods used primarily to promote trail use of a product, are relatively low in cost.
One of the problems with money refunds and rebates is that many people perceive the redemption process as too complicated. Consumers also have negative perceptions of manufacturers’ reasons for offering rebate. They may believe that these are new, untested products or products that haven’t sold well. If these perceptions are not changed, rebate offers may degrade the image and desirability of the products being promoted.

Premiums
Premiums are items offered free or at minimum cost as a bonus for purchasing a product. They are used to attract competitors’ customers, introduce different sizes of established products, add variety to other promotional efforts, and stimulate consumer loyalty. Inventiveness is necessary, however; if an offer is to stand out and achieve a significant number of redemptions, the premium must match both the target audience and the brand’s image. To be effective, premiums must be easily recognizable and desirable. Premiums are placed on or in packages and can also be distributed by retailers or through the mail.

Consumer Contests and Sweepstakes
In consumer contests, individual compete for prizes based on analytical or creative skills. This method generates retail traffic. Marketers should exercise care in setting up a contest. Problems or errors may anger consumers or result in lawsuits. Contestants are usually involved in consumer contests than in sweep stakes, even though total participation may be lower. Contests may be used in conjunction with other sales promotion methods, such as coupons
Entrants in consumer sweepstakes submit their names for inclusion in a drawing for prizes. Sweepstakes are used to stimulate sales and, as with contests, are sometimes teamed with other sales promotion methods. Sweepstakes are used more often than consumer contests and tend to attract a greater number of participants. Sweepstakes cost considerably less than contests. Successful sweepstakes can generate widespread interest and short-term increases in sales or market share.

























Objectives of Consumer-oriented sales promotion
The broad objective of any sales promotion programme is to induce trial and purchase of the product. As we consider the different sales promotion programmmes, we can conclude that their objectives are any one or all of the following:

1) Generate consumer interest, which should lead to trial
This is one of the most vital objective in marketing, particularly in the case of new products and those products which are mature and hence do not excite the interest of the consumer. Sales promotions designed to create excitement in the target market should help in generating trial purchases. Free samples and coupons are some of the consumer promotion schemes commonly used by firms. Offering gifts is another alternate way. Free trials
are very common in industry, particularly in cosmetics and the premium range of toilet soaps and shampoos. Dove, a premium brand of toilet soap from Hindustan Levers urges consumers to try the 7-Day test to convince themselves of the claims being made by the company.
Free samples and coupons have generally been found useful in stimulating trial for low involvement products because they generate a low cost usage experience that may create favourable attitudes much faster than advertising. For, more complex and high involvement products, in-store demonstrations seem to deliver better results. This may be attributed to the customer’s search for expert advice and information. And in most high involvement products, generally it is the dealer or store sales person who is looked up to as an expert.
In the context of multi-product firms like men’s toiletries firm, an organization may use vehicles like cross couponing to build trial for these products. In cross couponing the firm’s objective is also to piggy ride a new product on its existing products, which already command loyalty and market leadership.

2) Generate inquires from the target customer group
Another method of consumer promotion is to generate inquires from the target consumers. This is done through mail-in coupons, free catalogues and prizes. Since the incentive offered is generally in the context of an advertising message designed to introduce product benefits, these vehicles should be developed in coordination with the advertising programmes. This method is particularly useful in the following situations:
a) When the firm has to identify and attract prospective customers, who are difficult to be identified because of the product concept
b) When the customers have to be frequently replenished, like in the context of educational institutions whose stationery stocks have to be periodically replenished; here the supplier may offer mail-in coupons or even special prices or gifts on festivals
c) When a new model or another version of a product or service has been planned/introduced.




3) Build consumer traffic

Shoppers Stop, a leading garment and accessories store in the western suburbs of Mumbai, recently had a tie festival. Earlier it had several similar events either all by itself or in collaboration with leading brands. Such special sales, festival sales, or even entertainment events like Filmfare Awards are designed to build consumer traffic at retail outlets or for a brand.

4) Motivate customers to repeat their purchase
Several companies use promotion like first citizen’s club (Shopper’s Stop) which promises the customer a free shirt or any garment on the purchase of a specific number of garments. Likewise, Citibank with master card offers its members JPMiles for every purchase made on the Citibank master credit card and by earning JPMiles one can fly free through Jet Airways. These tools are aimed at creating brand loyalty. Likewise, a firm may offer continuity promotions like contests that run over several days and weeks or gifts distributed in increments over time. Frequent flyer programmes of airlines are another form of continuity promotion.

5) Increasing rates of purchase

Strategically the firm’s motivation here is to retain the customer or to generate primary demand. Tactically, for the former motivation, the firm may offer a multipack or a large pack at a lower price than the competition and its own smaller units. The net effect of this strategy is to make the consumer stock the company’s products brand above the normal level. Any consumer who does that will not have the motivation to buy the competing brand.
Sales promotion tools – coupons, contests, premiums, and the like—offer three distinctive benefits:
1) Communication: they gain attention and may lead the consumer to the product.
2) Incentive: they incorporate some concession, inducement, or contribution that gives value to the consumer.
3) Invitation: they include a distinct invitation to engage in the transaction now.

Trade Sales Promotion Methods
• With the influx of so many brands and variants in the market, there is a huge clutter and low consumer involvement leading to commoditisation of brands.
• Consumers are fatigued by the choices they have to make between nearly similar brands lacking a clear Rational or Emotional differentiator
• This makes the Retailer’s ‘Push’ or recommendation essential. He is becoming an essential part of the Marketing Mix. He can choose not to sell/stock a brand.
• No matter how much advertising is done- if the product is not available on the retail shelf- it will not be bought.
To encourage resellers, especially retailers, to carry their products and promote them effectively, producers use sales promotion methods. These include buy-back allowances, buying allowances, scan-back allowances, count and recount, free merchandise, merchandise allowances, cooperative advertising, dealer listings, premium or push money, sales contests, and dealer loaders. Discussed below is the analysis of each of these trade sales promotion schemes with advantages and disadvantages of each of them.

Buy-Back Allowances
A buy-back allowance is a sum of money given to a reseller for each unit bought after an initial deal is over. This method is a secondary incentive in which the total amount of money that resellers receive is proportional to their purchases during an initial trade deal, such as coupon offer. Buy-back allowance foster cooperation during an initial sales promotion effort and stimulate repurchase afterwards. The main drawback of this method is expense.

Buying Allowances
A buying allowance is a temporary price reduction to resellers for purchasing specified quantities. A soap producer, for example, might give retailers Re 1 for each case of soap purchased. Such offers may be an incentive to handle new products, achieve temporary price reductions, or stimulate purchase of items in larger than normal quantities. The buying allowance, which takes the form of money, yields profits to resellers and is simple and straightforward. One hazard of buying allowances is that customers will buy forward, meaning that they buy large amounts that keep supplied for many months. Another problem is that competition can beat the reduced price, which can lower profits for all sellers.

Scan-Back Allowances
A scan-back allowance is a manufacturer’s reward to retailers based on the number of pieces moved through their scanners during a specific time period. To participate in scan-back programs, retailers usually are expected to pass along savings to consumers through special pricing. Scan-back are becoming widely used by manufacturers because they directly link trade spending to product movement at the retail level.

Count and Recount
The count-and-recount promotion method is based on payment of a specific amount of money for each product unit moved from a reseller’s warehouse in a given time period. Units of a product at the start of the promotion and again at the end to determine how many units have moved through the warehouses and can also clear distribution channels of obsolete products or packages and reduce warehouse inventories. The count-and-recount method might benefit a producer by decreasing resellers’ inventories, making resellers method might benefit a producer by decreasing resellers’ inventories, making resellers more likely to place new orders. However, this method is often difficult to administer and may not appeal to resellers with small warehouses.

Free Merchandise
Free merchandise is sometimes offered at resellers who purchase stated quantities of the same or different products. Occasionally, free merchandise is used as payment for allowances provided through other sales promotion methods. To avoid handling and book-keeping problems, the giving of free merchandise is usually accomplished by reducing the invoice.

Merchandise Allowances
A merchandise allowance is a manufacturer’s agreement to pay resellers certain amounts of money for providing promotional efforts, such as advertising or displays. This method is best suited to high-volume, high-profit, easily handled products. Its major drawback is that some retailers perform activities at a minimally acceptable level simply to obtain allowances. Before paying retailers, manufacturers usually verify their performance. Manufacturers hope that retailers’ additional promotional efforts will yield substantial sales increases.

Cooperative Advertising
Cooperative advertising is an arrangement whereby a manufacturers agrees to pay a certain amount of a retailer’s media costs for advertising the manufacturer’s products. The amount allowed is usually based on the quantities purchased. Before payment is made, a retailer must show proof that advertisement did appear. These payments give retailers additional funds for advertising. Some retailers exploit cooperative advertising programs by crowding too many products into one advertisement. Surprisingly, not all available cooperative advertising amounts are used. A large proportion of all cooperative advertising amount are spent on newspaper advertisements.

Dealer Listing
Dealer listing are advertisements promoting a product and identifying participating retailers that sell the product. Dealer listings can influence retailers to carry the product, build traffic at the retail level, and encourage consumers to buy the product at participating dealers.

Premium, or Push Money
Premium, or Push money is additional compensation provided to salespeople by the manufacturers in order to push a line of goods. This promotion method is appropriate when personal selling through self-service. The method often helps manufacturers obtain commitment from the sales force, but it can be very expensive.

Sales contests
A sales contest is designed to motivate distributors, retailers, and sales personnel by recognizing outstanding achievements. To be effective, this method must be equitable for all salespersons involved. One advantage of the method is that it can achieve participation at all distribution levels. However, positive effects may be temporary, and prizes are usually expensive.

Dealer loaders
A dealer loader is a gift to a retailer who purchases a specified quantity of merchandise. Often dealer loaders are used to obtain special display efforts from retailers by offering essential parts as premiums. For example, a manufacturer might design a display that includes a sterling silver tray as a major component and give the tray to the retailer. Marketers use dealer loaders to obtain new distributions and push larger quantities of goods.











Objectives of Trade Promotions
The prime objective of trade promotion is to push the product through marketing intermediaries and also to get them to market the product aggressively. As inter-firm rivalry intensifies, more and more manufacturers will seek support of traders to aggressively market their product. The trader, too, has become selective and wiser and hence demands substantial incentives from manufacturers to push their brands in the market.

If we were to scan various promotional tools like shelf display contest, merchandize allowance, returns allowance, joint promotions, we will find that there are two objectives that explain their use:

a) Encouraging trade to build inventory
Any promotional tool designed to motivate trade to invest and build inventory of a particular brand at the expense of a competing brand is a good tactical weapon to preempt competition. This is also useful when marketers develop consumer-oriented promotions to boost their sales, as they do during the festive season.
During such occasions it is necessary to prevent any stockouts in the retail market. Thus, manufacturers may offer special margins or extra merchandise at no additional cost or even offer allowances for additional shelf and space or pay rent for additional godown space for a limited time period. The manufacturers may even offer to promote specific retail outlets for those who join his trade promotion programme.
In the case of new products, manufacturers may offer the trader additional margins, pay for promotions, part pay the wholesaler/retailer’s salesmen salaries or may offer cash incentives.

b) Getting trade’s cooperation in promotions
Often the manufacturer wants the distributor/wholesaler to participate in his promotional activities. One reason for this is because it can help lower promotion costs of the manufacturer. Another reason is, it helps heighten the interest and motivation of the distributor in the company’s brand/products. It also helps get a commitment form the distributor. Here Joint advertising, joint consumer promotions and joint sales contexts among retailers in the territory are some of the commonly used vehicles. Generally, in such situations, a major proportion of the promotional expenditure is borne by the manufacturers.
Companies use sales-promotion tools to draw a stronger and quicker buyer response. Sales promotion can be used for short-run effects such as to dramatize product offers and boost sagging sales.






Sales Promotion: Organizational Perspective
Case Study: Nestle India Ltd.


Sales Promotion Activity: “Operation Area Storm” for Maggi Extra Taste

A popular perception is that sales promotions can have negative impact on brand’s equity, a part of which is created by Advertising, Publicity, and Public Relations. A natural question that arises is, why do companies spend crores of rupees on advertising to boost a brand’s image while simultaneously spend crores of rupees on sales promotions that call attention to price and, therefore, erode equity? Furthermore, many companies seem to increase promotional spending at the expense of media advertising.
So is there any justification for carrying out extensive sales promotion activities for companies like Nestle India Ltd. when results in the long run will be detrimental to the brand image of the company. Or sales promotional activities fulfill objectives oblivious to popular marketing perceptions.
If we take a look at the promotional strategies adopted by Nestle India Ltd., we observe that Nestle relies heavily on sales promotion with respect to its products that fall within the processed foods category. As far as beverages and chocolates and confectionery are concerned Nestle employs all the elements of the promotional mix to inform, educate, remind, persuade consumers.
In effect promotional strategies differ from one organization to another based on their belief of the role of promotions in marketing.
Without getting into the debate and forming an opinion, we through a little bit of toil, poking and needling managed to gather information vis-à-vis one of Nestle India Ltd’s sales promotion exercises which was implemented in the city of Mumbai called the “Operation Area Storm”. The project lasted for a period of two months from 15.05.02 to 28.07.02.

Through a detailed study of their project by way of rummaging through secondary data and interactions with a few company personnel, I attempted to understand how sales promotion activities are conducted, what are the objectives for such activities and how they serve as excellent feedback mechanisms for organizations.
Secondary Data
Maggi Extra Taste
“Operation Area Storm”
(15.05.02 to 28.07.02)

Operation Area Storm was initiated as part of Flavour World Project to popularize Maggi Extra Taste (Maggi Super Seasoning Cubes).

This activity was carried out in a lower income group locality at Vikhroli (Kannawar Nagar), one of the central suburbs of Mumbai city.

Flavour World Project, objective of which is to popularize Maggi Extra Taste has been limited to Mumbai and Pune, although Maggi cubes are available throughout the country. Nestle believes that the markets for Maggi Extra Taste need further development and the current volumes (approximately 300 tonnes) warrant additional levels of awareness.
As a result Flavour World Project was confined to two cities to determine receptivity and sales potential.

Brief about Vikhroli (Kannamwar Nagar)
Vikhroli-Kannamwar Nagar is one of the central suburbs of Mumbai city en-route to Thane on the Eastern Express Highway. It has a population of approximately 40000 (majority Maharashtrians) from both middle as well as lower income groups.
The nagar has 100 buildings of 40 flats each and 196 chawls of 25 to 30 flats each.
It was an ideal location to conduct an activity of this kind and also conveniently measure its impact/effectiveness.

Scope of “Operation Area Storm”
• The consumption of Maggi cubes was mostly restricted to communities like Christians and Parsis. This was an ideal opportunity to introduce the cubes to a different set of consumers.
• The project could be treated as test marketing for it to be replicated in other cities and areas to attract non-traditional consumers.

Objectives to be achieved
• Popularize the concept of Maggi Extra Taste.
• Make Maggi Extra Taste an integral part of local cuisine.
• Identify regional recipes with Maggi Extra Taste

The entire exercise was divided into the following stages
• Conceptualization
• Actual Methodology Employed
• Feedback

The Concept
The idea was to reach the residents by way of sampling, one-to-one briefing about the use of the cubes, attractive schemes and redemption offers. While awareness would be created for the cubes, it would also serve the purpose of ascertaining receptivity and sales potential in cities and areas dominated by non-traditional consumers of Maggi cubes.

Actual Methodology Employed
 The activity began by extending distribution of cubes through various outlets in and around the targeted area. Awareness about the coming activity was communicated to the residents of the Nagar by way of wall paintings, banners and rice headers (kirana shops).

 This was followed by a dealers’ (retailers) meet. The idea was to involve them in Operation Area Storm in the following ways:
• Existing dealers to be made to stock higher volumes of Maggi cubes for the length of the activity
• Get new dealers into the existing supply chain
• High visibility for Maggi cubes in the various outlets (shops)

The dealers were sufficiently compensated by way of incentives and also giveaways like plastic utility items, waist pouches, dealer boards, parchi books etc.

 Sampling was done by contacting all residents in the Nagar. Teams of 40 promoters went to each building in the Nagar with samples of cubes and a questionnaire to get immediate feedback. Each of the residents was also provided with recipe leaflets that contained local recipes prepared by using the cubes.

This led to a one-to-one contact with the consumer who were then effectively briefed on Maggi cubes


 Each questionnaire had a tear off slip with details of a redemption offer. The offer allowed a certain number of empty pillows of cubes to be redeemed for plastic utility items bearing Maggi logo. The redemption of empties was to be carried out at the retail outlets.


 Cook-n-serve meets were organized for groups of 15-20 ladies in the area where local recipes prepared by using Maggi cubes were displayed. A minimum of 20 such Cook-n-serve meets was organized during the period of the activity.


 In-shop (retail outlets) activities like aggressive point-of-purchase displays and sampling to visiting customers was also carried out for the entire duration of “Operation Area Storm”.
The following gives a date-wise schedule of the two month exercise:
Sr. No. From To Activity
1 15.05.02 16.05.02 • Extension of distribution of cubes.
• Creating awareness for the intended activity (Operation Area Storm).
2 17.05.02 Dealers’ Meet
3 17.05.02 19.05.02 House to house activity through 40 promoters
4 21.05.02 28.07.02 • Commencement of Cook-n-serve meets.
• Commencement of In-shop activities and sampling at both retail outlets and at strategically acquired stalls within colonies in the Nagar.

5 29.06.02 30.07.02 Redemption of cube empties at select outlets.

List of Materials used
















Feedback
• Feedback was solicited both from the dealers and the consumers alike. The activity was a success in terms of creating awareness for the above product category and managed to achieve more than the projected sales volumes.
• Also the questionnaire that consumers were asked to fill during the sampling done gave valuable insights into the existing food patters of people in the locality, penetration of competitors’ products in the same category and receptivity of Maggi Extra Taste.
• As operation area storm was not conducted to drive up volumes to achieve short-term sales targets, the success of the campaign helped gauge consumer preferences for such a product category.














Our Analysis based on Secondary data and Fieldwork:

Analysis of Questionnaire:
(Total Respondent: 30)

 Your Daily food Habits?
Breakfast : 56% of respondent – Tea Biscuit
16% Poha
24% Chappati Bhaji
4% Others

Lunch : 76% Dal, Rice, Veg
11% roti / Chapati Veg
13% others

Dinner : 83% roti, Bhaji
9% Dal Rice / Veg or Non veg.
8% other
Non vegetarian food is consumed mostly during weekends or for dinner.


 Usage of Masala?
Home Made : 76%
Market : 24%






 Do you prefer Home Made Masala?
Yes : 96%
No : 4%


 Which company’s brand do you use?
Everest : 87%
MDH : 8%
Others : 5%



 Have you used Maggi Cubes?
Yes : 7%
No : 93%


 Which Variant?
Chicken : 92%
Veg : 5%
Lemon : 1%
Prawn : 2%


 In which recipe did you use Maggi Cubes?
Rice : 77%
Curry : 14%
Veg : 5%
Others : 4%


 Do you want to know more about Maggi Cubes?
Yes : 83%
No : 17%



 Do you want to know about your ‘Hobbies’ and which one?
Cooking : 78%
Stitching : 12%
Painting : 3%
Others : 7%



Effectiveness vis-à-vis levels of awareness and volumes
• In an area where awareness about the product was dismally low, rise in sales during the activity and after confirmed Nestle’s belief in Maggi Extra Taste as a mass product instead of it being confined to only select communities with particular food patterns.
• All variants of Maggi Extra Taste like Chicken, Veg, Lemon, and Prawn notched up sales equivalent to the first quarter sales (January-April); during the two-month period of the activity.
• The activity also helped induct new stockists into the existing supply chain. The exercise evoked a favorable response from all the dealers who readily agreed to stock up Maggi cubes and facilitated in-shop activities in return for some innovatively designed schemes and incentives.
• In addition to high visibility and awareness for Maggi Extra Taste, entire Maggi range of products benefited extensively with the exercise.

Suggestions

 The area storm activity proved very effective and impactful for a product category like Maggi Taste
 This activity could be conducted once a quarter for a Maggi Taste in and around wet markets / any other area for greater visibility and awareness of Maggi Extra Taste.
 This concept could be useful for any new product category as a support to other multiple below the line activities.























Branding and Promotion: An Uneasy cohabitation
Sales promotion seems to be the easiest and the best bet for some quick wins in the marketplace. It is an effective tool to increase the sales in the short run. Though it can help meet short term sales targets, marketers are not very clear about its effects on Brand image.
Branding and promotions are not always good bedfellows.
For example – When McDonald’s enters into a promotion war with rival Burger King and begins touting 99-cent Big Macs, it Damages more than its bottom line. It’s because price promotion runs counter to the image of “Everyday Value” that was one of the four pillars – Quality, Service, Cleanliness and Value which is the McDonald’s mantra. During Ray Kroc’s tenure, price promotions were banned.
A price promotion means that you are offering more value during the promotional period than at other times. It discloses a pricing flexibility, which in the eyes of your customer, you could not have if value was central to your operation.
Branding creates predictability; Promotion relies on creating urgency

Does this mean that you should not run promotions?
Not at all! At least not without doing some homework. It means a few important pointers enlisted below:
• A good promotion must justify its existence. Something like a new store opening, a company anniversary, etc. You can’t fool the customer after a few times and you will jeopardize your credibility and branding efforts.
For exs- Haagen Dazs could do an annual promotion on or around 9th July for it’s
Dulce de Leche ice creamand coincide with the Argentine National day, the flavour
and the name originated in Argentina

• Formalise the promotion planning process to include a mandatory rationale for the existence and the timing of each promo. Look at every promo not only as a short term tactical job- but also as a communication tool.
• “Brand Building Promotions” are very rarely seen because they require extra work by the promotion tacticians (prdt managers) to accomplish a strategic purpose that few companies have formalized. But use of imagination is required like researching into historical events or odd characters- like Sylvester Graham who promoted Graham flour,etc. Wherever the inspiration, exercise creativity to create brand centric promo opportunities.

• Co-ordinate advertising about the Sales promotion with actual availability of the offer at the retail outlets. Neglect to this aspect leads to consumer disillusionment and dissatisfaction.

• Sales Promotion can bolster marketing efforts in a downturn or recessionary period-
-New products can be introduced in this period. Product range must be expanded
-Must generate good Word of Mouth Publicity
-Keep in touch with your customers and constantly deliver more VFM.

• Sales promotionary offers also helps in generating Customer Loyalty- if the product it supports is of good quality.

• It is important to realize that the Retailer is an important link of your Supply Chain- he is in the business of making money and 30% of the times he will get your customer to switch over to a better deal offering brand. At the same time care must be taken to see that this does not lead to him overtly taking advantage of his trade interests and making unreasonable demands







References
Name of Author Title Publisher Year of Publishing
Philip Kotler Marketing Management – Analysis, Planning, Implementation and Control The Free Press 1998
9th Edition
Rajan Saxena Marketing Management Tata McGraw Hill 1997
J Barry Mason & Hazel F Ezell Marketing – Principles and Strategies Business Publications Inc. 1993
William M Pride & O C Ferrell Marketing – Concepts and Strategies Houghton Mifflin Co. 2000
10th Edition
Various Marketing Mastermind ICFAI Press 2002-03 editions
Various Business World - 2001-02















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consumer buying behaviour - February 3rd, 2009

can u plz help in preparing questionnaire on buying behaviour when they buy chocolates
help me plzzzz.
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hi...iam srujan doing mba in jntu... now iam working on consumer behaviour as mini project...
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Re: SALES PROMOTION - July 3rd, 2015

Benefits of Sales Promotion

1) Creates differentiation

2) Build new content

3) Creates training opportunities
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