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Sales Promotion 11

The document discusses a sales promotion campaign conducted by Horlicks in Madras, India in 1985 to increase sales, which included offering larger sizes of Horlicks at reduced prices. The campaign was successful, increasing Horlicks sales in Madras by 44% over two months. The document also provides general information about sales promotions, including objectives, types of promotions, and common promotion activities used with customers and trade partners.

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125 views8 pages

Sales Promotion 11

The document discusses a sales promotion campaign conducted by Horlicks in Madras, India in 1985 to increase sales, which included offering larger sizes of Horlicks at reduced prices. The campaign was successful, increasing Horlicks sales in Madras by 44% over two months. The document also provides general information about sales promotions, including objectives, types of promotions, and common promotion activities used with customers and trade partners.

Uploaded by

anu555
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Sales Promotion

Horlicks Bonus Offer


Objective of the Campaign: As the sales of Horlicks were down in the first
half of 1985 in Madras, the objective of the campaign was to boost the
sales.

Promotion: The promotion was through T.V, Press advertisement, and by


promotional posters.

The promotion was having two parts:

 A newly available 500gm bottle of Horlicks was offered for the usual
price of a 450gm bottle.
 The 1kg bottle was offered at Rs. 2.50 off the normal retail price.
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Result: The promotional campaign seemed to be very much successful as


the sales in Madras increased by 44% during the month of Sep and Oct

Sales Promotion: Sales promotion refers to short-term incentives, other


than advertising & personal selling, aimed at stimulating market demand
for products. It is used to implement other promotional efforts such as
advertising & personal selling.

For ex—when Pepsi launched promotion on its large 1 ½ litre bottle


offering 33% extra free, the buyers felt the need to respond quickly to
take advantage of the special offer.

Merits of Sales Promotion:

a) Attention Value: Sales promotion techniques, such as discounts,


rebate, offering gifts, etc. are helpful in attracting new customers.
Numerous brands have flooded the market & helps in pulling in the
customers.

b) Useful in Introducing New brands: Sales promotion techniques are


extremely useful when a new product is to be launched. Free
samples distributed at this stage attract buyers & stimulate
consumer trial.

c) Synergy in Total Promotional efforts: Sales promotion activities are


designed to supplement the personal selling & advertising efforts
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used by a firm & add the overall effectiveness of the promotional


effort of the firm.

Limitations of sales Promotion:

a) Reflects Crisis: If a firm frequently relies on sales promotion, it


may give the impression that it is unable to manage its sales or
that there are no takers of its product.

b) Spoils Product Image: Use of sales promotion tools may affect


the image of a product. The users may start feeling that the
product is not of good quality or is not appropriately priced.

Planning for Sales Promotion Programmes:

1) Defining the Sales Promotion Target: In this step the potential


consumers for the sales promotion are decided. It can be directed
towards ultimate end users, or towards its own sales force.

2) Defining Sales Promotion Objective: From the target consumer sales


promotion objectives can be determined. Different types of
objectives can be set.

3) Setting the Budget: Sales promotion budget must be approved


before the campaign is commenced. The budget must highlight the
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total administrative cost of promotion as well the total incentive


cost.

4) Developing Sales Promotion Strategy: Numerous decisions are to be


taken in developing a sales promotion strategy like size of the
incentive, duration of incentive and timing of promotion.

5) Selecting the Type of Sales Promotion: All sales promotion methods


can be classified in the above stated three broad categories. In these
categories the sales promotion methods varies wide and far.

6) Coordinating the Plan: Elements of promotion mix supplements the


efforts of each other so it is essential that sales promotion activities
must be well coordinated with other elements of the promotion mix,
like:

a) Advertising and sales promotion plans should be integrated.


b) The sales force should be communicated with all promotions
well in advance and trained to implement them.
c) For the special events, publicity should be generated.

7) Evaluating Sales Promotion Effectiveness: Before implementing the


sales promotion, pretesting of the programme is to be done.
Pretesting means testing the sales promotion programme before it is
implemented. The approaches to sales promotion evaluation include
consumer panels, consumer surveys and experiments.

Types of Sales Promotion:


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A. Customer Promotion: Here the target beneficiaries are the


customers. Here the offers are offered directly to the ultimate
customers. Such an offer is always for a short period.

B. Trade Promotion: Here the target is the middlemen. They are


being offered the incentives with the hope that they will stock
more and push the product to the customers. Tools used are
price or merchandise allowances, promotion allowances, and
perhaps sales contests.

C. Sales Force Promotion: This type emphasis to increase and boost


up the morale of the sales people. They are offered commissions,
bonuses and other incentives for increased sales so that they
work delicately.

Objectives of Sales Promotion:

A. Generate Consumer Interests: 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 interests of
the consumer. Free trails are very common in industry, particularly
in cosmetics and premium range of toilet soaps and shampoos. For
ex—Dove a premium brand of HUL, urges consumers to try the 7
day test to convince them of the claim made by the company.

B. Enquiry Generation: Another objective of sales promotion is to


generate enquires from the target market. This is used when a new
product or model is being launched in the market.

C. Build Customer Traffic: Shoppers Stop, a leading garment and


accessories store in the country organizes several events and
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festivals. Such special sales, festival sales, are designed to build


consumer traffic at the retail outlets.

D. Motivate Customers to Repeat Their Purchases: Several companies


use promotion tools like First citizen’s club and cumulative purchase
card which promises the customer a free product on redemption of
purchase points. Likewise, Citibank, Visa, Mater Card etc offer its
members redeemable points for every purchase made on the credit
card.

E. Increasing rates of Purchase: The firm may offer a large pack or a


multipack at a lower price than the competition or its own smaller
units. The net effect of this strategy is to make the consumer stock’s
the company’s product brand above normal levels.

Commonly Used Sales Promotion Activities:

a) Rebate: Offering products at special prices to clear off excess


inventory. Ex—a car manufacturer offers to sell a particular brand of
car at a discount of Rs.10000, for a limited period.

b) Discounts: Offering products at less than list price. Ex—a shoe


company’s offer of ‘Discount up to 50%’.

c) Refunds: Refunding a part of price paid by customer on some proof


of purchase, say on return of empty foils or wrapper.
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d) Product Combination: Offering another product as gift along with


the purchase of a product, say offer; “Get 128 KB memory card free
with a Digicam”

e) Quantity Gift: Offering extra quantity of product commonly used by


marketer of toiletry products. For ex—a shaving cream’s offer of
40% extra.

f) Instant Draws & Assigned Gifts: For ex—Scratch a card or Burst a


cracker and instantly win a refrigerator, car etc.

g) Lucky Draws: For ex—the offer of a bathing soap to win a gold coin
on lucky draw coupon.

h) Sampling: Offer of free sample of a product; say a detergent


powder or toothpaste to potential customers at the time of launch
of a new product.

i) Packaged Premium: In this type of sales promotion, marketers pack


some gifts inside the product package. The gifts create a lure to buy
the product.

j) Full Finance @0%: Many marketers of consumer durables such as


electronic goods, automobiles, etc offer easy financing schemes. For
ex—12 easy installments, 4 upfront and 8 to be paid as post-dated
cheques.
Page | 8

k) Container Premium: This category of sales promotion is also very


popular with the marketers of products like jam, detergents, and
soaps. In these schemes, the marketer devises special containers for
packaging the product which could be used by the consumer for
some use.

Selected Types of Sales Promotion Directed at Middlemen

1. Training: The manufacturer provides training for the personnel of


the middlemen.

2. Trade Allowances or Special Offers: Middlemen are given discounts


or rebates on purchasing during certain time periods.

3. Point of Purchase Displays: The manufacturer gives the retailer a


fully equipped display for its product and sets it up.

4. Push Money: Middlemen are given bonuses for pushing the brand
of a particular manufacturer.

5. Sales Contests: Prizes or bonuses are distributed if certain


performance levels are met.

6. Free Merchandise: Discounts or allowances are provided in the form


of merchandise.

7. Demonstration Models: A free item is given to the wholesaler or


retailer for demonstration purposes.

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