Types of Sales Promotion
Good afternoon. My name is Edgars Sevastjanovs and I’m going to give a talk on sales promotion. Basically, I’ve divided my presentation into four parts. At the beginning I’ll give the definition of promotion sales. Then, in the second part, I’ll identify what sales promotions can be derected at. Afterwards, I’ll point out the most effective sales promotions strategies and to finish off, I’ll discuss different types of sales promotion. Right… first of all it’s important to understand what sales promotion is.
It can often be hard to launch a new product or service, especially in times of economic uncertainty or where there is plenty of compeition in the market place. That’s why using a consumer sales promotion can be a useful technique when in comes to customer acquisition or as an incentive to increase sales. Sales Promotion is any initiative undertaken by an organisation to promote an increase in sales, usage or trial of a product or service (i. e. initiatives that are not covered by the other elements of the marketing communications or promotions mix). It is one of the seven aspects of the promotional mix..
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These promotions can be directed at either the customer, sales staff, or distribution channel members (such as retailers). Specific sales promotions can be directed at clients, employees, customers, sales people, wholesalers, other businesses and companies, or retailers. Promotions that you intend to target at individual consumers are called consumer promotions, and those that are targeted at wholesalers, retailers, etc. have been coined as trade promotions. In my next part, I’ll talk about sales promotions strategies. There are three strategies that are widely used to boost the sales promotion activities.
These three strategies are; a push strategy, a pull strategy, and a combination of both. Let us have a glance at which strategy is follow in different case scenarios. First, I’ll identify Push Strategies. A ‘push’ sales promotion strategy involves ‘pushing’ distributors and retailers to sell your products and services to the consumer by offering various kinds of promotions and personal selling efforts. What happens here is that a company promotes their product/services to a reseller who in turn promotes it to another reseller or to the consumer. The opposite is push strategy.
The assumption in this strategy is that the customers either don’t know at all or not enough about the manufacturer’s product features to have an interest in it. By adopting this strategy the producer works with the intermediaries, especially the retailers to better present the products not only in shelves but also improve its general outlook. There are situations, when a combination of the latter two would be most effective. It’s called mix strategy. This kind of strategy is adopted when the company thinks that the products need a push from both sides.
Neither the intermediaries are pushing the product of the company to the extent nor the customers know or are interested in the product. his strategy is obviously more cost bearing and takes more time to materialize. In this strategy the company not only gives heavy margins to the intermediaries like the wholesalers and distributors, but also tries to attract the customers by making its products more attractive in shelves and packaging. ————————————————- ————————————————- ———————————————— Now I’ll examine some of the mojor trade sales promotion techniques. These are: * Trade allowances: short term incentive offered to induce a retailer to stock up on a product. * Dealer loader: An incentive given to induce a retailer to purchase and display a product. * Trade contest: A contest to reward retailers that sell the most product. * Point-of-purchase displays: Used to create the urge of “impulse” buying and selling your product on the spot. * Training programs: dealer employees are trained in selling the product. Push money: also known as “spiffs”. An extra commission paid to retail employees to push products. Trade discounts (also called functional discounts): These are payments to distribution channel members for performing some function . The other type is so-called ‘Consumer-Oriented Promotions’, which include: * Free Samples – You might have received free samples of shampoo, washing powder, coffee powder, etc. while purchasing various items from the market. Sometimes these free samples are also distributed by the shopkeeper even without purchasing any item from his shop.
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. * 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. For example, you might have come across coupons like,show this and get Rs. 15 off on purchase of 5 kg. of Annapurna Atta’.
The reduced price under this scheme attracts the attention of the prospective customers towards new or * Premium or Bonus offer: A milk shaker along with Nescafe, mug with Bournvita, toothbrush with 500 grams of toothpaste, 30% extra in a pack of one kg. are the examples of Premium or bonus given free with the purchase of a product. They are effective in inducing consumers to buy a particular product. This is also useful for encouraging and rewarding existing customers. * 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. ‘Bring your old mixer-cum-juicer and exchange it for a new one just by paying Rs. 500’ or ‘exchange your black and white television with a colour television’ are various popular examples of exchange scheme. * Fairs and Exhibitions: Fairs and exhibitions may be organised at local, regional, national or international level to introduce new products, demonstrate the products and to explain special features and usefulness of the products. Goods are displayed and demonstrated and their sale is also conducted at a reasonable discount. International Trade Fair’ in New Delhi at Pragati Maidan, which is held from 14th to 27th November every year, is a wellknown example of Fairs and Exhibitions as a tool of sales promotion. * 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. 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. To sum up, Sales promotions are useful tactical activities used as part of the overall promotional mix.
Different types are intended to produce quick and short-term changes in consumer or business to business buying behaviours. This can range from money off vouchers, inviting you to buy today and save money off the normal list price, or, maybe buy one get one free offers which seem to be the ‘big box’ supermarket preferred offer of the moment. Sales promotions are used by a wide range of organizations in both the consumer and business markets, though the frequency and spending levels are much greater for consumer products marketers. That concludes my presentation..