Sales Promotion

“Sales promotion includes these activities, which enhance and support mass selling and
personal selling and which help compete and/or coordinate the entire promotional mix and
makes the marketing mix more effective.”

Mason and Rath, “Sales promotion consists of those activities that are designed to bring a
company’s goods or services to the favourable attention of consumers.”

Characteristics of sales Promotion

1. Irregular and non-recurring activity – Sales promotion is an irregular and non-

recurring effort to increase the sales. In other words, the routine activities of marketing
efforts are not included in it. The technique is used on certain specific circumstances,
such as decline in demands, fall in profits, acute competition in the market, or when a
new product is to be introduced in the market.

2. Scope – Sales promotion is a supplementary effort to advertising and personal selling.

It does not include advertising and personal selling, publicity and public relations.
3. Motivation – It is an effort by which the consumers, traders and sales force are
motivated towards maximum sales.
4. Various marketing activities – It includes all such activities to attract the consumers
at the selling points, such as the use of decorations, displays, premium offers, etc.
5. Objective – The objective of sales promotion is to establish better coordination
between the activities like advertising, personal selling, publicity’s, etc. In the words of
Stanton, “Really the major function of sales promotion is to bridge the gap between
advertising and personal selling; so that efforts of these two areas could be
supplemented and coordinated.”
6. Universal activity – It is an universal activity adopted by all the economies of the
world in their sales efforts.
7. Investment – Money spent on sales promotion is not a waste, but an investment. It
will bring return on the investments in future.
8. Short-period effect – The sales promotion techniques have a short term effect of the
consumers, but it is an objective oriented tool to get maximum sales during a short
period of time.
9. Tripartite activity – It is a tripartite activity involving the distributors/middlemen,
consumers, consumers and salesmen of the company to achieve the desired goals.
10. Means of marketing communication – It is an important means of communication
by which views and ideas of the consumers about the products and services are
exchanged with the producers regularly.
11. Personal and impersonal nature – Sales promotion is both, a personal and
impersonal activity. Certain promotional tools such as premium, samples,
demonstration, training, repairing, etc. are of personal nature, whereas certain other
tools such as contests, decorations, trade fairs, etc. are of impersonal nature.
12. An element of promotion mix – Sales promotion is one of the important elements of
promotion mix, other than advertising, personal selling and publicity.
13. Aim – The aim of sales promotion is goal-oriented to achieve sales/marketing
objectives, which are short-term and immediate.
14. Variation with product category – The distinction between short-term and long-
term results often may vary with the product category and the particular industry.
15. Viewed as a non-recurrent selling activity – The sales promotion has been
traditionally viewed as a non-recurrent selling activity and has been defined as such in
some definitions. However, this does not portray the present day, intensely competitive
market conditions.
16. Maximum effect at minimum cost – When the nature of promotion objective is such
that it can best be achieved by sales promotion, rather than advertising alone, and the
objective is achieved at minimum cost.
17. Motivates consumers to buy now – Successful sales promotions induce a sense of
urgency to buy now and avoid postponing purchase. The consumer is moved to take
immediate action and gets involved in the transaction.
18. Offers what the consumers want – Sales promotion must not attempt to push any
offer that is not regarded as desirable by target consumers. They cannot attract
consumers towards offers that are not perceived as interesting, exciting and valuable to
them.
19. The promotion should be clear and uncomplicated – It offers a single but powerful
incentive to engage in transaction. Any subsidiary offer stems from or is closely related
 to the main offer. In a simple and clear language, it communicates how consumers can
take advantage of the promotional offer. Too many hurdles discourage consumers to
participate.
20. Promotion should be highly visible – The offer must draw attention of target
consumers. The media selection is important. Effective promotion draws attention from
high visibility and from creative qualities.
21. Promotion should benefit all concerned – Usually promotions involve cooperation
of sales force and channel members. They need to be motivated to make the efforts
successful.
22. Promotion must be believable and honest – It makes reasonable and believable
claims, tells the truth, there are no exaggerations, and it respects public’s intelligence.
23. Promotion must be legal – The marketers must check the legality of promotion
before announcing it.
24. Promotion must be implemented efficiently – In some types of promotions,
handling houses and premium suppliers are involved. Proper arrangements must be
made with these outside parties to avoid any complication.

Various objectives of sales promotion

 • To announce new products

Encourage customers to buy a new product, complimentary samples may be dispersed, or

money and stock allowance can be awarded to business reserve and sell the product.

• To fascinate new consumers

New consumers can be fascinated by the allocation release of complimentary samples bonus,
contests and the same products.

• To encourage existing consumers to purchase more

Existing consumers can be encouraged to purchase more by knowing more about a commodity,
it’s elements and uses.

• To help the company stay competitive

Sales promotion can be initiated to meet competitions amongst companies.

• To raise sales in the off-season

Buyers can be inspired to use the goods created in the off-season by displaying them the
variations of uses of the products.

• To raise the stock of the business buyer

Retailers can be encouraged to maintain a stock of more units of products so that mere sales
can be enacted.
Advantages of Sales Promotion

• Produces Immediate Sales

Because of this kind of sales promotion measures, people get very excited to buy more. It
generates excitement, and customer again wants to purchase the product.

• Prevents Competitor Entry or Promotions

Any competitors who are trying to enter the market and attain your market share cannot do so
when you go ahead into sales promotion because if they are already in an established darn, they
are doing very well. On top of that, if you come up with your offers in sales promotion
measures, then the competitors cannot do anything in this matter.
 • Measurable Results can be Produced

Measurable results can be produced because it is a short-term event. Thus, the sales volume
generated during your sales promotion period can be easily measured.

• Helps to Gain Distribution Channel Support

A distribution channel is nothing but the people involved in distributing your product. It could
be a dealer, retailer, etc. Thus, you get to put your product by using sales promotion tools as
well. If you give discounts or deals to your dealers, then they help you to sell your product, and
this could benefit and increase your sales.

• Easy to Design and Implement

In advertising, there are so many costs involved, so many competitors are involved, so it
becomes challenging to decide what kind of advertisement should you come up with and how
it should be. Out in the case of sales promotion, it is relatively easier to design and implement
your activities; you can calculate your costs and their effects on the sales accordingly.

Disadvantages of Sales Promotion

1. It is for the short-term.

2. Excessive use of it can also harm the brand value.
3. It may create confusion in the customer’s mind.
4. It attracts only price switches.
5. Forward buying.
6. Sometimes it gets mistreated by both merchant and customers.
Scope of Sales Promotion:

Sales-Promotion : Roles and Limitations:

A. Manufacturers and Sales-Promotion:

1. It creates new customers:

No manufacturer is happy with the sales turnover achieved, because it can be excelled and
improved upon. This is possible by new customers who are brought in the orbit of sales by

sales- promotion as it has the capacity to convert potential consumers into actual customers.

2. Retains the existing customers:

Every manufacturer has his own class of customers for his products and services. The

intelligence lies not only getting new and new customers but in retaining the existing class of

customers. Tagging the customers to the product or the firm for a long time is the basic function
of sales-promotion.
3. Combats competition:

Business means existence of rivals. The institution of competition is a must to bring about al-

round improvement in performance. It is the competitive spirit that makes one to excel another

through different weapons. One such powerful weapon is sales-promotion that helps in

combating competition.

4. Woos middlemen:

This is true that there cannot be total direct sales by manufacturers to consumers in these days

of mass and concentrated production on one side and widely scattered consumers on the other,

middlemen are a must to connect the two ends to balance the demand for and supply of goods.

5. Sales reduce the costs:

Sales-promotion is one of the promotional tools noted for creating, maintaining and extending
demand for the firm’s products. This mass distribution supports the very idea of mass
production and the benefits of this mass production namely, better cheaper and more
production is transmitted to all. Producers get higher and higher margin, dealers get increased
business and the consumers reduced prices for their purchases.

B. Middlemen and Sales-Promotion:

1. Multiplies sales:

Middlemen are benefitted by the creative act of sales promotion that creates new customers

and retains the existing one. The overall effect is that their sales turnover goes on increasing.

It is for their own good and good of their manufacturer.

2. Reduces strain:

In absence of sales-promotion tool, the middlemen would have been forced to work still harder

to create, maintain and extend the demand for the goods on their shelves. Like advertising, it

creates a fertile ground and makes possible quick returns than the advertising.
3. Builds store image:

Sales-promotion covers a wide range of techniques such as demonstration, exhibition, games,

contests, displays, window signs, packages which go much deep in giving beauty-mask or a

face-lift for his retail outlet. This personality building work is the magic of sales-promotion.

4. Hike in earnings:

Increased sales for retail stores through sales- promotion efforts result in multiplied earnings

of commissions and profits, as the case may be. Success of sales-promotion is his financial

success, a mark of achievement, a mile-stone in his business career.

5. Personal benefits:

In addition to the increased earnings, sales- promotion makes possible some special non-cash

benefits to him and his family associated with his business success. Thus a dealer contest

enables him to have a tour to Europe or around the world or say week’s period stay at a holiday

beach resort for him and his family. These are extra-ordinary noncash benefits derived out of

sales-promotion.

C. Consumers and Sales-Promotion:

1. Supplies information:

Just as producers are eager to speak of their new products and services, consumers are equally
inquisitive to know about the latest arrivals. The information made available by sales-
promotion gives not the product features but also the special concessions attached to the sales
conditions.

2. Improves standard of living:

Improvement in standard of living implies making available goods and services at least cost,

of better quality and in larger quantities. Sales-promotion does this by working on distribution

side which has the cycle of effects on production and back on consumption.
3. Grants incentives:

It is through the sales-promotion drives that the consumers get number of incentives both cash

and non-cash. These may be season discounts, samples, coupons, gifts, contest-prizes. Thus, a

victory in sales contest may give him the opportunity of visiting a foreign city or a stay in a

star hotel with family and so on.

4. Builds loyalty:

Sales-promotion incentives build brand loyalty and store loyalty. This tagging of consumer to

a particular brand and a particular store has its own impact on the consumers. A consumer who

is known as regular is dependable and, therefore, gets easily the credit facilities and special

concessions.

5. Gives better value for money:

Every consumer has his own budget. He looks for some adjustment or refinement in spending

so that he gets maximum satisfaction within the financial limits he is struggling.

Sales- promotion will mean getting quality goods at reduced prices plus variety of gifts that are
useful on which otherwise he would have spent. Thus, a sales contest may bring him a fridge
for which his family was pressing for.

Limitations:

1. It is short-run device:

Like a flash light, it flashes and disappears. It has the shortest life impact as promotion tool

unlike advertising. It can be used as a tool to achieve short term marketing objectives by

schematic means. It has the strongest ability of creating impulse buying but cannot work as a

lasting dose.

2. It is dependent technique:

It is more of a supplementary device and has got to be blended well in right proportion with
other two promotional ingredients namely, advertising and personal selling. That is why; it has
been rightly described as the bridge between personal and impersonal selling. It makes up the

gaps in the two and, therefore, is a plus ingredient.

3. It damages the brand image:

Advertising is the most powerful means of creating brand image which is a must in these days

of segmented marketing practices. However, creating brand image through promotional

ingredient is like praising too much of a thing. When the firm has already done much in this

direction, this plus ingredient creates a doubt in the minds of consumers.

They are likely to feel that when too many incentives and concessions are given, there is

something fishy about the product or a brand. Thus, instead of refining the image it is

dismissed.

4. Under-valued by experts:

Sales-promotion, as tool of promotion mix, is undervalued by the experts from advertising

agencies. They are of the opinion that sales-promotion as mix ingredient is not capable of

fighting the intense competition.

These techniques of sales-promotion are so over that they are easily copied by the competitors

and the original gap between the competitors is again maintained.

It is like increasing the dearness allowance to match the rising cost of living, so much so that,

by the time authorities declare the dearness allowance, the prices have gone up again.

sales promotion techniques:

(1) Rebate:

Under it in order to clear the excess stock, products are offered at some reduced price. For
example, giving a rebate by a car manufacturer to the tune of 12,000/- for a limited period of
time.
(2) Discount:
Under this method, the customers are offered products on less than the listed price. For
example, giving a discount of 30% on the sale of Liberty Shoes. Similarly giving a discount of
50% + 40% by the KOUTONS.

(3) Refunds:
Under this method, some part of the price of an article is refunded to the customer on showing
proof of purchase. For example, refunding an amount of 5/- on showing the empty packet of
the product priced 100/-.

(4) Product Combination:

Under this method, along with the main product some other product is offered to the customer
as a gift. The following are some of the examples:

(5) Quantity Gift:

Under this method, some extra quantity of the main product is passed on as a gift to the
customers. For example, 25% extra toothpaste in a packet of 200 gm tooth paste. Similarly, a
free gift of one RICH LOOK shirt on the purchase of two shirts.

(6) Instant Draw and Assigned Gift:

Under this method, a customer is asked to scratch a card on the purchase of a product and the
name of the product is inscribed thereupon which is immediately offered to the customer as a
gift. For example, on buying a car when the card is scratched such gifts are offered – TV,
Refrigerator, Computer, Mixer, Dinner Set, Wristwatch, T-shirt, Iron Press, etc.

(7) Lucky Draw:

Under this method, the customers of a particular product are offered gifts on a fixed date and
the winners are decided by the draw of lots. While purchasing the product, the customers are
given a coupon with a specific number printed on it.

On the basis of this number alone the buyer claims to have won the gift. For example, ‘Buy a
bathing soap and get a gold coin’ offer can be used under this method.
(8) Usable Benefits:
Under this method, coupons are distributed among the consumers on behalf of the producer.
Coupon is a kind of certificate telling that the product mentioned therein can be obtained at
special discount.

It means that if a customer has a coupon of some product he will get the discount mentioned
therein whenever he buys it. Possession of a coupon motivates the consumer to buy the product,
even when he has no need of it.

Such coupons are published in newspapers and magazines. Some companies distribute coupons
among its shareholders. Sellers collect the coupons from the customers and get the payment
from the company that issues the same.

(9) Full Finance @ 0%:

Under this method, the product is sold and money received in installment at 0% rate of interest.
The seller determines the number of installments in which the price of the product will be
recovered from the customer. No interest is charged on these installments.

(10) Samples or Sampling:

Under this method, the producer distributes free samples of his product among the consumers.
Sales representatives distribute these samples from door-to-door.

This method is used mostly in case of products of daily-use, e.g., Washing Powder, Tea,
Toothpaste, etc. Thus, the consumers willy-nilly make use of free sample. If it satisfies them,
they buy it and in this way sales are increased.

(11) Contests:
Some producers organise contests with a view to popularizing their products. Consumers taking
part in the contest are asked to answer some very simple questions on a form and forward the
same to the company. The blank form is made available to that consumer who buys the product
first.

Result is declared on the basis of all the forms received by a particular date. Attractive prizes
are given to the winners of the contest. Such contests can be organised in different ways.
Consumer-oriented sales Promotion:

The consumer-oriented promotion tools are aimed at increasing the sales to existing consumers,
and to attract new customers to the firms. It is also called pull strategy. The consumer can take
the benefit of promotion tools either from the manufactures or from the dealer, or from both.

1. Free samples:
In this case, small units of free samples are delivered door to door, sent through direct mail,
attached to another product, or given along with the purchase of some other product (e.g., soaps,
soft drinks, detergents or other items). Free samples are normally provided during the
introductory stage of the product.

2. Coupons:
This involves offering price reduction or saving to customers on the purchase of a specific
product. The coupons may be mailed or enclosed along with other products, or inserted in a
magazine or newspaper advertisement.

3. Exchange scheme:
In this case, the customer exchanges the old product for a new one. The old product’s exchange
value is deducted from the price of the new product. This sales promotion tool is used by several
companies for consumer durables. For instance. Philips came up with five-in-one offer. The
offer consisted of Philips TV, two-in-one, iron, mixer-grinder, and rice cooker at an attractive
price.

4. Discounts:
It refers to reduction in price on a particular item during a particular period. It is common during
festival season or during off-season period. It is very stimulating short-term sales, especially
when the discount provided is genuine one. For instance, the Hawkins pressure cooker
manufacturer announced an attractive price reduction, up to Rs.150 off, on a new Hawkins in
exchange for any old pressure cooker. The advertisement specified that the offer was open only
up to a particular date.
5. Premium offers:
These can be extra quantities of the same product at the regular price. Premium offers are used
by several firms selling FMCG goods such as detergents, soaps and food items. For instance,
Colgate offered 125 g in a tube for the price of 100 g.

6. Personality promotions:
This type of promotion is used to attract the greater number of customers in a store and to
promote sale of a particular item. For instance, a famous sports personality may be hired to
provide autographs to customers visiting a sports shop.

7. Installment sales:
In this case, consumers initially pay smaller amount of the price and the balance amount in
monthly installments over a period of time. Many consumer durables such as refrigerators and
cars are sold on installment basis. For example, Washotex came up with a scheme to pay 20
per cent now and take home Washotex washing machine. The consumers were offered the
facility of paying the balance in 24 equal monthly installments.

Trade-oriented Sales Promotion:

Trade-oriented sales promotion programmes are directed at the dealer network of the company
to motivate them to the sell more of the company’s brand than other brands. It is also known
as push strategy, which is directed at the dealer network so that they push the brand to the
consumers by giving priority over other competitor brands.

▪ Cash bonuses:

It can be in the form of one extra case for every five cases ordered, cash discounts or straight
cash payments to encourage volume sales, product display, or in support of a price reduction
to customers.

▪ Money Refund Offers:

Here the company or producer gives a definite proportion of refund as a component of the deal
for buying a product. If the customer is not pleased with the product, a part or all of the
purchaser’s money will be refunded. The refund is not given while making a procure but
received when the buyer submits a proof-of-purchase to the producer. It will generate new users
and support brand devotion.
 ▪ Stock return:

Some firms take back partly or wholly the unsold stocks lying with the retailers and distribute
it to other dealers, where there is a demand for such stocks.

▪ Price off Offer:

It stimulates sales during a slump season. It gives a momentary reduction to the consumers,
i.e., goods are offered at a rate less than the labeled rate. Fans are sold at a decrease rate in the
winter season.

▪ Premium Offers:

Products are offered free or at a low cost for buying a meticulous product. It is a momentary
price decrease which increases the nature of the buyers. For example, buy one get one free,
book a flat with no EMI for the first year, etc. Products are offered free or at a reduced cost as
an incentive for purchasing. The company also gives out gifts like wallets, calendars, diaries,
etc. along with a buy.

▪ Credit terms:

Special credit terms may provide to encourage bulk orders from retailers or dealers.

▪ Consumer Sweepstakes:

These are opportunities for the buyers to win cash, trip, or a product when making a definite
purchase. Consumers submit their names for insertion in a list of prize-winning contest. After
getting the right numbers, the consumers win a prize. At a particular time, lots will be drawn.
The prize-winner gets the prize. Sweepstakes refers to submitting names for a draw – lucky
draws. This system is followed by trade businessmen to endorse sales.

▪ Dealer conferences:

A firm may organize dealer conferences. The dealers may be given information about the
Company’s performance, future plans, and so on. The dealers can also provide valuable
suggestions to the company at such conferences.
 ▪ Dealer trophies:

Some firms may institute a. special trophy to the highest-performing dealer in a particular
period of time. Along with the trophy, the dealer may get a special gift such as a sponsored
tour within or outside the country.

▪ Product warranties and guarantees:

The producer makes security to the purchaser that the manufactured goods will be repaired
without charge or cost, replaced, or money refunded if it doesn’t perform as promised for a
definite stage.

▪ Push incentives:

It is a special incentive given to the dealer in the form of cash or in-kind to push and promote
the sale of a product, especially a newly launched product.

▪ Exchanges:

Purchasers are asked to submit the old product and a new product is accessible at a new price.
The organizations sometimes ask to submit the old product pretend by them, but sometimes,
the swap rolls over to a product from any brand or a certain brand.