A COMPREHENSIVE PROJECT REPORT ON

Role of consumer oriented sales promotion in FMCG sector

Submitted to
SOM-LALIT INSTITUTE OF BUSINESS MANAGEMENT IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF THE AWARD FOR THE DEGREE OF MASTER OF BUSINESS ASMINISTRATION

In

Gujarat Technological University

UNDER THE GUIDANCE OF Prof. Meeta Munshi Submitted by SMITAL SOLANKI [Enrollment No.:107780592045] BINDESH BANKAR [Enrollment No.:107780592054] MBA SEMESTER III/IV
SOM-LALIT INSTITUTE OF BUSINESS MANAGEMENT
MBA PROGRAMME

Affiliated to Gujarat Technological University Ahmedabad 2010-2012

CERTIFICATE
This is to certify that Mr. SMITAL SOLANKI and Mr. BINDESH BANKAR students of MBA 2nd year of the SOM-LALIT INSTITUTE OF BUSINESS

MANAGEMENT, Ahmedabad have completed their Grand Project Role of consumer oriented sales promotions in FMCG in the year 2011-2012 in partial fulfillment of Gujarat University requirements for the award of the degree of Master of Business Administration.

Director Prof. Dr. Jagdish Joshipura Date:

Grand Project Guide Prof Meeta Munshi

PREFACE
In this age of globalization hyper competition has become a regular feature. Today the markets are no less then battlegrounds and one has to strive very hard for survival and growth. Due to very rapid industrialization all over the world the demand for the managerial personnel and the administrative personnel has increased. The perfect study of Management involves both the theoretical as well as practical aspects. To survive in this highly competitive market Practical Knowledge is as relevant as the Theoretical. The significance of MBA Degree is that the Theoretical aspects, which a student learns throughout the year in the class sessions, can be practically applied through different projects, which one undertakes. Keeping in tune with this doctrine, we have tried to apply theoretical aspects through out the project, which we learned under the course of management. In this project more emphasize given to the various tools of sales promotion and its impact on consumers buying decisions. Actually in recent trend to some extent this technique also become victim of clutter, even though it can be eliminated by generating innovative and more attractive tools to lure the customers. Now a day most of the FMCG companies considering sales promotion as an important part of their marketing strategy. From the analysis of survey it becomes clear that consumers do response to the sales promotion campaign, but there are customers who strongly prefer to stick to brand name.

SLIBM Gujarat Technological University Ahmedabad . 3

Smital Solanki Bindesh Banker

ACKNOWLEDGEMENT

Every study requires a guidance of someone who is working in that field. Firstly we wouldlike to thank Director Sir
Dr. Jagdish Joshipura

for providing an opportunity of preparing a Grand Project Report and allowing us to use the resources of the institution during this project. We are extremely thankful to our Project Guide, Prof Meeta Munshi and of SLIBM for their precious guidance regarding the preparation of the Project Report. Their guidance has proved to be useful and without them, the preparation of this report might not have been possible. We are also thankful to the other faculty members of SLIBM for extending their valuable support for this project. We also extend our sincere thanks to the Respondents, who helped us during the course of our project and for their gracious attitude. We would like to take this opportunity to extend our warm thoughts to those who helped me in making this project a wonderful experience. Last but not the least; we would also like to thank our family for their support and encouragement.

Executive Summary
As a part of our study curriculum it is necessary to conduct a grand project. It provides us an opportunity to understand the particular topic in depth and which leads to through to that topic. My topic for the grand project is titled as Study of consumer oriented sales promotion in FMCG sector in which emphasis given to the effect of sales promotion on buying habits of consumers. To start with we will give brief information regarding FMCG sector then moving to the main topic we will explain what is topic is all about. Promotion is one of the pillars of marketing mix and same way sales promotion is also one of the elements of promotion. With respect to consumer oriented sales promotion there are certain theories narrated as operant conditioning and projective theory. Based on secondary source certain theoretical aspects are also included as a part of study. Then after concentration is given to the primary research. It includes the analysis and results of survey which was focuses on consumers behavior towards sales promotion campaign. The survey was conducted with the help of structured questionnaire. At last conclusion of report, findings and suggestions was given based on study of secondary source as well as primary research.

INDEX
Sr. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. TOPICS Research Methodology of the study Introduction Introduction to the topic Sales promotion strategies SWOT Analysis Data Analysis of the survey Findings of the report Recommendations Limitations Emerging Trends Conclusion Bibliography Annexure: Questionnaire Page No. 6 8 10 24 29 30 61 63 65 66 67 68 69

RESEARCH METHODOLOGY
Research Objectives: 1. To study consumer preferences with respect to sales promotion in FMCG sector. 2. To examine tradeoffs, relative importance of different attributes while responding to a sales promotion offer. 3. To study the effect of sales promotions in FMCG sector esp. in soap industry. 4. To study consumer behavior in purchase of soaps. Product categories under study TOILETERIES Soaps

Research Design
Research design selected for this project is Descriptive.

Data collection Method:

(a) Primary Data Collection Method: Survey method was used for primary data collection. We used questionnaire as an instrument for survey method. Structured questionnaire. Type of questionnaire: Close ended. (b) Secondary Data Collection method: Reference books. Internet.

Sampling Detail
1. Target population: The population for this research study consists of the residence of Ahmedabad. 2. Sampling unit:
3. Sample size:

In this study the sampling unit is individual consumer. 100 consumers. The sample is selected by using convenience-sampling method.

4. Sampling method:

Introduction
FMCG Concept and Definition:

The term FMCG (fast moving consumer goods), although popular and frequently used does not have a standard definition and is generally used in India to refer to products of everyday use. Conceptually, however, the term refers to relatively fast moving items that are used directly by the consumer. Thus, a significant gap exists between the general use and the conceptual meaning of the term FMCG.

Further, difficulties crop up when attempts to devise a definition for FMCG. The problem arises because the concept has a retail orientation and distinguishes between consumer products on the basis of how quickly they move at the retailers shelves. The moot question therefore, is what industry turnaround threshold should be for the item to qualify as an FMCG. Should the turnaround happen daily, weekly, or monthly? One of the factors on which the turnaround depends is the purchase cycle. However, the purchase cycle for the same product tend to vary across population segments. Many low-income households are forced to buy certain products more frequently because of lack of liquidity and storage space while relatively high-income households buy the same products more infrequently. Similarly, the purchase cycle also tends to vary because of cultural factors. Most Indians, typically, prefer fresh food articles and therefore to buy relatively small quantities more frequently. This is in sharp contrast with what happens in most western countries, where the practice of buying and socking foods for relatively longer period is more prevalent. Thus, should the inventory turnaround threshold be universal, or should it allow for income, cultural and behavioral nuances?

Characteristics of FMCG Products:

Individual items are of small value. But all FMCG products put together account for a significant part of the consumer's budget. The consumer keeps limited inventory of these products and prefers to purchase

them frequently, as and when required. Many of these products are perishable. The consumer spends little time on the purchase decision. Rarely does he/she look

for technical specifications (in contrast to industrial goods). Brand loyalties or recommendations of reliable retailer/dealer drive purchase decisions. Trial of a new product i.e. brand switching is often induced by heavy

advertisement, recommendation of the retailer or neighbors/friends. These products cater to necessities, comforts as well as luxuries. They meet the

demands of the entire cross section of population. Price and income elasticity of demand varies across products and consumers.

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The Top Five Top FMCG Companies In India

Hindustan Unilever Ltd

Hindustan Unilever Limited was previously called as Hindustan Level Limited and it came into existence in the year 1933 in the name of Lever Brothers India Limited. It has been found that two out of every three Indian who are using food and beverages and home & personal care products are making use of the products of Hindustan Unilever Limited

Indian Tobacco Corporation

Indian Tobacco Company came into existence in the year 1910 with the name of Imperial Tobacco Company of India. The company is famous for its employees' satisfaction policies and the employees of the organization are happy with their employer. The company deals with different FMCG products and it cannot be any more called as Tobacco Company.

Nestle India
The journey of Nestle India began in the year 1912 in the name of the Nestle Anglo-Swiss Condensed Milk Export Company Limited and they are dealing with selling and importing finished products in Indian market. The company is one among the top wealth creators of India. The company is manufacturing Indian Consumer products with international standards

GCMMF(AMUL)
GCMMF stands for Gujarat Cooperative Milk Marketing Federation and the company aims at offering good returns to the farmers and at fulfilling the requirements of consumers 11

by offering them quality products. Of the different products offered by GCMMF, Amul range of products is the most famous and millions of people in India use Amul products. Some of the products of Amul include Amulya, Amul Milk, Nutramul, Amul Ice Cream, Amul Shirkhand, Amul Chocolates, Amul Cheese, Amul Spray, Amul Ghee, Amul Milk powder and Amul Butter.

Dabur
Dabur India deals with personal and health care products. The recent turnover of this company is Rs. 1899 crores. The company has manufacturing units in different countries and some of their popular brand products are Dabur lal dant manjan, dabur chyawanprash, dabur amla, hajmola, anmol, vatika and Dabur red tooth paste.

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Introduction to the topic

Introduction:
The importance of consumer sales promotion in the marketing mix of the fast moving consumer goods (FMCG) category throughout the world has increased. Companies spend considerable time in planning such activities. However, in order to enhance the effectiveness of these activities, manufacturers should understand consumer and retailer interpretations of their promotional activities. The study here pertains to consumers perceptions regarding sales promotion. Some past researches have suggested that promotion itself has an effect on the perceived value of the brand. This is because promotions provide utilitarian benefits such as monetary savings, added value, increased quality and convenience as well as hedonic benefits such as entertainment, exploration and self-expression. Broadly speaking most of the companies using Marketing Mix which includes Price Place (Channel of Distribution) Product Promotion These are the four basic pillar of marketing mix. Most of the marketing strategies are built on the basis of these criteria. Promotion is one of the important elements of marketing mix. There are so many elements of promotion such as Advertising Direct Marketing Public Relations Sales Promotion

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Traditionally, sales Promotions have been used by marketer to increase sales in the short term. However, in the last few decades this communication tool has evolved and now is considered from a strategic point of view. For this reason, it is necessary to realize new studies in this area and study how consumers evaluate sales promotions. Sales promotions have grown in both importance and frequency over the past few decades. Although an accurate estimate for total sales promotions expenditures does not exist, we can be sure that the trend is up. Sales promotion serves three essential roles: It informs, persuades and reminds prospective customers about a company and its products. Even the most useful product or brand will be a failure if no one knows that it is available. As we know, channels of distribution take more time in creating awareness because a product has to pass through many hands between a producer and consumers. Therefore, a producer has to inform channel members as well as ultimate consumers about the attributes and availability of his products. The second purpose of promotion is persuasion. The cut throat competition among different products puts tremendous pressure on their manufacturers and they are compelled to undertake sales promotion activities. The third purpose of promotion is reminding consumers about products availability and its potential to satisfy their needs. From these elements Sales Promotion is the element which is in the focus of this project. Further Sales Promotion is quite broad term it includes Consumer Oriented Sales Promotion Trade Oriented Sales Promotion

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Consumer Oriented Sales Promotion

Consumer Oriented Sales Promotion is the main topic of this project. Here emphasize is given to motivate consumer to increase sales. Consumer Oriented Sales Promotion includes Sampling, Couponing, Premiums, Contest, Refunds, Rebates, Bonus Packs, Price-off, Event marketing etc. Definition: For the purpose of this study, following definitions of sales promotion were kept in mind. Kotler defines sales promotion as: Sales promotion consists of a diverse collection of incentive tools, mostly short-term designed to stimulate quicker and/or greater purchase of particular products/services by consumers or the trade. Roger Strang has given a more simplistic definition i.e. sales promotions are short-term incentives to encourage purchase or sales of a product or service. Hence, any forms of incentives (price cut or value added nature) offered for short period either to trade or consumers are considered as sales promotion activities.

Marketers uses consumer oriented sales promotion tools for the following reasons: To increase short term sales To induce trial To reduce inventory To establish a brand name To make cross selling To cope up with competition To avoid advertising clutter

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Tools of Consumer Oriented Sales Promotion:

There are so many tools or technique available to the marketers for achieving objective of sales promotion. These tools should be used considering all other factors affecting such as cost, time, competitors, availability of goods etc. These tools are as under 1. Coupons 2. Price-Off 3. Freebies 4. Scratch Cards 5. Lucky Draws 6. Bundling Offer 7. Extra Quantity Lets have look at each tool 1. Coupons: Coupon is the oldest and most widely used way of sales promotion. Coupons have been used since 1895. It is mostly used by packaged goods. It is worthwhile to use coupon as a promotion tool because data shows that market for packaged goods increased from 16 billion in 1968 to 310 billion in 1994. To boost up the sales not only manufacturer but retailers personally can also used. A coupon leads to price reductions so as to encourage price sensitive customers. Non users can try a product which may leads to regular sales.

2. Price-off:
A price-off is simply a reduction in the price of the product to increase sales and is very often used when introduction a new product. A reduction in price always increases sales but the use of this technique should be carefully considered in the current market situation. 16

Price-off is the most preferred sales promotion technique because consumers response very positively to this scheme. Not only that but it also cause large increase in sales volume. Price-off reductions are typically offered tight on the package through specially marked price packs. E.g. Krack Jack offers 30% Price-off.

3. Freebies
Freebies are a popular form of modern marketing and are some of the best things about the internet. The definition of freebies is products or services given away for free at no cost to the consumer. Well thats the definition we came up with. I am a bargain freebie shopper, pretty much going for any free product and informing everyone about it. At different times, big and small companies often give away prizes and money which is too good to be true. Often its in the pursuit of more customers or a larger fan base and it often works.

4. Scratch Cards
A scratch card (also called a scratch off, scratch ticket, scratcher, scratchie, scratchit, scratch game, scratch-and-win or instant game) is a small token, usually made of cardboard, where one or more areas contain concealed information: they are covered by a substance that cannot be seen through, but can be scratched off.

5. Bundling Offers
Product bundling is a marketing strategy that involves offering several products for sale as one combined product. This strategy is very common in the software business (for example: bundle a word processor, a spreadsheet, and a database into a single office suite), in the cable television industry (for example, basic cable in the United States generally offers many channels at one price), and in the fast food industry in which multiple items

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are combined into a complete meal. A bundle of products is sometimes referred to as a package deal or a compilation or an anthology.

Factors Influencing Consumer Oriented sales promotion:

Mainly four factors should be taken into account while determining the sales promotion program. > Target market > Nature of product > Stage of product life cycle > Budget available for promotion

1. Target Market: While doing sales promotion, marketer must know who their target market is; otherwise there is no use of all effort because it leads to no where. A target market can be in any of the stages of buying hierarchy i.e. awareness, knowledge, liking, preferences, conviction and purchase. Each stage defines a possible goal of promotion. 2. Nature of the product: There are various product attributes which influence sales promotional strategy. When the unit price is low the manufacturer as well as the customer has low risk but he can get the benefit of mass marketing. Therefore, mass marketing requires mass sales promotion schemes. Sales promotion scheme differ for products like its durability, perishable goods etc.

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3. Stage of product Life Cycle: Sales promotion strategies are influenced by the life cycle of a product. When a new product introduced, prospective buyers must be informed about its existence and its benefits and middlemen must be convinced to stock it. Later, if a product becomes successful, competition intensifies and more emphasis is placed on sales promotion to increase its sales. 4. Budget Available for Promotion: The funds available for promotion are the ultimate determinant of the promotional programme. A business with ample funds can make more effective use of sales promotion programme than a firm with limited financial resources. The budget for sales promotion can be prepared by the following methods Percentage of Sales Fixed funds available for sales promotion Following the competition, and Budgeting by objective.

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Sales Promotion from the Consumers point of view

Willingness to buy on sales promotion offer Sixty per cent of the sample did not show willingness to buy a brand due to promotion while 30% showed willingness and 10% were not sure. This indicates that when 30% showed willingness and 10% consumers who were not sure, these groups might be lured through innovative and lucrative sales promotion offer. Ability to induce trial Forty per cent of the respondents had said that sales promotion had the ability to induce trial which reinforces the above inference. Long-term impact In order to understand ability of the promotions to increase long-term sales, respondents were asked about continuity of purchase of a brand after the withdrawal of promotion. Eighty per cent of the respondents indicated that they would not continue. But 20% said they would. Thus, it could be inferred that promotions in this category (low involvement products) might encourage trial and brand switching but not long term loyalty. Preference of Schemes: Price off was the most preferred type of scheme. Maximum customers ranked price-offs as number one or two. Perceived Quality: Majority of respondents had a perception that the quality of the promoted brands remained the same during promotion, while some of them felt that it was inferior than before. It can be inferred that promotions were not leading to negative brand quality 20

perceptions. It is found that some customer strongly preferred to buy their regular brand and said that sales promotion would not weaken their loyalty towards the brand. Perceptions regarding underlying company motivations On tapping perceptions regarding underlying company motivations for sales promotion, to increase sales was ranked highest followed by to attract switchers and to sell excess stocks. While providing value to customers and To reinforce company image were ranked lowest. This indicates that consumers believed that companies were undertaking such activities only for their own benefit and not for the benefit of consumers. Findings from retailer and consumer perception studies, it is evident that there was a matching of perceptions regarding nature of scheme (price offs as most preferred type of scheme mentioned by consumers and retailers perceptions about consumer preferences). Since retailers observe consumers in store behavior were frequently and directly, their perceptions regarding providing consumer behavior are likely to be accurate. Such inputs from the retailers would be useful to companies. The retailers had the perception that those schemes which were announced through mass media had better response. This was reinforced by the consumer survey which showed that recall in case of heavily promoted schemes on TV was found to be very high. Retailers prediction of companies motivation for offering sales promotion were matching with the consumer perception regarding the same. Thus both viewed that companies were using sales promotion activities mainly to increase short term sales or encourage switching or selling excess stock and not really to give value benefit or enhance/reinforce brand/company image.

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Trade Oriented Sales Promotion

Trade Oriented Sales Promotion aimed to motivate channel member of the company and to encourage them to push companys product. Trade Oriented Sales Promotion includes dealer contest and incentives, trade allowances. Point-of-purchase displays, sales training programs, trade shows, cooperative advertising, and other programs designed to motivate distributors and retailers to carry a product and make an extra effort to push it to their customers

Sales promotion from the retailers point of view:

Perceptions on Scheme Preference It was found that retailer perceived price offs as a better form of sales promotion activity. Price offs in their opinion had relatively a greater impact compared to any other form of sales promotion activity like Bonus packs, Premium, Contests etc. Retailers preferred price offs the most, then bonus pack, premium, contests, in order of importance. Perceptions about Buying Roles Retailers viewed that the person who came to the shop (who may be a maid, son, daughter, daughter-in-law and child) was the decider of a toilet soap brand and not the Income provider (e.g. head of the family). It could be inferred that visibility of information about the sales promotion activity at the point of purchase could result into the purchase of a promoted brand. Perceptions about their role in decision-making Retailer had relatively very low influence in affecting choice. It could be inferred that visibility and awareness about the scheme were the critical success factors so that pull could be created.

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Perceptions about Response to Sales Promotion Offers They believed that younger age-groups were more experimental in nature, amenable to trying new brands, and sought/looked for or asked whether there were any) sales promotion schemes running on any toilet soap at the time of purchase. Perceptions about Communications of Sales Promotion Schemes Retailers perceived that role of word of mouth and television advertising played an important part in providing information inputs to consumers regarding sales promotion activities. Variations in Information Flow Smaller (non-supermarket, small format store) retailers received relatively less support compared to supermarkets in terms of servicing, margins, information about sales promotion activities from the dealers. Many a times small retailers were only informed verbally about sales promotion schemes by the dealer salesmen during the scheduled weekly visits. Dealer-Retailer Dynamics At the time of sales promotion activities, dealers had tendency to push unwanted stocks onto the smaller retailers. In fact these retailers preferred to stock variety of brands and wanted payment for shelf and window display to increase traffic into their store. However, supermarkets and big retailers were pampered and given special services and given better margins and better allowances.

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Margins It was found that in sales promotion schemes margins varied from 6 to15% depending of the size of the retail outlet, bargaining power of a retailer, quantity ordered by him etc. Mostly margins were linked to size of the volumes that were ordered. Perceptions about terms and conditions Retailers were not found to be happy with sales promotion schemes where their margins were cut on the pretext of just fast movement of inventory of the brand being promoted. Also if additional incentive was offered it was subject to minimum performance requirement. Nature of POP Retailers indicated that most of the POP (Point of Purchase) materials were meant for brand advertisement and not for giving information regarding the schemes. Thus it could be inferred that companys follow up was not adequate. Servicing during duration of Scheme In stock-out situation during the running of the sales promotion schemes, smaller retailers had to wait for replenishment of stocks till the next scheduled weekly visit by the dealer salesman but big retailers were serviced on telephonic request for replenishment of stocks. This clearly indicated the disparity in treatment. Problem of left-over A leftover stock at the end of any scheme was required to be sold by the retailers before they ordered fresh stocks. In case of bonus packs scheme, leftover stock was often dismantled (cut open buy one get one free) and sold them individually as a regular soap. This approach of the company leads to misappropriation which in turn could result in adverse brand image. 24

Gifts for Retailer motivation Companies at times were rewarding retailers by giving free gifts like thermos flasks or clocks if they sold more than certain quantity in a given period. Companies were making a half-hearted effort to motivate retailers. Perceptions about mass media announcements Retailers viewed that whenever sales promotion scheme was announced on TV, it created pull and they were more than willing to stock such brands. For example Medimix and Dettol contest was not advertised on TV, hence there was very little awareness leading to unsold stock till 6 months. While Lux Gold Star which was heavily promoted on T.V. is recalled even today. Post Promotion Behavior Retailers observed that in most cases sales promotion scheme on a brand might encourage a buyer to switch a brand temporarily but he would revert back to original brand after promotion. Handling Problems Many a times retailers had to handle various sales promotion offers simultaneously in a category and also across categories and there was no formal communication planning either from the dealer or the company. Remembering each offer and handling was a problem especially for a small retailer which was often an as one-man show.

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Why do Sales promotion schemes affect sales?

There are three mechanisms behind these facts. It is Purchase quantity, Brand switching and Category expansion. First, consumer can increase the quantity they buy just because the product is on sale. Second, consumers are inducing to purchase another brand different from the one they would have purchased when there is no promotional incentive. Finally, consumers total consumption of the product category is increased by the promotion. However, in the long term this positive effect may be diluted because a promotional campaign has no permanent effect in the sales of the firm

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Sales Promotion Strategy

Sales are the lifeblood of a business, without sales there would be no business in the first place; therefore it is very important that if a business wants to succeed, it should have a sales promotion strategy in mind. The primary objective of a sales promotion is to improve a companys sales by predicting and modifying your target customers purchasing behavior and patterns. Sales promotion is very important as it not only helps to boost sales but it also helps a business to draw new customers while at the same time retaining older ones. There are a variety of sales promotional strategies that a business can use to increase their sales, however it is important that we first understand what a sales promotion strategy actually is and why it is so important. A sales promotion strategy is an activity that is designed to help boost the sales of a product or service. This can be done through an advertising campaign, public relation activities, a free sampling campaign, a free gift campaign, a trading stamps campaign, through demonstrations and exhibitions, through prize giving competitions, through temporary price cuts, and through door-to-door sales, telemarketing, personal sales letters, and emails. The importance of a sales promotion strategy cannot be underestimated. This is because a sales promotion strategy is important to a business boosting its sales. When developing a sales promotion strategy for your business, it is important that you keep the following points in mind.

Consumer attitudes and buying patterns Your brand strategy Your competitive strategy Your advertising strategy Other external factors that can influence products availability and pricing.

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There are three types of sales promotion strategies:

A push strategy A pull strategy or A combination of the two

A Push Strategy:
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 basic objective of this strategy is to persuade retailers, wholesalers and distributors to carry your brand, give it shelf space, promote it by advertising, and ultimately push it forward to the consumer. Typical push sales promotion strategies include; buy-back guarantees, free trials, contests, discounts, and specialty advertising items.

A Pull Strategy:
A pull sales promotion strategy focuses more on the consumer instead of the reseller or distributor. This strategy involves getting the consumer to pull or purchase the product/services directly from the company itself. This strategy targets its marketing efforts directly on the consumers with the hope that it will stimulate interest and demand for the product. This pull strategy is often used when distributors are reluctant to carry or distribute a product. Typical pull sales promotion strategies include; samples, coupons, cash refunds or rebates, loyalty programs and rewards, contests, sweepstakes, games, and point-of-purchase displays.

A Combination of Two Strategies:

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A combination sales promotion strategy is just that; it is a combination of a push and a pull strategy. It focuses both on the distributor as well as the consumers, targeting both parties directly. It offers consumer incentives side by side with dealer discounts.

The Short term Impact of Promotions:

Lets have look at the impact of promotions on purchase behavior during the promotional period i.e. the week or the month when the promotion was being run. The majority of the empirical studies have focused on the impact of promotions in the short term. The key findings across the studies are discussed below. Temporary price reductions (price off) substantially increase sales: There is ample evidence to show that promotions lead to dramatic increases in sales of promoted brand in the short term. Studies have consistently reported high sales effects and high price elasticity of brands which are on promotion. The economic rationale for the promotional response is clear temporary price cuts increase the value of the product to the consumer and it leads to immediate action. Sales boost can be quantified on the basis of brand switching, primary demand expansion and consumer stockpiling during a promotion. Sales Promotion leads to brand substitution with the product category: The sales bump during the promotional period into sales due to brand switching, purchase time acceleration and stockpiling. Studies on brand switching have shown that brand switching effects within a category are asymmetric such that promotions on higher quality brands impacts weaker brands disproportionately. During a promotion, higher quality brands induce a large number of consumers to switch to them as compared to lower quality brands. One explanation advanced for this finding by researchers is that large share brands have higher brand equity and attract switchers more than low share brands.

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Sales Promotion leads to purchase acceleration/stockpiling effects: In response to a promotion, consumers may buy more quantity of the product category or buy at an earlier time than usual (purchase acceleration effect). If consumers buy extra quantity during a promotion or earlier than normal, then they are not in the market to buy products once the promotion is over. Thus purchase acceleration is demonstrated through A lengthening of inter purchase times after a promotion. Purchase acceleration was more likely to be exhibited in increased purchase quantity than in shortened inter purchase times. Results showed that consumers mostly made up for the large quantity purchased by waiting longer until purchasing again. Results indicated that heavy users tended to accelerate purchases more than light users. There was negligible difference in the acceleration propensities of high versus low income groups. Sales Promotion leads to primary demand expansion for a category: While it was traditionally assumed that consumption rates remain fixed during and after a promotion, but from this project I came to know that promotions also have a primary demand expansion effect. When a primary demand expansion occurs, promotion induced increase in purchase quantities does not significantly extend the time till the next purchase in the category occurs, thus indicating that there has been an increase in consumption promotions induced consumers to buy more and consume faster. It is found that promotion induced inventory temporarily increased consumption rates within the category e.g. in categories such as bacon, salted snacks, soft drinks and yogurt exhibited primary demand expansions as a result of promotion while bathroom tissue, coffee, detergent and paper towels exhibited stockpiling only. Sales Promotions affect sales in complementary and competitive categories: From this project it is found that promotion not only increases sales of main product but it also lead to increase in sales of complementary categories. Found strong cross relationships between products of the promoted product category indicating brand substitution behavior. They stated that retail price promotions work as a form of implicit price bundling whereby the consumer surplus is transferred from the promoted item to non promoted items. Also found that retail price promotions create significant complementary and substitution effects within the store.

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The Long term Impact of Promotions:

Strategies are builds to reap the benefits for longer period of time; same is true in sales promotion strategies. Let us see impact of promotions effort and study the impact over a longer time period e.g. 4-6 months or even a few years after a sales promotion campaign. The result showed that consumer promotions for leading brands of established packaged products had no after-effects on the brands sales or repeat buying loyalty. The extra sales of a brand while promoted came virtually all from the brands existing long-term customer base for which the experience of buying the promoted brand was nothing new. It is found that although the short term effects of promotions are strong; these promotions rarely exhibit long term effects. It is observed that each sales component generally lacked a permanent effect and the effect of promotion was short lived and increase in promotions affected consumers stockpiling decisions in the long run. They found that the combined short and long-term elasticity of promotions was zero. The stockpiling induced by a promotion was essentially offset by reduced demand in the long term. Thus increased sales were more a result of sales borrowed from the future than increased consumption

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SWOT Analysis of FMCG Sector

Strengths:

Well-established distribution network extending to rural areas. Strong brands in the FMCG sector. Low cost operations.

Weaknesses:

Low export levels. Small-scale sector reservations limit ability to invest in technology and achieve economies of scale. Several "me-too products.

Opportunities:

Large domestic market. Export potential. Increasing income levels will result in faster revenue growth..

Threats:

Imports. Tax and regulatory structure. Slowdown in rural demand.

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DATA ANALYSIS

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Q1. Which brand of Soap do you use?

Bathing soaps Lux Hamam Lifebuoy Pears Others Respondents 45 2 13 7 33

Bathing soaps
50 40 30 20 10 0 Respondents Lux 45 Hamam 2 Lifebuoy 13 Pears 7 Others 33

Interpretation:
The above question has been formed to know the soaps at the top of the mind of the customers. It shows those consumers purchase and use of that particular brand. It will help to the company to know the market scenario and the major brands in the market. Form the above result it is clear that out of 100 customers more than 40 are consumers are having the same brand as the image in their mind, whereas others category is also showing the higher graph than these 3 major players(Hamam, Lifebuoy, Pears).

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Q2. Do you always buy the same brand of Soap?

Particulars Yes No Respondents 58 42

Brand loyal
60 50 40 30 20 10 0 Respondents Yes 58 No 42

Interpretation: The objective behind the formation of this question is to know the level of brand loyalty of the consumers towards the brands of soaps available in the market. The above figure shows that on 56% of the respondents are loyal to their brands of soap. FMCG are such a market where the level of loyalty remains low and this is because of many reasons.

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Q3. Which factors do you normally consider while purchasing a particular brand of Soap?
Factors Fragrance Quality Company image Price Packaging Others Bathing soap 17 40 16 18 6 3

Factors affecting purchase behavior

40 30 20 10 0 Fragrance Bathing soap 17 Quality Company image 16

Price 18

Packaging 6

Others 3

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Interpretation:
The objective behind this question is to know the effect of influencing factors in the purchase decision of the soaps and detergent powders. It mainly contains the factors like, quality which players an important role in the purchase decision of the soaps and detergents both. If we look at the graph of the soaps and detergent it shows quality as the most influencing factors in the purchase decision while price is also an important for purchase decision.

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Q4. Do you consider promotional schemes while purchasing a particular brand of Soap?
Particulars Yes No Respondents 80 20

H0: Promotional schemes have a significant effect on the purchase of brand. H1: Promotional schemes do not have an effect on the purchase of brand.

Effect of schemes purchase behavior

100 80 60 40 20 0 Respondents Yes 78 No 22

Interpretation:
Answer of this question will give idea about the effect of promotional schemes in the purchase decisions. Such types of schemes always attract more and more consumers towards particular brand. Simultaneously it gives idea about the factors which consumers look most in the product before they make final decision. Here H0 is accepted as the graph shows that 80 out of 100 consumers are looking for such schemes before they make purchase.

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Q5. Which of the following promotional schemes you have come across so far?
Promotional schemes Coupons price off Freebies scratch cards lucky draw Bundling extra qty. Respondents 8 42 12 6 4 15 13

Familiarity of promotional Schemes

50 40 30 20 10 0 Coupons Respondents price off Freebies scratch cards

lucky draw

Bundling

extra qty.

42

12

15

13

Interpretation:
The above stated question clearly states the awareness of promotional schemes offered in the market by the marketers to attract more and more consumers. The results show that price off and extra quantity is the two main offers/schemes which consumers have came across at the time of purchase. It will help the manufacturers and marketers too how too launch their new products in the market with which schemes.

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Q6. Which medium do you feel is suitable to promote the various promotional schemes?
Source Radio TV Newspaper Hoarding Others Respondents 11 44 22 8 15

Mediums to promote the promotional schemes

80 60 40 20 0 Respondents

Radio 11

TV 44

News.ppr 22

Hoarding 8

Others 15

Interpretation:
This question gives stress on the media habit of the people and through which the product should be launch or they think it would be better than other Medias. The above result shows TV as the best media to market the product which will cover majority of the viewer ship. On the second place it shows news papers as the media to promote the product in the market.

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Q7. Is there any existing scheme on the Soap you are currently using?
Particulars Yes No Respondents 62 38

Existing scheme on the Soap / Detergent

70 60 50 40 30 20 10 0 Respondents Yes 62 No 38

Interpretation: The answer of the respondents give idea about the awareness of the promotional schemes offered in the market on their existing soaps and detergents. In this situation more then 30% of the people are not aware or having vague idea about the promotional schemes running into the market. It shows that people are not much aware of the schemes which continue in the market it may be because of the present stock of the product at their place.

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Q8. If yes, please specify?

Particulars 3+1/Other Free Discount No idea No answer Respondents 36 22 6 36

40 35 30 25 20 15 10 5 0 Series1 3+1/Other Free 36 Discount 22 No idea 6 No answer 36

Interpretation:
This question supports the above question. It enlists the answers of those customers who are aware of the present schemes offered in the market and also those schemes which are more demanded in the market. The result shows that 1+1 or 2+1 or other free schemes are more demanded and more aware schemes in the market. So manufacturers may go for the same at the time of launching their product.

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Q9. If you get an attractive promotional offer in the product other then of your choice will you switch over?
Particulars Yes No Respondents 73 27

Switching behavior
80 70 60 50 40 30 20 10 0 Respondents Yes 73 No 27

Interpretation:
It shows the level of brand loyalty among the consumers. The result clearly shows that out of 100, 73 people are ready to switch over to another brand if they find better promotional schemes which suits their budget means more qyt + less cost + quality. Combination of all these schemes will run better in the market.

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Q10. Give reason for the same?

Particulars Cost+qty Quality Satisfaction Brand loyal More benefit/budget Season change No answer Respondents 16 17 2 5 22 2 36

Reason
40 30 20 10 0 Cost+qty Respondents 16 Quality 17

More Satisfaction Brand loyal Benefit/bud 2 5 22

Season change 2

No answer 36

Interpretation:
Above question it gives specific reasons for switching to other products. It shows that extra quantity with less or same price, more satisfaction, quality and other factors influence consumers to switch over too other brands.

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Q11. Give suggestions about futuristic promotional schemes?

This show the consumers future expectations from the whether company to come with new schemes or continue with present one. It shows consumers demand which the manufacturers have to meet.

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Findings of the report:

Sales Promotion, a short-term inducement, offered to a consumer or trade has gained momentum as a promotional tool world over. It represents nearly three fourth of the marketing budget at most consumer product companies. Sales promotions can enhance consumers self-perception of being smart or a good shopper FMCG are such a market where the level of loyalty remains low and this is because of many reasons. Quality as the most influencing factors in the purchase decision while price is also an important for purchase decision. Schemes always attract more and more consumers towards particular brand. Simultaneously it gives idea about the factors which consumers look most in the product before they make final decision Price off and extra quantity is the two main offers/schemes which consumers have came across at the time of purchase TV as the best media to market the product which will cover majority of the viewer ship. On the second place it shows news papers as the media to promote the product in the market People are not much aware of the schemes which continue in the market it may be because of the present stock of the product at their place. 1+1 or 2+1 or other free schemes are more demanded and more aware schemes in the market. People are ready to switch over to another brand if they find better promotional schemes which suits their budget means more qyt + less cost + quality. Extra quantity with less or same price, more satisfaction, quality and other factors influence consumers to switch over too other brands. Retailer stocks all types of soap and detergent because of competition. People are more quality and price oriented. 45

Consumer remember that name of the product by the company name and also from the past performance of that company Consumer remembers that name of the product by the company name and also from the past performance of that company Customers are looking for any type of the promotions on the product before them going to purchase. Price off, product bundling and extra quantity are more demanded by the consumers over others schemes. NIRMA is mainly offering credit facility which is offered by all major players it may differ in the time limit of the credit. HUL attracts more consumers through such promotions, such as display of the product, banners etc.

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Recommendation:
The findings of the empirical study indicate that unless the brand to be promoted is in the consideration set of the consumer, sales promotion by itself is unlikely to have any major impact. Clearly this shows that managers need to invest into brand building exercise so that his/her brand appears in the consideration set of the target consumers. Only after this should he spend time, money and energy on sales promotion activities. Sales promotion should not be used in isolation but need to be integrated with other tools and in line with the overall positioning of the brand. Also the importance of the role of mass media came out clearly in the study. Companies need to create sufficient awareness about sales promotion schemes through mass media in order to create awareness. FMCG products are low involvement products characterized by switching behavior. Also the person going to the shop for the purchase of soap is the final decision maker of the brand. Hence it is essential that companies need to design attractive, striking, visible POPs for scheme announcements. Repetitive use of the same premium for a prolonged period may have negative effect on the loyal customers. When the company is giving its own product free as premium, it needs to ensure the quality of the product from it as it is likely to jeopardize the image of both its products. The findings exhibited that the consumers perceived that sales promotion activities carried out by the companies for increasing sales in short term and clearing excess stocks. What it implies is that companies need to use sales promotion synergistically and communicate so that they provide value to the target audience and enhance brand quality/image perceptions.

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Companies need to systematize information flow regarding sales promotion activities particularly at dealer and retailer level. Ensuring proper information flow and devising checks and measures to reduce misappropriations and implementation flows should be considered critical aspects for the success of sales promotion activities by the companies. As retailing is fragmented, direct reach by companies is next to impossible. Through dealers and proper feedback mechanism, companies keep in touch with the market. Developing a system to tap such responses from time to time both at retailer and consumer level would be helpful for planning future sales promotion activities. In order to build trust and commitment companies should tap preferences, perceptions of retailers as well as consumers.

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Limitations of the study

We considered Ahmedabad region only because of limited time duration. Due to this, our sample size is only 100, which is not very large. Respondent may give biased answer due to some lack of information about other brands. Findings of the study are based on the assumption that the respondents have given correct information.

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Emerging Trends
So far as FMCG market is concern there is new trend is emerging known as Joint sales promotion. Actually it is old concept but it was more prevailing in durable products now it is coming intro non durable goods also. When any sales promotion scheme either for trade or consumer is announced by more than one company and /or more than one brand of the same company, it is referred as joint sales promotion or horizontal co-operative sales promotion or cross promotion or umbrella sales promotion.

Classification of joint sales promotion:

Use complementarily due to natural use New use catering complementary relationships Commonality of need due to use time Tie-up of a new /slow moving brand with an established brand Target market commonality Seasonal demand Distribution commonality Targeting new segment Derived demand Countering competitive joint sales promotions

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Conclusion of the Survey

The study reflects that the use of sales promotion undeniably has increased over the years in India. Future holds lot of promise for such schemes across wider range of productmarkets. Sales Promotion has ceased to be major differentiator at least in the metros, with almost all companies offering similar freebies and gifts. As a result now marketers have to find out some innovative ways of sales promotion to differentiate from competitors. Currently Price off and Bye one get one free offers are very effective to attract the consumers towards the products. We have noted that these kind of promotional tools are useful for short term increase in sales and to induce first trial. These types of promotional schemes should be consistent and changed from time to time depending upon season and competitors schemes. With the Increasing number of supermarket, the branded packaged goods work as silent sales person. So in such stores, sales promotion plays a more effective role in stimulating consumers demands. One of the very important facts we came to know from this project is that sale of goods which contain large quantity and having big packaging e.g. detergent are stagnating because consumer prefer to buy small pack goods, the reasons are: small pack goods reduce risk of bad quality, It had low cost or say price, and last but important factor i.e. mentality to purchase just to try first. Sales of small pack goods are quite high, but from the companys point of view small pack goods is less profitable compare to large pack goods. So here marketer tries to increase sales of large pack goods by using sales promotion tactics like price off and percentage extra. 51

Bibliography
BOOKS
Philip Kotler, Marketing Management, 11th edition, Pearson education

Asia Publication.

C.R.Kothari, Research Methodology methods & techniques,New Age International(p)ltd.publishers,2nd edition.

WEBSITES
http://www.nirma.co.in_files http://www.hul.co.in_files http://www.pg-india_files http://www.godrej_files http://www.listmyfive.co.in

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Annexure

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