c



 

Y


Y Y   
Y   
 
Y    
Y   
Y   
 
Y !  "
Y # $ "%
Y &  '(   
 
Y
) *   

Y
+,-./0,+
Of all the methods of promotion that constitute the promotion mix, sales promotion is the only met
that makes use of incentives to complete the 'push-pull promotional strategy of motivating the
salesforce, the dealer and the consumer in transacting a sale.

,

Y Y(++1(+..*+,+

There is no single universally accepted definition of sales promotion. One can, however, gat
essence by perusing a few definitions. Let us look at some of the popular definitions of sales promo
According to ( 
 2  (
, sales promotion refers to those activities othe
personal selling, advertising and publicity, that stimulate consumer purchasing and dealer effectiv
such as display shows and exhibitions, demonstrations, and various other non-recurrent selling
not in ordinary routine.
This definition suggests That sales promotion is a catch-all for all those promotion activities wh
not fall clearly into advertising, personal selling or publicity.
Roger A. Strang offers a simple definition:
Sales promotions are short term incentives to encourage purchase or sale of a product or service.
Yet another definition that seems fairly exhaustive, and hence, will be used in this unit is one given by
Stanley M. Ulanoff in his Handbook of Sales Promotion. Stanley fines sales promotion as
All the marketing and promotion activities, other than advertising, personal selling, and publicity,
that motivate and encourage the consumer to purchase by means of such inducements as
premiums, advertising specialties, samples, cents-off coupons, sweepstakes, contests, games,
trading stamps, refunds, rebates, exhibits, displays, and demonstrations. It is employed as well, to
motivate retailers', wholesaler; the manufacturer's sales forces to sell through the use of such
incentives as awards or prizes (merchandise, cash and travel), direct payments and allowances,
cooperative advertising, and trade shows.
It offers a direct inducement to act by providing extra worth over and above what is built into the
product as its normal price. These temporary inducements are offered usually at a time and place
the buying decision is made.
Summing up, Sales promotion deals with promotion of sales by the offer of incentives, which are
essentially non-recurring in nature. It is also known by the names of Extra-Purchase-Value (EPV) and
Below-the-line selling.
Like in other market economies, the use of sales promotion is catching on in India. In terms of volume,
the number of sales promotion schemes offered to the consumers alone have grown by over seven times
in the first three years of the eighties as against the average in the seventies. The schemes offered at the
dealer level also nearly doubled during the period 1978-79 and 1982-83. In terms of the expenditure
incurred, the large size companies are stated to be spending between 40 and 50 per cent of their
advertising and sales promotion budget on this activity.
Product group-wise, the major users of sales promotion ate: tea, coffee and beverages, soaps, toiletries,
detergents and washing soaps; toothpaste; textiles; food products and baby foods; household remedies;
and consumer durables like fans, refrigerators, sound systems television and household
appliances.Among the various types of sales promotion schemes used contests at the consumer, dealer
and sales force levels have made a significant headway.
ü"3%4
A perusal of the list of the product groups which emerged as the major users of sales promotion, and
from the market feel, it seems clear that a transformation from the seller's to the buyers' market is taking
place and marketing has become more competitive in these product markets. In addition to increasing
competition, other reasons for rapid growth of sales promotion in India, as pointed out ninety five large
sized cooperating companies in survey are summarised below:
ë Sales promotion makes an immediate effect on sales
ë Measurement of the effectiveness of sales promotion is easier as against the other promotional
methods
ë £hannels of distribution are emerging as powerful entities and demand greater use of incentives
to get desired results
ë Products are becoming standardised and similar, and so need increased support of non-price
factors of which sales promotion is an important one

Impulse buying is on the increase, and so is the rise in the number of marginal customers, With virtually
no brand loyalty, offer of attractive schemes help manufacturers to induce such customers to choose their
product.

,

Y (5-,+670,8

As a powerful method of sales promotion with a capability to complement and suppleme

advertising function of marketing, sales promotion help marketers realise a variety of objectives.
objectives could relate to the promotion of sales in general, or to a specific activity at a particula
i.e. consumer, dealer or sales force. Some of the-commonly attempted objectives are to:
ë Increase sales (in general, and focusing on new uses, increased usage, upgrading unit of pu
winning sales of fading brands etc.)
ë Make the sale of slow-moving products faster
ë stabilise a fluctuating sales pattern
ë Identify and attract new customers to launch a new product quickly
ë Educate customers regarding product improvements
ë Reduce the perception of risk associated with the purchase of a product
 ë Motivate dealers to stock and sell more (including complete product line)
ë Attract dealers to participate in manufacturer's dealer display and sales contests
ë Obtain more and better shelf space and displays
ë Bring more customers to dealer stores
ë Make goods more faster through dealers
ë Improve manufacturer-dealer relationship
ë Motivate sales force to take the achievement higher than targets
ë Attract sales force to give desired emphasis on new accounts, latent accounts, new products, and
difficult territories
ë Reward sales force for active market surveillance and for rendering superior customer service
ë Put power into the sales-presentation
ë £ounter competitors sales-promotion and, marketing efforts
ë Provide punch to the company's advertising efforts
ë Build goodwill.
£ompanies may use anyone or a combination of the above objectives in varying form to suit the product-
market needs of their product. What is of significance is that the sales promotion objectives set to be
accomplished must be integrated with the promotion and marketing objectives pursued by the company.
,

Y  (5-,+,9.

Marketers use many methods of sales promotion. Depending upon the creativity level of their spon
their variety seems very large. We refer here to some of the most commonly used methods of
promotion.
As noted above, the accomplishments of the desired promotion and marketing objectives ultim
depend on the extent of the desired response received from consumers, dealers and members o
salesforce. Hence various sales promotion methods are building around these three target gro
Further, in terms of the impact desired, the variety of sales promotion schemes offered are grouped
two categories: One, aimed at producing immediate impact, and the other delayed impact i.e. carr
on the impact over a period of time. Immediate impact schemes are those schemes where the consu
dealer or salesperson gets the incentive on first contact, purchase or on performing a one-time act. On
the other hand, under the delayed impact schemes, the consumer, dealer or salesforce is called upon to
comply with the scheme over a period of time before receiving the full benefit of the scheme. Price
discounts, free samples or large quantity packs are the popular examples of immediate impact
schemes, whereas coupons, trading stamps, and contests are examples of delayed impact category of
sales promotion schemes. Table 1 presents the variety of sales promotion schemes directed at the
consumer, dealer and salesforce levels according to their grouping under immediate impact or delayed
impact categories. The meaning and, objectives of these schemes are given in Table 2.

, Y
3
 /  +'   , : 33   

* Prequisites
*Price-off *Price-off *Discounts
& Allowances
*Self space
*Qty-off *Sampling
allowance
*Over-the-
Immediate *Over-the-£ounter
counter
*Package Premium *Gifts *Gifts
*Banded Premium ;Push Money
*Posting of
*£ontainerPremium
Salesforce
*Merchandise *Sales
*In Prdt.£oupons *Media/Door
Deals £ontests
Delayed/
Over a *Personality *Return/ Honours and
*Display £ontests
period Of Premiums Refund/Offers Recognitions
Time
*£ustomer
*Trading
*£o-op Allowance Service
Stamps
Awards
*Self-liquidators *Sales £ontest
*£ontests/Lucky Training Sales
Draws Force/Privileges

* The format of this table is based on Donald W'£owell's article on Sales Promotion and the Marketing
of Local Government Recreation and Liesure Services, European Journal of Marketing, 18.2.
 , Y< < 
 
    
 
To encourage
immediate sales,
attract non-users,
induce new product
Offering product at lower
1. Price-off offers attract trial, counter
than the normal price
competition, inventory
clearance at the retail
level, inventory build-
up at the trade level.
To encourage
Offering more quantity of more/longer duration
the same product at no consumption, higher or
Quantity-off offers extra cost or with a very excess quantity
2.
duration nominal increase in the movement from the
price of the larger quantity factory trade up
packs consumer for higher
quantity pack size.
Offer of an article of To encourage
merchandise as an purchase,loyalty, off-
Premium incentive in order to sell season sales induce
3.
stimulate promotion,product or trial of new product,
service, Its forms are: reach of premium to
ensures the consumer
When the incentive article
a) Packaged Premium is packed (inserted) inside
the package of the product
Where the premium article is
Sampling new products,
BandedPremium banded to the package of
b) speed the product say with
adding to slow moving
products to
cellotape etc
When the premium article is
neither inserted inside nor
Over-the-counter (OT£) banded to the product To counter competition,
c) Premium package but is given away to improve inventory
level the consumer over the clearance at the trade
counter along with the
product package
When the product itself is
placed in an attractive and As a durable reminder at
d) £ontainer Premium
reusable container which home
serves as a gift
 Where the consumer usually
To induce consumer to
is asked to pay a specified
appropriate premium
amount to liquidate or offset
Self-liquidating article, reinforce brand
e) Premiums a part or full cost
image, encourage more
consumption, of the
enables sponsor to offer
premium article or the
better quality premium
scheme administration costs
Where the consumer is
required to redeem a
To build loyalty and
specified proof-of- purchase
reward the consumer for
f) Personality Premium for the premium article
Proof-of-purchase may be that to counter
competitive offers
labels, Proof-of-purchase
may be labels,
When the consumer is
entitled to redeem a
specific standard
certificate for a
product/article free or in
part payment. £oupons To encourage product
are used by both the trial. loyalty" trade-up
£oupons
4. manufacturer and the regular users. stimulate
build
dealers be distributed by re-purchase rate,
mail, by media for sales solicit inquiries.
promotion. £oupons may
advertisements, door-to-
door, inside product
package or by dealers on
purchase.
To induce trial from prim
Offer of a refund of
users,motivate seve
money to consumer for
product obtain displays
5. Refund offers mailing in a purchases,
the retailers, retailers tie
proof-of-rchase of a help
with other products., sw
particular products)
competing brand users to
Organised by Trading
Stamp companies or large
retailers. Trading stamps
are a kind of companies or
To encourage consum
large retailer.discount
6. Trading stamps loyalty to" certain re
coupons offered to
stores.Trading stamps are
£onsumers linked with
the quantum of their
purchase. On enough
accumulation these are
 redeemable for various
kinds of merchandise.
To create brand
awareness
andstimulate interest in
Where individuals are the brandacquaint
invited to compete on the consumers with brand
£onsumer contests basis of creative skills. and benefits, build
7.
and Lucky draws The latter is based on the traffic at thestore
usagechance or luck precipitate brand
factor. purchase,obtain
consumer feedback,
promoteadvertising
theme of the company
It is a type of point-of-
purchase advertising
To provide product
which uses the show
exposure at the point
windows of the dealers for
Dealer stock the of purchase,generate
8. providing exposure to the
Display contests traffic at the store,
sponsor's products.
infuse enthusiasm
Dealers participating
among dealers.
enthusiastically and
creatively are awarded.
Where participating To increase sales,buy
dealers are invited to dealers¶ loyalty,
9. Dealer Sales
compete in terms of the motivate dealers' staff
sales performance to sell more.
Other than normal trade
To push more sales to
10. Discounts and cash discounts cash
trade, early
recovery
These are temporary pr
reductions/reimbursement
11. Trade Allowances expenses incurred by dealers
full or in part, its varied ty
are as under:
Offer of price reduction
on purchase of specified
a) Trade or Buying To load the trade
quantity of allowance a
product
A secondary incentive
which offers a certain sum To encourage trade co-
b) Buy-back of money to trade for each operation and
additional unit bought stimulate repurchase
over and above the deal.
 When a specific amount
of money is offered after
£ount and recount To move stocks fas
c) ascertaining
allowance reward on only.
the number of units sold dur
a specified period.
To create enthusiasm
in trade, improve
traffic and exposure at
An allowance to trade
the point-of-purchase,
Merchandise (display) for providing desired sales
d) gain larger space/effort
allowance promotion and product
of the trade in the
displays
promotion of sponsor's
product as against the
competitors.
Where in a manufacture To gain product and
shares at an agreed rate retail identity motivate
£o-operative the advertising and dealers to promote
e) advertising & promotional cost incurred manufacturer's
Promotion allowance by the dealer in the product, obtain local
promotion of advertising and
manufacturer's product. promotion
Offer of useful articles
To improve dealer
and attractive gifts to
relations, impact on
12. Dealer gifts dealers for his
consumer scheme /
personal, family or office
contest offered
use
When an additional
compensation is offered to
Premium or Push trade or salesforce for To push a specific
13.
money pushing additionally a product or product line
specific product or
product line
Wherein additional To load dealers with
quantity of the same or inventory, expose
the same manufacturer's other products of the
Merchandise Deals (13
14. another product is offered sponsor encouraging
for 12)
to trade.Maybe offered dealers to sell more
jointly by non-competing and early to realise
manufacturers their incentive.
Those special displays, To attract traffic at
racks, banners, exhibits, retail store, remind
. Point-of-Purchase
15. that are placed in the retail customers, encourage
(POP)
store to support the sale of impulse buying, ensure
a brand. additional visibility to
 the advertising
campaign.
*The format of this table is based on Donald W'£owell's article on Sales Promotion and the Marketing
of Local Government Recreation and leisure Services, European Journal of Marketing, 18,2.

Though ideal for consumer goods, sales promotions are also used for promoting industrial-goods. The
difference in the use lies in the types of schemes offered, and in the frequency of their offer. Sales
promotion schemes offered to industrial customers, besides the usual gifts, price-off coupons and
contests, include product demonstration, training to customer staff, offer of interest-free installment
payment plan, ready and regular availability of repairs and spares, and posting of trained staff to
assist/supervise in the working of the equipment in the client's premises, at the manufacturer's cost. The
sales promotion schemes offered at the level of industrial distributors are: provision of extended credit,
and provision of specialised sales/technical staff at the manufacturer's' cost, besides the usual
cooperative advertising and sales promotion, gifts, and organisation of distributors contests. The sales
promotion schemes popularly used to motivate industrial salesforce are: prizes and awards on special
achievements, sales contests, new accounts contests and prompt service awards.

+  "  

In spite of the growth in the Sales promotion activity, one of the survey of the company practices
revealed that the managerial efforts put in to manage this function were unsatisfactory. Use of
temporary approaches, neglect of sales promotion research, and lack of formal systems and procedures
were found to be more prevalent in the case of 95 companies surveyed. £onsequently larger number of
companies experienced less than expected success of their schemes. When asked specifical1y about
forty per cent of the companies surveyed, admitted that one or more of their sales promotion schemes
misfired during the last three years due to causes which could be categorised as:
ë faulty administration
ë failure to match the scheme to the objective
ë lack of proper planning
ë poor dealer relations
ë lack of creativity.
,

Y 5(+++1(5-,+

With growing competition at the marketplace and the need to realise full benefits of this unique m
of promotion it is required that the perfunctory approach used in its management is stopped fort
and the sales promotion function is managed professional1y. Systematic planning of this fun
should initiate the managerial process. The fol1owing steps are suggested for effective plannin
management of the sales promotion function.
The first step is to assess and analyse the present situation of the brand in terms of market share,
competitors, and brand performance of brands users, non-users and lapsed users. This bench
should then be related to the market size and the potential estimated. It will now pave the wa
determining the role of sales promotion in effecting the desired change in the market share of the b
The outcome of this exercise wil1 be the availability of desired information to set measurabl
attainable goals.
After the goals for sales promotion of the brand are set, the second step deals with the identification
the alternative schemes, and the selection of the most appropriate sales promotion scheme(s), capab
accomplishing the goal set, within the available budget.
The third step relates to incorporating creativity into the scheme to be offered. This is, makin
scheme novel, attractive, and challenging from the viewpoint of its target group i.e. consumer, tra
salesforce.
The fourth step relates to legal validity of the sales promotion scheme to be offered. For exa
before a consumer contest can he offered permission from the licensing authority of a State, usuall
£ollector of the District is required under the Prize £ompetition Act, 1955. Similarly, wit
amendment of MRTP Act and the incorporation of Unfair Trade Practices therein, the sponsor
ensure that their schemes do not attract the provisions of the Act. The recent judgements of the MR
against the Sales Promotion Schemes offered (by a leading footwear company of India relati
children footwear; a dentifrice company relating to the toothbrush offer; and of a popular fan com
relating to announcement of special off-season reduction in price) point to the strong determinati
the commission to protect consumers from unfair trade practices.
The fifth step covers primary decisions relating to timing and duration of the schemes to be of
location-wise selection of dealers, and conviction of the trade and sales force about the appropriateness
of the scheme. It will be useful to quote here the findings of a recent study of Kenneth G. Hardy on Key
success factors for manufacturer¶s sales promotions. The major findings are given in a tabular form
below:

, <$ "

*

 
0   , 

 
*Trade support
*Dual promotions (offer of trade promotions
*Short promotion
Short-term volume simultaneous with £onsumer promotions)
1. period
objective
*Salesforce (trade) Support
*Offer of high level of
incentives
*Dual promotions
Long-term market
2. *Salesforce support
share objectives
*Trade support
*Absence of
*A void competitive promotion competitive
promotions
Building trade *Salesforce (trade) support
3.
inventory objective *Trade support
*Offer of high level of incentives to the consumer
(and to the trade in case of dual promotions). *Shorter-promotion
period
*Salesforce(trade)support
Increase consumer
4. *Longer promotion period *Dual promotions
Trial
*Offer of higher level of incentives
*Salesforce (trade) support
Load the consumer
5.
objective
*High promotion cost-special advertising, p.o.p.,etc.

Other important decisions relate to scheduling for procurement of scheme related premiums, production
of the brand, advertising, P.O.P. materials and other logistics related aspects.

The sixth step covers the development of the evaluation criteria in relation to the sales promotion goals
set. The decision areas include what to measure, when to measure, how to measure and for how long to
measure.
Effectiveness of Sales promotions is usually measured in references to sales achieved, cost
effectiveness, redemption rate of coupons and trading stamps, turnover of special packs or special
liquidators, number of entries received to the contest, etc. To do a good job special focus must be laid
on measuring the incremental sales arising out of sales promotions. Before proceeding to the last two
steps involved in management of sales promotions let us take note of the select findings from the
literature survey relating to the effectiveness of sales promotion. These are:
ë Incremental sales are harder to get for high market share brands
ë A coupon with a sample can be almost twice as effective as a coupon alone
ë High redemption rates can be very costly
ë The earliest redemptions are the incremental sales
ë Short purchase cycles mean shorter-term effects.
At the sales promotion offer commences, the seventh step relates to monitoring the offer and collecting
the relevant data and experience for future use as well as mid-period corrections.
The eighth and last step relates to evaluating the effectiveness of sales promotions in the context of their
goals. Efforts must also be put into perfect the measurement methodologies, and in conducting
researches on aspects like deal prone consumer, incentive scheme and gift selection factors, attitudes of
trade and consumers towards the use of sales promotion schemes. Documentation of corporate
experiences on sales promotions, the pitfalls in the existing systems and procedures, and the mishaps
that occurred, etc., ultimately help in improving the state of the art of managing the sales promotion
function professionally.
,

2.6 Exercise
The sales promotion manager of an established lower priced washing powder is planning the sales
promotion programme for the next year. Suggest a suitable programme for his consideration.
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------

,

Y !/(-=

Sales promotion, of late, has emerged as one of the more popular methods of promotion in the
consumer goods. Stated simply sales promotion deals with offering some thing extra as an incen
motivate an early purchase. Sales promotions can be offered at the level of the consumer, trade an
force. Sales promotions aid in achieving both the push-pull elements of a promotion strategy
promotion schemes used to attain consumer pull include free samples, price-offs, premium give a
coupons and contests. Schemes offered for gaining the push cover promotional allowances
discounts, cooperative promotions, contests and awards and rewards. To save a sales pro
programme from getting misfired, it should be planned and managed in a systematic manner.
Promotion is an important marketing function of each firm. And, rare will be a firm, which makes
only one promotional method. The commonality in the ultimate goal of all the promotional m
apart, their limited suitability in influencing only a specific part of the consumer adoption proce
for the need to use the promotional mix in an integrative manner. Given the complexities
management of the promotion function and its vulnerability to failure, it is desired that the func
managed professionally

,

Y #$=ü-.
6 
 
2  : An additional offer made with an earlier self-liquidating premium offer o
usually related product.
0 3  : A structured sales presentation made of an inflexible nature.
0
: Door to door conviction and sale of products.
0 : A competition based on skill in which prices are offered. Some time also used for refer
to competition based on chance.
 .    < A premium given to a dealer in return for an order of a specified value. This could
take the form of a merchandise deal, price deal, gifts to dealers or a combination of these.
9 : A gift given to a housewife who provides for a product demonstration to be conducted
in her home
5 : name of an individual or organization that might be a prospect
3
: A lead that can both benefit from the use of the product and afford to buy it.
''3 
  3 >33?< A sales promotion method using window display and other
display materials aimed at attracting customers to store and also encouraging the retailers to push
displayed products.

 < short-run price decreases
3 
 < A bottle cork, box top, pack flap, label, coupon, cash memo of a product, which
qualifies a customer to receive a premium or refund.
3
: the step during which probable customers are found for the product or service.
-   3  : A premium offered to a satisfied customer, who refers the seller to another
person who purchases the product or service. It is also called use-the-user premium plan.
, 3< sales promotion activities directed at the wholesaler and retailer levels
,
   : low cost premiums offered free as an inducement to visit a store. Also includes the
organization of product demonstration or unique display of products.
ü% 3"< A display placed in the window of a retail store facing out side to attract the
attention of the passers