Impact Ofsales Promotion Edited

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TRIMPH AUTOMOBILES LTD NATIONAL HIGHWAY - 2, OPPOSITE

ORIENT FAN FACTORY FARIDABAD -121004 , HARYANA

Respected Sir/Madam,

This is to certify that Mr. TAJVENDRA SINGH, a fourth semester student of

MBA in

Marketing from SWAMI VIVEKANANDA INSTITUTE OF TECHNOLOGY, hassuccessfully

Completed a two months Project Training on ‘Impact of Sales promotion’ under mysupervision.

His performance during this period is hardworking and encouraging. His work has beenquite

productive to the organization and we wish hi all the best in his future endeavor.

Anemash Pandey

(Sales Promotion Term)

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OBJECTIVE OF THE RESEARCH

• The objective of the research is to study the effect of sales promotion to retain the

customer.

• It studies how far sales promotion tools prove to be effective in attracting and

binding the customer’s to the product.

• To check out can sales promotion convince the customer to change the brand.

• To study that how sales promotion works in case of new products.

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RESEARCH METHEDOLOGY

Collection of Data:

The marketing research was a field survey personally done through questionnaire. The

research will be based on both primary and secondary data.

For collecting the primary data the survey will be done through questionnaire, which will

be personally given to customers and will be filled by them.

For theoretical overview, secondary data will be collected from magazines, newspaper

and different website.

Sample:

Area to be covered

The area to be covered under the survey for customers will be entire Delhi and NCR

(Noida and Ghaziabad).

Sample size

The total sample size will be 50 customers.

Sampling

Sampling will be done through simple random sampling.

Instrument to be used:

Questionnaire

A questionnaire consists of questions will be presented for respondents for their answers.

It is the most common instrument used to collect the primary data. Hence in my survey,

questionnaire will be used to collect primary data from customers.

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LIMITATIONS

1. The first problem I faced is in getting the co-operation of the customers. Many of

the respondents I approached did not agree to the need and utility of surveys and

hence did not agree to provide me with information.

2. The second problem faced by me was in getting the required secondary data,

sorting them, photocopying and organizing them according to my need.

3. In my stipulated duration, I was unable to do a detailed study of the project.

4. As the sample size of the survey was so small and comprise of only 50 customers,

the survey may be biased, as it’s not representing the whole Delhi and Ghaziabad.

4



ABSTRACT

A growing body of research conclusively shows that higher sales promotion leads to

higher customer satisfaction which in turn lead to higher share prices. Now that this

market inefficiency has been exposed, business leaders -especially CFOs – have a

responsibility to seriously question decision-making criteria that result in stronger short-

term Earnings but could weaken customer attitudes and relationships. The stakes are

high. Leaders who do not actively work on sales promotion will be responsible for

damaging their companies’ future earnings and shareholder value.

In a groundbreaking study by University of Michigan showed the relationship between

sales promotion, customer satisfaction and financial success by creating a hedge

portfolio in which stocks are bought long and sold short in response to changes in the

American Customer Satisfaction Index (ACSI). Developed by the University of

Michigan’s National Quality

5



INTRODUCTION

COMMUNICATION

Effective communication is the essence of promotion. In the age of information,

marketing is incomplete without effective communication with the prospective buyers

about the right product at the right price that is available at the right place. Marketers

must communicate the product, its features, etc. to the right target customers by

formulating right message in the language that is understood by them. Proper

communication requires advertising, sales promotion, personal selling, direct marketing,

and public relations. Thus, marketer has to use complex marketing communication to

convey the message to the target group of customers. Communication is the

responsibility of manufacturers, distributor, wholesaler, retailer or all in the channel.

CONCEPT AND ELEMENTS OF COMMUNICATION

The term ‘communication’ is derived from the Latin word ‘communis’ which means

common. That means if a person communicates with another, he establishes a common

ground of understanding. In the words of Newman, Summer and Warren,

‘Communication is an exchange of facts, ideas, opinions or emotions by two or more

persons.”

According to Keith Davis, “Communication is the process of passing information and

understanding from one person to another.” Communication does not mean merely

sending or receiving message. It involves understanding the message also. It is

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appropriate too quote Louis A. Allen, “Communication is the sum of all the things one

person does when he wants to create understanding in the minds of others." It is a

bridge of meaning. It involves a systematic and continuous process of telling, listening

and understanding.

Communication is an attempt to share understanding by two or more persons. It is

a two-way process and is complete when there is some response from the receiver of

information. It has two basic objectives:

(i) To transmit message, ideas, or opinions; and

(ii) To create an impression or understanding in the mind of the receiver of information.

.

7



HOW DOES COMMUNICATION WORK IN MARKETING?

Communication is a process involving interchange of facts, viewpoints and ideas

between two or more persons or organizations.

As shown in figure, the communication process starts when the sender or

communicator has an idea or message to communicate to another person known as

receiver. Communication will be completed when the following steps are completed:

(i) The sender formulates the message, which he wants to convey to others.

(ii) The sender will translate the message into words, symbols or some other form

which he feels will make the receiver understand his message. This is

known as encoding of message.

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http://known.as/

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(iii) The encoded message is transmitted to the receiver with the help of certain

media. The sender may use spoken or written words for this purpose.

(iv) The message is communicated to the receiver.

(v) The receiver of the message decodes the message and draws meanings from

the message.

(vi) The receiver will take the necessary action and will send his response to the

sender of the message. This is also known as feedback information. When the com-

municator receives the feedback, the communication process is said to be complete.

Noise and Other Reasons

Noise is one of the biggest obstacles in the marketing communication. For example, a

driver's need to provide safety to the traffic sidetracks the role of billboards, banners, etc.

during disturbed weather conditions-wind, dust storm, rain, etc. Similarly, too many

advertisement exposure during the day of purchase of a tyre for a car, would disturb the

planned purchasing. These constitute noise in the communication- process. The level of

noise may not allow a customer to receive the message as intended. The effectiveness of

communication depends upon the level of congruity and compatibility between different

elements of the communication:-

• Sender and Encoding of Message ('Fevicol' marketer targets illiterate carpenters and

formulates an effective written message in English language with proper wording,

sequencing, phrasing, slangs, etc.).

• Message and Media (The written message is advertised in Business Today, a

magazine for educators, business people and elite class).

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• Media and Receiver (even if the message is come across by carpenter, he is unable to

read and decode the message).

Apart from noise in the total communication process, there are other reasons for not

receiving the intended message:

• Selective Attention:

A prospect does not notice, all the stimuli that is intended to reach him. This is because

people are daily bombarded with thousands of advertisements on TV, Newspaper,

Radio, Magazines, Billboards, etc. It is not possible for a prospect to attend to all the

stimuli.

• Selective Distortion:

Because of predisposition of people to look at stimuli in the way that suit them, a prospect

would selectively distort the message. That is, their attitude would greatly affect the

message that is conveyed. For example; a prospect that has good experience with HP-

Deskjet printer would favorably look at the communication sent by the company.

The reverse is equally true. Therefore, the communicator should give the message that

is simple, clear and interesting.

• Selective Recall:

People do not retain everything they are exposed to, for only a small portion of it is stored

in their permanent memory. Thus, whenever one thinks of colors one may recall United

Colors of Benetton, Blue colors (BPL), Red colors (Brook Bond Red Label), etc. To

overcome the difficulties of recall, marketers must modify messages and change receiver's

beliefs and attitudes.

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CONCEPT AND NATURE OF PROMOTION

Promotion is an important part of the marketing-mix of a business enterprise. It is the

spark plug of the marketing-mix. Promotion is a process of communication involving

information, persuasion, and influence. It includes all types of personal or impersonal

communication with customers as well as middlemen in distribution. The purpose of

promotion is to inform, persuade and influence the prospective customers. Personal

selling, advertising, publicity and sales promotion are widely used to inform the people

about the availability of products and create among them the desire to buy the

products.

Promotion is communication from sellers to buyers in the market in as much as it tries to

instill into consumer's minds images (through advertising, personal selling, sales

promotion and publicity) that make them buy the product. Thus, the promotion message

(i.e., information, advice or request) by the sender (i.e., marketer) to the receiver (i.e.,

consumer) must accomplish three tasks to be effective:

(a) It must gain the attention of the receiver.

(b) It must be understood by the receiver.

(c) It must stimulate the needs of the receiver and suggest an appropriate

method of satisfying these needs.

The three tasks are related to the AIDA (attention-interest-desire-action) concept

proposed by EX Strong. As an explanation of the steps an individual must go through

before making a purchase decision. First of all, the potential consumer's attention must be

gained. Once this is accomplished, the promotional message seeks to arouse interest in

the product or service. If interest is aroused, the next stage is to stimulate consumer desire

by convincing the prospective buyer of the product's ability to satisfy his or her needs.

Finally, the sales presentation or advertisement must attempt to produce action in the

form of a purchase or a more favorable attitude that may lead to future purchases.

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MARKETING COMMUNICATION AND PROMOTION

Promotion is marketing communication. Communication influences the rate of promotion

in marketing. If there is no product promotion, there will be no-gathering of customer

attention, awareness or exposure to the product. In such cases, customer might be able to

know about the product, its benefits, features by point-of-purchase 'displays, or from

packaging. But who is to inform, what is available, where it is available and at what

price. In the world of fast changing technologies and information, how can one... Think

of telemarketing, internet marketing, or direct marketing without product, promotional

efforts.

Marketing is mutually beneficial relationship and the role of promotion is to encourage

such an exchange by joining communications and the product adoption processes.

Motivating consumers to positives respond requires the marketers to understand the

complete consumer buying process. To conceptualize the consumer buying process,

several models have been developed. Marketing Communication objective depends upon

the stage at which the target consumer is found.

At cognitive stage (Learn), the marketer wants to put something in consumer's mind i.e.,get his attention/make him aware and knowledgeable/or expose the consumer with the

communication for easy reception and recognition. At the affective stage (Feel), the

marketer tries to create consumer interest and desire, or liking, preference and conviction,

or interest and evaluation, or change consumer's attitude and intention. At the behavioral

stage (Do), consumer is expected to take action, purchase, or go for trial and adoption.

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OBJECTIVES OF PROMOTION

Marketers undertake promotional activities to ultimately achieve the following

objectives:

i. To provide information:

The main purpose of promotional activities is to inform the prospective customer

about the availability, characteristics, and main use and alternative uses of particular

product.

ii. To stimulate demand:

Promotional activities create awareness and build consumer interest in new products

and new technology.

iii. To differentiate the product:

Promotion helps in differentiating a particular product of the firm from the

competing products of other firms. A business firm can supply data revealing how

its product compares with other products.

iv. To highlight the utility of product:

Promotion helps in letting the people know the utility of the new product. It

also tells them how the concerned product will be helpful in satisfying their

specific demands.

v. To counter competition and stabilize sales:

In the modern age of competition it is an important purpose of promotional

activities to fight competition by reassuring the customers about the quality and

price of the product. This is also intended to stabilise'sales volume in the long-

run. It is possible that, a customer using a particular brand of a product may buy

another one next time because the other brand is advertised heavily.

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vi. To build image:

Promotional activities such as public' relations, advertising-and sale promotion

may be used to build a favorable public image of the firm.

The objectives of promotion are summarized in the table:

Initial and Ultimate Promotional Objectives

Initial ObjectivesExamples Ultimate Objectives

1. To Inform :

nature & type of product,

Unique benefits, Uses and

features Offered price,

Availability, Special offer.

Pepsi (Yeh hi hai right

choice Baby!)

Voltas Mega Laundrette

(Yeh Ho Nahi Sakta!)

Maggi Sauces (It’s

different)

Inform the prospective

customers and differentiate

offer.

2. To Pursuade :

To Receive Sales Calls,

To Purchase now,Encourage switching to

your brand,

Build brand preference,

Change perception, attitude,

belief about

product/brand/co.image

Surf (Sasti cheez aur achhi

cheez main faraq hota hai).

Onida (Neighbour’s envy,owner’s Pride).

Stimulate demand

3. To Remind :

Need and availability of

product

Where to buy,

Keeping top of mind slot,

Showing presence during

Lux (Filmstar’s soap).

Colgate (Ring of

confidence).

Complan (Will the

Complan mothers stand-

up).

Stabilities demand and stay

in competition.

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off seasons

4. To Counter

Competition :

Better product,

Unique product,

Better availability,

Multiple uses

BPL Mobile office,

HP-DJ-200colour printer,

HP Copier, printer and Fax

Mahindra Classic

Jeep (Admit it, You’ve

always been crazy about

topless models).

Allwyn Duracool

Refrigerators

‘For extra space without

extra cost’ (Allwyn’s heartfelt condolences to all 165

litre refrigerators).

Product utility and

superiority, and Product

differentiation.

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PROMOTION-MIX

(Methods of Promotion)

The term 'Promotion-mix' is used to refer to the combination of different kinds of

promotional tools used by a firm to advertise and sell its products. The main

promotional tools or activities which make-up the promotion-mix are personal

selling, advertising, public relations and publicity and sales promotion. These are also

known as elements of promotion-mix. .

The modern business cannot depend upon a single promotional tool. They have to make

use of all the promotional tools in different degrees depending upon the nature of

product, nature of competition and kinds of customers. The marketing manager is

supposed to decide about the use of various promotional activities and allocate budget

for them. While taking a decision about promotional-mix, two factors need adequate

consideration.

1. A combination of promotional activities is to be used because any promotional tool,

used alone, may not prove fully effective.

2. All promotional tools are not of equal importance and their importance mar

change with the. Change in business environment.

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ELEMENTS OF PROMOTION-MIX

(METHODS OF PROMOTION)

Product promotion can take place in many ways: Advertising, Sales Promotion,Personal Selling, Direct Marketing, and Public Relations and Publicity. Similarly,

promotional tools may have many mixes. First, various methods of promotion are

discussed. Next, a review of their mixes has been considered. Finally, factors that

affect promotion have been listed for developing right promotional strategies.

Advertising:

It is impersonal form of promotion that is directed towards masses and is paid for,

with the clear identification of the sponsors. Advertising is the most visible form of all

promotional tools. The media include Wass media (TV, Radio and Newspaper),

Magazines, point-or-purchase displays, packaging, sponsorship, billboards, banners,

etc. The recent trend is towards sponsorships like,

(i) Pepsi -The Independence Cup `97

(ii) Videocon - 4th National Games '97

(iii) Colgate - Pados6n Ki Pasand (DD-metro)

(iv) Philips - Philips Top 10 (Zee-TV)

(v) Kodak - Kodak Klick-Klick (Zee-TV)

Promotional Tools

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Sales Promotion:

It consists of short-term and temporary incentives to purchase or induce trials. The tool includes

arranging contests, games, premium packs, gifts, off-season discounts, sampling, rebates, Trade-in

allowances, exchange offer, etc. The recent trend is to go for freebies:

(i) RPG Numeric Paper with purchase of HCL computer, Liberty Shoes etc.

(ii) Allwyn 100 litre bedroom refrigerator free with every 360 litre frost free refrigerator.

(iii) Motorola Micro TAC International 8200 Lightweight cellular phone with gift of fully

automatic, auto focus Kodak camera, or exchange offers.

(i) LML for the grand exchange offer for scooter of any make, and

(ii) Phillishave for exchange of your old electric shaver.

Personal Selling:

It is the personal direct presentation of product to the customer or prospective customer

for the purpose of making sales. The tools include techniques like sales presentations,

meetings, incentive programmes, and samples.

Direct Marketing:

It is the use of non-personal contact tools to solicit a trial or purchase. The tool includes

catalogue selling, mail-order, Tele-marketing, WWW marketing, TV shopping, etc.

Public Relations and Publicity:

It encompasses wide variety of communication efforts to contribute a generally favorable

attitude towards the organization and its products. Publicity is not paid for. The tool

includes press conferences, speeches, annual reports, events, publications, donations for

public cause and sponsorships. Sponsorship is covered here to include that part which is not

paid for. For example. Pepsi paid for the sponsorship o f the Independence Cup, 1997. But

it generated news items in Newspaper, studio, Television, Sports magazines, etc. First

part is advertising and the, second part is publicity.

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PROMOTIONAL PLANNING

These promotional tools are part of the overall marketing-mix strategy as shown in

Fig.

Thus, a company prepares an offer-mix of products, services, and prices, and utilizing mix

of sales promotion, advertising, salesforce, public relations, direct mail and tele-

marketing to reach the distribution channels and the target consumers. Companies

constantly search for substitutes of one promotional tool with another because the tool has

become less effective. Fir example, Phoenix shoes have been heard to be on sale for over

a year now. This cuts doubt on the use of the product for consumers. But, Raymond’s

has opened its Raymond's Seconds shops as a substitute for sale. This has improved

the company's image.

The issue becomes more complex when one promotional tool is necessary to promote

another promotional tool. For example Phillishave has issued advertisements (one

promotional tool) to inform the public that it has offered for exchange of old electric

shavers (sale promotion tool).

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FACTORS AFFECTING PROMOTION-MIX

There is no tailor-made promotional-mix for a firm. Every firm has to design its own

promotional-mix, i.e., to determine the various promotional tools to be used for

promoting the sale of its products. The most striking feature of the promotional tools is

their cross-substitutability. They represent alternative ways to influence buyers. This

substitutability calls for treating various promotional tools in a joint decision framework.

Promotional strategy is determined by the product-market strategy and over all marketing

strategy. Various combinations, types and degrees of personal selling, advertising and

other forms of promotional tools are brought together into a promotional-mix to develop

the promotional strategy. For each component of the promotional mix, management has

to set objectives, determine policies and formulate strategies.

The managerial decision about the promotional-mix of a firm is in fluenced by the

following factors:

Product Considerations

i. Nature of Product : The type of promotional-mix will differ depending upon the

nature of the product. In case of sale of consumer's products, advertising, publicity

and sales promotion are necessary in addition to personal selling. But in order to

push up industrial goods, personal selling is much more effective because its market

is easily identifiable, products are often made to specifications and a great deal of

pre-sale and after-sale services are required to sell and install the product.

ii. Product Image : Prestige goods rarely use coupons or point-of-purchase-displays.

They may occasionally arrange sales. For example, "sales" of carpets. However,

there may be a great usage of freebies. For example pagers, Televisions, computers

have recently used this technique quite successfully.

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iii. Stage of Product's Life-Cycle: The stage of a product's life-cycle (PLC) is an

important determinant of promotion-mix. During the introduction stage, the

customers are to be informed about the availability of the product and educated

about its benefits and uses. That is why; most of the firms make use of all kinds of

promotional activities (including event launching) to launch their products

successfully. After the product has been launched, advertisement and publicity are

more important to create continued patronage of the customers, to create a good

image of the product; and its manufacturer, and to meet competition in the market.

But during the last stage of the product, when its sales are declining, it may be

decided to make drastic cuts on promotional efforts.

Thus, promotional tools vary depending upon the stage of the PLC and their cost

effectiveness. Table 3 illustrates the point.

Prices and Promotions Tools

PriceExamples

Sales

Pro

moti

on

Advertising and

Publicity Personal

Selli

ng

Low Colgate gel,

Rotomac Ball-

point Pens

Heavy to

medium

Supplemental to

sales promotion

Low

Medium Acqua Guard

water purifier,

Phillips audio

system

Medium to low Heavy Low to

Medium

High Mercedes-Benz;BPL-frost free

refrigerators

with three

doors; HCL

computers

Low Sophisticated Heavy

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iv. Packaging: Packaging performs the self-promotional function in addition to

protecting the product. By incorporating creativity in its design, a package can add

the `pick-me-up' appeal to the product. It also helps to communicate the

product features, applications, and benefits more positively. For example, Coke in

can, Frooti in Tetrapacks, and Dalda in Handle Bar plastic bottles.

v. Degree of Customization: The product, whether standardised or adapted to the

customer's special needs, is responsible for the type of promotional efforts that might

be adopted. Table 4 guides the broad dimensions of promotional efforts that could

be designed depending upon the degree of customization. For example,

generally, the more the standardization would attract need for more

advertising and sales promotional activities and least personal selling efforts because the product (in such case) bas-to satisfy more general needs of the

customers.

Thus, advertising and sales promotion are less and less required as the product moves

from more standard to less standardised (more tailored to individual needs),

while personal selling has mostly negative relation to the mass vs. personalised

marketing.

2. Pricing Policy

The pricing of product can broadly decide the type of promotional-mix. - Generally

the following Table 5 has its uses

3. Distribution

Again the promotional tools are affected by the type of distribution followed:

( See Table)

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The Intensivity of Distribution and Promotion

TypeSales

Promotion

Advertising &

Publicity

Personal

Selling

Examples

IntensiveMost Heavy Least Coca-Cola,

Tata salt

Selective Medium Heavy Medium Bata shoes,

Liberty shoes,

DCM clothes

Exclusive Least Medium Most Raymonrs,

Bajaj Auto

scooters,

Maruti cars

Thus, intensively distributed products generally require heavy advertising and sales

promotion efforts so that products will be pulled through the distribution system.

For example, advertising can accurately target the customers and locate , there in

segmented (e.g., Coca Cola) and undifferentiated markets (e.g., salt).

4. Targ et Market Characteristics

Promotion is greatly influenced by the target market characteristics such as level of

competition, geographic coverage, and buyer readiness stage:

i. Level of Competition:

The type of competition existing in the market is one of the factors which can affect

the penetration of the Product/brand into the market. The promotional efforts must match

the level of competition and there is generally tendency to go for high advertising,

sales promotion and personal selling, when there is highly competitive marketing

environment.

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ii. Geographic Coverage:

In case of wide market coverage, advertising and sales promotion are desirable.

For example, to inform that the Colgate toothpaste is widely available at

competitive prices, high promotional campaign is launched by Colgate Palmolive

Company. However, if the product is available in local area, personal selling

becomes more important. This can be seen from the promotional efforts of small

and very small manufacturers who produce their product in their residential

premises. The brand dames of such products are not widely known.

iii. Buyer Readiness Stage:

The promotional mix becomes a tool to prompt the buyer to prepare and accept

the product being offered. The type of Promotional efforts required would depend

upon the buyer's own readiness stage. A bird's eye view at these stages and the

promotion desired is given ' below (See Table)

Table: Promotional Efforts and Buyer Readiness Stage

Stage of Buyer

Readiness

Sales Promotion Personal Selling Advertising

& Publicity

Awareness Low Very Low Very High

Comprehension Low Low High

Conviction Medium High Medium

Ordering Very High Very High Low

ReorderinHigh Very High Medium

For example, customer conviction is mostly influenced by personal selling and less by advertising and sales promotion. Further, advertising and publicity are most

effective at the early stages of buyer decision process, and sales promotion and

personal selling dare most effective in closing the sale and reordering.

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iv. Promotional Budget:

The allocation of funds by the op management for the promotional activities

must be kept in mind by the marketing manager while determining the

promotional-mix.

A firm with huge promotional budget can spend on all promotional activities.

But a marketer with financial constraints will be selective in the use of

promotional activities. Personal selling is cheaper and more effective in the short-

run. Advertising in reputed magazines and journals is very costly, but can

attract the status conscious customers towards the product.

v. Promotional Strategy:

The choice of promotional tools depends to a great extent on whether a company

chooses a push or pull strategy to create sales in case of a push strategy, the

manufacturer induces his dealers to carry the product and promote it to consumers.

Personal selling and sale promotion are more suitable to this strategy. On the other

hand, a pull strategy involves inducing consumers to ask dealers to carry the product.

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RELATIVE EFFECTIVENESS OF PROMOTIONAL-MIX

(METHODS)

The relative advantages or disadvantages of various promotional methods make the

choice more obvious than finding the interaction of promotional for different situations.

The starting point must be the relative study of their positions. Here is the table which

broadly explains the scope, cost consideration, and advantages/disadvantages.

Table: Relative Position of Promotional Methods

Promotional

Method

Scope Cost Advantage Disadvantages

Advertising Mass Relatively

inexpensive

per contract

Allows

expressiveness

and control

over message

Hard to

measure results

Publicity Mass Inexpensive Has high

degree of

credibility

Not easily

controlled as

other forms

Sales

Promotion

Mass Can be costly Gains attention

& has

immediate

effect

Easy for others

to imitate

Personal

Selling

Personal Expensive per

contract

Permits

flexible

presentation

and gains

immediate

response

Costs more

than all other

forms per

contract

\

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A look at the table reveals that publicity is inexpensive, has high credibility, and has

mass impact. But it is not easily controlled by marketer. A close substitute is advertising

the results of which are hard to measure. On the whole, personal selling is most

expensive and it has local effect in the market. Because of its fixed cost implication it is

not easily adopted in the companies. However, the flexibility in the human to adopt to

situations and the fact that at the time of closing the sale personal selling is required,

personal selling is indispensable and is here to stay even in the age of Electronic

Marketing.

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SALES PROMOTION

“An activity designed to boost the sales of a product or service. It may include an

advertising campaign, increased PR activity, a free-sample campaign, offering free

gifts or trading stamps, arranging demonstrations or exhibitions, setting upcompetitions with attractive prizes, temporary price reductions, door-to-door calling,

telemarketing, and personal letters on other methods”.

More than any other element of the promotional mix, sales promotion is about “action”. It

is about stimulating customers to buy a product. It is not designed to be informative – a

role which advertising is much better suited to.

Sales promotion is commonly referred to as “Below the Line” promotion.

Sales promotion can be directed at:

• The ultimate consumer (a “pull strategy” encouraging purchase).

• The distribution channel (a “push strategy” encouraging the channels to stock the

product). This is usually known as “selling into the trade”.

Sales promotions are activities that shape buying patterns attract new audiences or

increase sales. It's a grab-bag of a word that encompasses everything that falls outside

advertising, publicity and direct marketing, although these might be used to deliver your

sales promotions.

Most textbooks see sales promotion as interfacing with price -- this writer believes sales

promotions are broader than this. Too often people think discounts are synonymous with

sales promotion -- not true. Sales promotions can include the provision of sampling or

learning opportunities, joint promotions or collaborations with third party networks,

special events, giveaways and competitions, discounts, incentives, value adding and

rewards. In this section we will also look at distribution and display of promotional

materials, mainly because there is nowhere else for them to go.

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Imaginatively and carefully planned sales promotions can deliver long-term benefits to

your organization. Too often they are used as an afterthought to get people through the

door. Not surprisingly, they usually look like last minute panic measures and that can

signal failure, not success.

One well-planned, far-reaching promotion is better than heaps of little one-offs that bear

no relation to your overall strategy. The work involved in developing sales promotions

can often outweigh the apparent benefit -- if you measure the results in the broadest

possible context, you just might find you have successfully reached people outside the

inner arts circle.

As the term implies -- the ultimate goal is sales or transactions. However, promotions can

be planned to increase sales over a long period within a specific market segment, so it is

not always about immediate results.

Need of Sales Promotion:

Good sales promotions say something about your work and who you are. They can be an

inexpensive way of increasing awareness, of reaching new buyers or extending the

buying choices of existing audiences. As an essential part of your campaign they should be planned from the beginning. While sales promotions can often be done cheaply, there

should always be a line item for this activity in your budget, no matter how small.

Because sales promotions often involve working with other organizations, they can open

doors into the wider community. By building mutually beneficial relationships, you could

also be paving the way for sponsorship. Remember never devalue your product. This is

really easy to do if you are desperate, which is why the best sales promotions are usually

planned well in advance.

29



METHODS OF SALES PROMOTION

There are many consumer sales promotional techniques available, which are as

follows:

Price promotions:

Price promotions are also commonly known as “price discounting”.

These offer either:

(1) A discount to the normal selling price of a product, or

(2) More of the product at the normal price.

Increased sales gained from price promotions are at the expense of a loss in profit – so

these promotions must be used with care. A producer must also guard against the possible

negative effect of discounting on a brand’s reputation.

Coupons:

Coupons are another, very versatile, way of offering a discount. Consider the

following examples of the use of coupons:

• On a pack to encourage repeat purchase.

• In coupon books sent out in newspapers allowing customers to redeem the coupon at

a retailer.

• A cut-out coupon as part of an advertisement.

• On the back of till receipts.

The key objective with a coupon promotion is to maximize the redemption rate – this is

the proportion of customers actually using the coupon. One problem with coupons is that

they may simply encourage customers to buy what they would have bought anyway.

Another problem occurs when retailers do not hold sufficient stocks of the promoted

product – causing customer disappointment. Use of coupon promotions is, therefore,

often best for new products or perhaps to encourage sales of existing products that are

slowing down.

30



Gift with purchase:

The “gift with purchase” is a very common promotional technique. It is also

known as a “premium promotion” in that the customer gets something in addition to the

main purchase. This type of promotion is widely used for:

• Subscription-based products (e.g. magazines).

• Consumer luxuries (e.g. perfumes).

Competitions and prizes:

Another popular promotion tool with many variants. Most competition and prize

promotions are subject to legal restrictions.

Money refunds:

Here, a customer receives a money refund after submitting a proof of purchase to

the manufacturer. Customers often view these schemes with some suspicion –

particularly if the method of obtaining a refund looks unusual or onerous.

Frequent user / loyalty incentives:

Repeat purchases may be stimulated by frequent user incentives. Perhaps the best

examples of this are the many frequent flyer or user schemes used by airlines, train

companies, car hire companies etc.

Point-of-sale displays:

Research into customer buying behavior in retail stores suggests that a significant

proportion of purchases results from promotions that customers see in the store.

Attractive, informative and well-positioned point-of-sale displays are, therefore, very

important part of the sales promotional activity in retail outlets.

31



HOW SALES PROMOTION HELPS IN INCREASING THE

MARKET SHARE?

Direct sales promotion can help build market share, breaking through brand loyalty by

offering incentives to buy. This is a strategy best used by small brands breaking into

markets dominated by larger brands. Prominent brands can use this strategy to gain

additional sales volume, but sales promotion alone, generally speaking, is not sufficient

enough reason for a long-time customer to make the switch permanently.

Decisions necessary for effective sales promotion include: establishing goals, selecting

appropriate tools, pre-testing the deal and evaluating the results.

Establishing Goals

Depending on the type of target market, specific goals may vary. Targeting consumers,

goals could include encouraging purchasing of larger quantities of product, building a

base with nonusers and attracting users of competitor’s brands. Targeting retailers, goals

include inducing them to carry additional items and higher levels of inventory,

encouraging off-season buying, building brand loyalty and opening orders with new retail

outlets. For your sales force, goals include additional support of a new product,

encouraging more prospecting and stimulating off-season sales. Clear definition of goals

will help measure success.

Selecting Appropriate Tools

Consumer Promotion Tools:

1

Samples - can be delivered door to door, sent in the mail,

attached to another product or featured in advertising. This is

the most effective and most expensive way to introduce a new

product.

2 Coupons - can be mailed, attached to other products or

32



Consumer Promotion Tools:

inserted in ads. Redemption rates vary - pack distribution is

redeemed at about 17%, direct-mail distribution about 8% and

newspaper coupons about 2%.

3

Cash Refunds/Rebates - are redeemable after purchase and

can be the determining factor among products of similar price

and quality.

4

Prizes/Contests/Sweepstakes - offer the opportunity to enter

to win cash, a trip or some other large item. Generally, these

attract far more attention than a coupon or small rebate.

5

Product Warranties - become more attractive as consumers

become more quality sensitive. It is important for companies to

consider carefully the length of warranty, what parts are

covered, etc. so that the value of sales generated exceeds the

potential costs of the warranty.

6

Point of Purchase Displays/Demonstrations - take place at

the retail outlet or point of sale. Manufacturers get the attention

of the most retailers by offering creative displays and demos

that are set up and maintained by the manufacturer and

supported with additional advertising.

Business Promotion Tools

1

Trade Shows/Conventions - can significantly increase sales

volume through direct contact with customers. About 90% of a

trade show's visitors see a company sales person for the first

time. Trade show preparation includes choosing the appropriate

show(s) to attend, building a dramatic display to attract

attention, a strategy for drawing attendees into your booth and

effectively following up on sales leads.

2 Sales Contests - are used to increase sales over a determined

period of time by awarding prizes for those sales

staff/representatives that attain stated goals. Important issues to

33



Business Promotion Tools

consider are what incentives work best for each sales person

and what specific goals will be obtained.

3

Specialty Advertising - consists of useful, low-cost items

bearing the company logo that sales people can distribute to

customers. When choosing a specialty advertising item,

consider overall cost, usefulness to customer and whenever

possible, the type of item relates specifically to your business.

For example, an office supply retailer could have pens, paper

clip holders or scratch pads imprinted with their logo.

Pre-Testing the Deal

Sales promotions aimed at consumers can be pre-tested surveying a group of consumers

to rate different possible deals. Attending trade shows in which you are considering

exhibiting will give you information regarding other exhibitors, attendance, etc., so you

can make an informed decision about becoming an exhibitor. Seeking input from your

sales force regarding the types of incentive that will inspire them will help you develop a

successful incentive program.

Evaluating the Results

Examining sales results before, during and after-a-sales promotion on a particular product

or service is perhaps the most common evaluation method utilized. If increases remain

after the promotion, it can be assumed that some customer gain has been achieved. Sales

promotions work best when your competitor’s customers try your product, determine it to

be the better choice, and continue to buy.

Consumer surveys can also be helpful in determining whether they recall the promotion,

did it entice them to buy the product and how it affected their future purchasing choices.

34



Evaluate trade show results by identifying how many new customers were reached, how

many were sold either at the show or during subsequent follow up calls, and how many

existing customer relationships were further enhanced by your presence at the show.

Evaluation of sales promotion efforts will help in determining how much of your

marketing budget is allocated to these efforts.

35



Five More Critical Success Factors For Running A Loyalty Programme:

Loyalty programmes begin to mature in year three and beyond. Finding out when your programme is maturing will depend on a number of factors including the type of industry

you are in. But it is safe to say that until you can start to look for year-on-year trends in

data, it's not possible to assess important loyalty metrics like retention, or your efforts to

influence the behavior of loyalty programme members.

Once your loyalty programme does begin to mature, there are five more critical success

factors that will help you stay focused and on track to maximize your investment:

1. Maximize the use of your loyalty information - but not just for your loyalty

programme.

One of the top reasons businesses report wanting to create a loyalty programme is to find

out who their customers really are. Now that your loyalty programme has built a

customer profile, use it well. Extend what you have learned about your best customers

into your general marketing strategies.

Programme members will tell you where they live, when they shop, and even how old

they are – it's all in the data. Use that data not only to communicate with your loyalty

programme members but also to plan your broader marketing initiatives.

2. Look at year-on-year performance data.

It takes time to establish a baseline of performance within your loyalty programme. Now

that one is emerging, one way to stay focused on improving your programme is to start

paying attention to year-on-year performance data (and to continue to do so on a regular

basis). Monitoring even simple measures like acquisition, number of active customers,

36



and average spend data gives you valuable information for programme planning.

Compare it store, same month, from year to year to get a regular picture of your

programme at the store level.

3. Create differentiation within your loyalty programme.

Many loyalty programmes have 'tiers' which are established as the programme matures.

Most frequent flier and hotel programmes have these characteristics. The loyalty rules

within the different tiers of these programmes can be very complex. This complexity is

the result of much small change within the programme over time, each designed to treat

specific customer segments within the loyalty programme differently. The key is to make

this complexity visible to loyalty programme members who are already familiar with the

base programme.

As your programme matures, consider tiering as a way to establish more value for more

loyal members, and to give them 'performance targets' to strive for.

4. Cross marketing can add even more value.

If you have established a powerhouse of a loyalty programme, your marketing power

extends beyond the walls of your business. Suppose you are running a theatre chain and

that there is a restaurant chain that is almost always situated near your theatres. Adding

value to your loyalty members without affecting your business could be as simple as

rewarding frequent movie goers with a restaurant offer (restaurant sponsored of course),

or having the restaurant award and pay for loyalty points within your programme when

your members dine there.

The key to any initiative like this is to protect your brand while adding value to your

member at no cost - or even at a profit to you. But even if stretching your loyalty

programme beyond the walls of your business doesn't appeal, the concept of cross

37



marketing still applies. Employ techniques to encourage loyal customers who only

experience one segment of your product to try others. Use your loyalty knowledge to

identify them, and use your loyalty currency to influence them.

5. You are never done.

Loyalty programmes are living, breathing things. As long as they can adapt, they never

get old. Continually adjusting your programme to address changes in your business,

customers, and market trends will make it always relevant and valuable. Certainly,

keeping up with these adjustments requires an ongoing commitment but it is one that

pays off handsomely when done well.

As I have said before, loyalty programmes go through three main stages:

First, programme creation. Second, programme launch and early operation (the first two

years). Third, and finally, maturity (years three and beyond). While established

programmes are rarely recreated from the ground up, they are often modified to meet theongoing needs of their members and the business.

Paying the same attention to detail for each programme iteration as you did to the

creation of your original programme, and following the five critical success factors for

each of the three stages will help ensure a successful and profitable loyalty experience.

38



DATA ANALYSIS

All the observations are based on the primary data collected through questionnaire filled

by customers. The observations made on customer’s questionnaire, is dealt separately.

The customer’s questionnaire is attached with it and as we can see it consists of 10

different questions related to sales promotion and to retain customers.

Question 1: That is kind of purchase the customers prefer.

Observation:

Choice No. of response % age

Planned Purchase 19 38

Impulse Purchase 9 18

Both 22 44

Can't say 0 0

0

510

15

20

25

30

35

40

45

50

Plannedpurchase

Impulsepurchase

Both Can't say

No. of Response

%age

Interpretation:

As some persons do planned purchase while others do the impulse purchase due to the

impact of sales promotional schemes available in the market and hence lets see what

maximum respondents have to say about it. Nearly (44%) of the respondents prefer both

type of purchase while (38%) respondent thinks sales promotion schemes does not affect

39



their buying behavior and they do only the planned purchasing while (18%) thinks that

they are affected by the sales promotion and only follow the impulse purchase.

Question 2: That is sales promotion is best for:

Observation:


Shopping Goods 8 16

Specialty Goods 11 22

Convenience Goods 8 16

All 23 46

0

5

10

15

20

25

30

35

40

4550

Shoppinggoods

Specialitygoods

Conveniencegoods

All

No. of Response

%age

Interpretation:

Today each and every company is carrying the sales promotional schemes but it is very

important for them to know the product for which the sales promotion scheme is best for

and hence when asked about (46%) respondent says that sales promotion schemes is best

for all types of products while (22%) says for specialty goods and (16%) of the

respondents favored for both the shopping & convenience goods.

40



Question 3: That is the most important basis for customer purchase..

Observation:


15 3011 22

4 8

2 4

9 189 18

0

5

10

15

20

25

30

35

No. of Responses

%age

Interpretation:

The customer purchase the product with some or the other kind of product features,

promotional schemes, brand image, services ( after & before) etc and hence lets see what

maximum respondents have to say about the basis for product purchase and (30%)

respondents purchase on the basis of product features while (22%) says for brand image

while (18%) says for both prices & services ( after & before) & (8%) says for advertising

while (4%) says for sales promotional schemes.

41

Product FeaturesBrand Image

AdvertisingSales Promotional

SchemesPrice

Services(after & before)



Question 4: That is sales promotional schemes effect buying decision of customer’s.

Observation:


Very much 9 18

To some extent 33 66

Not at all 8 16

Can't say 0 0

0

10

20

30

40

50

60

70

Very much To some

extent

Not at all Can't say

No. Of response

%age

Interpretation:

Today when infinite number of price wars are going in FMCG sector, Consumer

Durables, etc, the customers is no more a usual customer but a profitable customer

waiting everything at price discount and hence lets see what maximum respondents have

to say about it and (66%) respondent thinks sales promotion effects their buying decision

only to some extend while (18%) i.e. the second maximum lot says its very much

effective

42



Question 5: Customers try to purchase new product through sales promotion.

Observation:

0

10

20

30

40

50

60

70

80

90

No. of response %age

Yes

No

Interpretation:

The customer always looks for making best deal by spending less and buying more. The

customers will buy only those items that have certain discount, free gifts, contest and

priced-packed deals with them.

43

ChoiceNo. of

response % age

Yes 42 84

No 8 16



Hence as customer impulsively buy the product with some or other kind of product

promotions, customers do try new product as the new marketer is quite familiar with this

aspect of consumer behavior and when asked the respondent that do they try new

products because of sales promotion, they have a positive answer for this as (84%) people

agrees that they do try new product because of sales promotional schemes.

Question 6: What extent a company’s sales promotional schemes can bind the repeat

Purchase?

Observation:

ChoiceNo. of

response % age

Very much 8 16

To some extent 29 58

Not at all 11 22

Can't say 2 4

0

10

20

30

40

50

60

70

Very much To some extent Not at all Can't say

No. of response

%age

Interpretation:

Today, when there is a trend of “me-too” product it is very difficult for customers to

make a distinction between them and decide to buy one, here the role of promotional

scheme mainly price discounts come in where customers go by there affordability factor

and mostly buy’s a product with price discount.

44



Hence we tried to ascertain the extend of customer retention effectiveness of various

sales promotional schemes which binds the customer for the repeat purchase and

maximum about (58%) respondent says that these schemes can bind the customer for

repeat purchase only to some extent while (22%) says that they are not at all bind to

repeat purchase while (16%) says its very much effective for customer retention.

Question 7: What type of promotional schemes attract to buying product?

Observation:


Price discount 41 82

Price pack deals 6 12

Coupons 2 4

Contests 1 2

0

10

20

30

40

50

60

70

80

90

Price discount Price packdeals

Coupons Contests

Nao. Of response

%age

Interpretation:

45



There are various kind of promotional schemes available in the market but its very

important for the market to know what kind of promotion schemes will increase the sale

of his product and hence when asked about (82%) respondent says that price discount

attracts them most and then comes price pack deals (12%),coupons (4%) and contest

(2%).

46



Question 8: Customers purchase affected by sales promotional activity through the point

of sales displays in retail outlets and stores.

Observation:

0

10

20

30

40

50

60

70

80

90


Yes

No

Interpretation:

Companies are well aware of the customer’s buying behavior hence carry out the sales

promotional activities through the point of sales displays in the retail outlets and stores

which effects the customers purchase and hence when asked the respondent that do their

purchase is affected by sales promotional activity, they have a positive answer for this as

(82%) people agrees that their purchase is affected because of sales promotional schemes.

47

ChoiceNo. of

response % age

Yes 41 82

No 9 18



Question 9: That is the sales promotion convince the customer to change the brand the prefer..

Observation:

0

10

20

30

40

50

60

70


Yes

No

Interpretation:

Although the customers are retained with the brand they prefer but still the sales

promotional schemes rather convince them to change the brand they prefer and hence

when asked the respondent that they do change their brand, they have a positive answer

for this as (62%) people agrees that their preference for brand is affected because of sales

promotional schemes while (36%) respondents does not favour it.

Question 10: That is the association of stars (cricket, bollywood etc.) / public figures

48

ChoiceNo. of

response % age

Yes 32 64

No 18 36



with sales promotion affects customer decision.

Observation:

ChoiceNo. of

response % age

Very much 16 32

To some extent 14 28Not at all 19 38

Can't say 1 2

0

5

10

15

20

25

30

35

40

Very much To some extent Not at all Can't say

No. of response

%age

Interpretation:

The association of stars / public figures with sales promotion affects the customers

decision for the product purchase and hence when asked the respondent that their

purchasing decision is also affected by this, (38%) respondents are not at all affected by

this while (32%) are very much affected, (28%) respondents are affected to some extent

& (2% ) have no answer to it.

49



FINDINGS

1. As some persons do planned purchase while others do the impulse purchase due

to the impact of sales promotional schemes available in the market and hence in

the survey it is found that maximum prefer both type of purchase

2. Today each and every company is carrying the sales promotional schemes but it is

very important for them to know the product for which the sales promotion

scheme is best for and hence when asked about (46%) respondent says that sales

promotion schemes is best for all types of products.

3. The customer purchase the product with some or the other kind of product

features, promotional schemes, brand image, services ( after & before)

,advertising & the price of the products and hence maximum respondents

purchase on the basis of product features .

4. Today the customer is no more a usual customer but a profitable customer

waiting everything at price discount and hence maximum respondent thinks sales

promotion effects their buying decision only to some extent.

5. The customer impulsively buy the product with some or other kind of product

promotions, customers do try new product as the new marketer is quite familiar

with this aspect of consumer behavior .

6. Today, the role of promotional scheme mainly price discounts come in where

customers go by there affordability factor and mostly buy’s a product with price

discount. Hence it is found that the extend of customer retention effectiveness of

various sales promotional schemes which binds the customer for the repeat

purchase.

50



7. There are various kind of promotional schemes available in the market but its

very important for the market to know what kind of promotion schemes will

increase the sale of his product and hence when asked about maximum respondent

says that price discount attracts them most and then comes price pack deals

8. Companies are well aware of the customer’s buying behavior hence carry out the

sales promotional activities through the point of sales displays in the retail outlets

and stores which effects the customers purchase.

9. Although the customers are retained with the brand they prefer but still the sales

promotional schemes rather convince them to change the brand they prefer and

hence when asked the respondent that they do change their brand, they have a

positive answer for this

10. The association of stars / public figures with sales promotion also affects the

customers decision for the product purchase

51



SUGGESTIONS

1. First of all it’s very essential for the market to work on it product quality, if

quality is good, the product will sell no matter how many competitor it has in

market.

2. As far as winning the competition is concern the market should concentrate on

different type of promotion in the market reassuring the customer about the

quality and price of the product like its very for FMCG’s where price packs and

discount prices are very effective.

3. A good company in order to build its goodwill must try to promote sales with price discounts, coupons, and contests.

4. Sales promotion helps in building relationship with other channel members like

retailers, wholesalers and dealers, hence must be introduce from time-to-time.

5. A Company should always try to introduce one or other type of sales promotional

scheme so that customer can don’t lose interest in the company.

6. A Company should give only that kind promotional scheme to a product that suits

and work well. Like free gifts with consumer bur bales, price discount on FMCG

products, contest with automobiles, etc.

52



CONCLUSION

Unfortunately, most marketing and practice center on the art of attracting new customer

rather than on retaining existing ones. The emphasis traditionally has been on marketing

sales rather than building relationship; on pre-selling and selling rather than caring for the

customer afterward.

We all know that the key to customer retention is customer satisfaction. A satisfied

customer that stays loyal to their product, buys more as company’s introduces new

product ad upgrades existing products, talks favor about the and company and further

offers product or service ideas to the company’s.

People believe that it’s important for retaining existing customer than attracting new

ones. But I say one emerges from the others. Sales promotion schemes are the key that

53



temporary incentive to purchase or induce trials, they play an important in introduction of

product to customer, if the product is good customer will be satisfied and hence retained.

Promotion helps in setting the people know about the utility of new products .It also tells

them now the concerned product will be helpful in satisfying their needs.

Further the sales promotion schemes can it self-buying the customers to the product by

the help of price discounts that is an important basis for purchase decision for “me-too”

products.

Sales promotion further support customer’s buying decision and hence stabiles sales

volume by reassuring the customer about the quality and price of the product it is

possible that a customer using a particular brand may buy another because the other

brand is promotional in effective manners.

Hence I conclude that sales promotions plays one of the important role in customer

satisfaction that in turn leads to customer retention.

54



BIBLIOGRAPHY

Books:

• Marketing Management by Phillip Kottlar.

• Marketing Management by T.N.Chabbra.

• Marketing Research by B.C.Goel.

Magazines:

• Business World

• Business Today

Websites:

• google search . com

• search. com

• msn search . com

55



ANNEXURE – I

QUESTIONNAIRE

1. What kind of purchase you prefer?

a) Planned Purchase

b) Impulse Purchase

c) Both

d) Can’t Say

2. According to you, sales promotion is best for:

a) Shopping goods

b) Specialty goods

c) Convenience goods

d) All

3. Which is the most important basis for you in your purchase?

a) Product features.

b) Brand image.c) Advertising.

d) Sales promotional schemes.

e) Price.f) Services (After & Before).

4. Does sales promotional schemes affect your buying decision?

a) Very much

b) To some extent

c) Not at all

d) Can’t say

5. Do you try a new product because of sales promotional schemes?

a) Yes

b) No.

5. To what extent company’s sales promotional schemes can bind you to its

repeat purchase?

a) Very much

b) To some extent

c) Not at all d) Can’t say

56



7. What type of promotional schemes attracts you?

a) Price discount

b) Price pack deals

c) Coupons

d) Contests

7. Does sales promotional activity through the point of sales displays in retail

outlets and stores affect your purchase?

a) Yes

b) No

9. Does the sales promotion convince you to change the brand you prefer?

a) Yes

b) No

10. Do you think that association of stars (cricket, bollywood etc.) / public figures

with sales promotion affects your decision?

a) Very much

b) To some extent

c) Not at all d) Can’t say

Personal details:

Name :

Gender : Male / Female

Age : Up to 18

18-25

26-35

Above 35

Occupation : Government Service

Private Service

BusinessStudent

Others.

Contact :

57



Documents

Impact Ofsales Promotion Edited