DEFINITION OF SALES PROMOTION:
“Sales promotion includes incentive-offering and interest-creating activities which are generally short-term marketing events other than advertising, personal selling, publicity and direct marketing. The purpose of sales promotion is to stimulate, motivate and influence the purchase and other desired behavioral responses of the firm’s customers.” CHARACTERISTICS OF SALES PROMOTION:
Writing about sales promotion tools, Prof. Philip Kotler observes – “they have 3 distinctive characteristics.”
(1) Communication: They gain attention and usually provide information that may lead the customer to the product. (2) Incentive: They incorporate some concession, inducement, or contribution that gives value to the consumer. (3) Invitation: They include a distinct invitation to engage in the transaction now (offer valid till …or till stocks last)
Sales promotion offers a direct inducement to act by providing extra worth over and above what is built into the product at its normal price. These temporary inducements are offered usually at a time and place where the buying decision is made. Not only are sales promotions very common in the current competitive market conditions, they are increasing at a fast pace. These promotions are direct inducements. In spite of the directness, sales promotions are fairly complicated and a rich tool of marketing with innumerable creative possibilities limited only by the imagination of promotion planners. Sales promotion is often referred to by the names of ‘extra purchase value’ and ‘below-the-line selling’. Today many companies in almost all sectors offering some sort of a promotion scheme. These sectors range from automobiles to beverages, from financial services to foods, from household durables to services, from household products to business products, from personal care to textiles and apparel. Sales promotion is any initiative undertaken by an organization to promote an increase in sales, usage or trial of a product or service (i.e. initiatives that are not covered by the other elements of the marketing communications or promotions mix). Sales promotions are varied. Often they are original and creative, and hence a comprehensive list of all available techniques is virtually impossible (since original sales promotions are launched daily!). Here are some examples of popular sales promotions activities: (A) Buy-One-Get-One-Free (BOGOF): - Which is an example of a self-liquidating promotion. For example if a loaf of bread is priced at $1, and cost 10 cents to manufacture, if you sell two for $1, you are still in profit - especially if there is a corresponding increase in sales. This is known as a PREMIUM sales promotion tactic. (B) Customer Relationship Management (CRM):- Incentives such as bonus points or money off coupons. There are many examples of CRM, from banks to supermarkets. (C) New media: - Websites and mobile phones that support a sales promotion. For example, in the United Kingdom, Nestle printed individual codes on KIT-KAT packaging, whereby a consumer would enter the code into a dynamic website to see if they had won a prize. Consumers could also text codes via their mobile phones to the same effect. (D) Merchandising: - Additions such as dump bins, point-of-sale materials and product demonstrations. (E) Joint promotions: - Between brands owned by a company, or with another company's brands. For example fast food restaurants often run sales promotions where toys, relating to a specific movie release, are given away with promoted meals. (F) Competitions and prize draws: - In newspapers, magazines, on the TV and radio, on The Internet, and on packs.
Ch.2 REASON FOR RAPID GROWTH OF SALES PROMOTION
1. Increasing Competition: - The air of change is gaining momentum after the introduction of economic liberalization. Due...