Sales Promotion in Marketing: Definitions, Elements, Objectives, Functions

Sales promotion refers to the activities which supplement and co-ordinate personal selling and advertising to attract customers to buy a product.

Sales promotion methods include displays, demonstrations, expositions, exhibitions and other non-recurrent selling efforts which aim at impelling spot buying action by prospective customers.

Sales promotion, as part of the total distribution system, plays a vital role in inducing the consumer to buy your product. Sales promotion covers so many activities that it is difficult to define it precisely.

According to Philip Kotler – “Sales promotion consists of a diverse collection of incentive tools, mostly short-term, designed to stimulate quicker and/or greater purchase of particular product/services by consumers or the trade.”

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Sales promotion devices can include premiums, coupons, contests temporary price reduction, free goods, letters to trade, literature, educational material, displays and trade shows.

Sales promotion takes into consideration the communication gaps that always exist between the producer and the consumer. Sales Promotion should therefore be closely coordinated with advertising and personal selling.

Learn about:-

1. Introduction and Meaning of Sales Promotion 2. Definitions and Concept of Sales Promotion 3. Elements 4. Aims and Objectives 5. Features 6. Items Used in Sales Promotion Efforts.

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7. Tools 8. Activities 9. Functions 10. Important Aspects 11. Factors 12. Methods of Evaluation 13. Relationship of Advertising and Personal Selling with Sales Promotion

14. Advantages. 15. Reasons for Rapid Growth (With Criticisms) 16. Points to be Considered for a Successful Promotion.

Sales Promotion in Marketing – Meaning, Definitions, Concept, Features, Types, Functions, Methods and Other Details

Sales Promotion – Introduction and Meaning

Sales promotion is a part of promotional mix. Sales promotion refers to the activities which supplement and co-ordinate personal selling and advertising to attract customers to buy a product. Sales promotion methods include displays, demonstrations, expositions, exhibitions and other non-recurrent selling efforts which aim at impelling spot buying action by prospective customers.

Sale promotion techniques are indirect and non-personal. Sales promotion activities are more common for consumer’s goods marketing than for industrial goods. Consumers are attracted by displays, packaging and publicity. Sales promotion devices are also a source of information to the customers.

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Sales promotion refers to the activities which supplement and co-ordinate personal selling and advertising to attract customers to buy a product. Sales promotion methods include displays, demonstrations, expositions, exhibitions and other non-recurrent selling efforts which aim at impelling spot buying action by prospective customers.

“Sales promotion means, any steps that are taken for the purpose of obtaining or increasing sales. Often this term refers especially to selling efforts that are designed to supplement personal selling and advertising and by co-ordination, help them to become more effective.”

The term sales promotion comprises a wide variety of promotional activities.

Therefore, the activities which link personal selling and advertising and make them effective are called sales promotion. The word sales promotion is made of two words, i.e. sales and promotion. Sales mean selling a product after charging a price and hand over the product and service.

Promotion means to increase. Therefore, sales promotion is a continuous process to increase the sales. Therefore, it can be said that any process whose purpose is to increase sales is sales promotion. When a retailer is giving a calendar or any other gift to his customers, he is following sales promotion.

Sales promotion is an effort that provides a special incentive to buy which may be in different forms. Sales Promotion offers to add some value to the product or service.

It may also provide an inducement to marketing intermediaries like wholesalers, retailers etc. It also attempts to accelerate sales, offering coupons with certain benefits, using limited-time offers. Basically it is a tool designed to speed up the selling process and maximise sales volume.

A sales manager is interested in any approach that will help persuade customers to buy. A variety of sales promotion activities have proved effective in selling merchandise in many markets abroad. This implies that international decision on promotion should include a consideration of sales promotion alongside of, or in place of expenditures for advertising and personal selling.

(i) Where incomes are lower, people are usually even more interested in “something for nothing,” such as free samples, premiums or contests.

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(ii) Legal constraints affect the international use of sales promotion materials. These legal constraints may restrict both the size and the nature of sample, premium or prize. However, these constraints are not crippling regulations, as evidenced by the amount of sales promotion activity going on in markets around the world. The laws are less as a barrier than a challenge to the ingenuity of the sales manager.

(iii) Cultural constraints also have a significant impact. The premium used must be attractive to the local consumer. Premiums will require greater adaptations than the products.

(iv) In addition to meeting local consumer desires, the other problem is the capabilities of retailers and other intermediaries.

Many sales promotion activities require some retail involvement that is, processing coupons, handling odd shaped combination or premium packages, posting display materials and so on. Getting the retailers to cooperate may be difficult where they lack the appropriate facilities. Some of the problems that arise where there are large number of small retailers are the following –

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The retailers are difficult to contact. They have limited space. They will often handle the materials in a way that the producer did not intend to.

A further challenge is to be found in the local competitive situation. On the one hand, a firm can feel itself “forced” to use a particular sales promotion because of the method the competitors are using. It may see no advantage to the particular gimmick, but nevertheless feels that it might lose sales without it.

The constraints in sales promotion, however, do not prevent the use of sales promotion by the international marketer. They do make it necessary to obtain good local information before designing a sales promotion program for a country. Once these constraints have been satisfied, the major question is how much of the promotional budget should be allocated to sales promotion.

The marketing manager should examine the relative pay-off of advertising, personal selling, and sales promotion expenditures which may differ by market. Comparative analysis of company expenses in different markets will be helpful in evaluating sales promotion ideas and in determining the budget that should be allocated for it.

Sales Promotion – Definitions and Concept

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The American Marketing Association defines it as follows:

According to Massott & Ruth, “Sales promotion consist of those cultivates that are designed to bring a company’s goals or services to the favorable attention of customers”.

According to William. J. Stanton, “Sales promotion is an exercise in information persuasion and influence”.

Louis J. Haugh defined sales promotion as “a direct inducement that offers an extra value or incentive for the product to the sales force, distributors, or the ultimate consumer with the primary objective of creating an immediate sale.”

As analysed by L. Percy “sales promotion, or what we call traditional promotion, is usually defined as any direct purchasing incentive, reward, or promise that is offered for making a specific purchase or taking a specific purchase-related action.”

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As expressed by John F Luick and Willim L. Zeigler, “sales promotion includes those activities, which enhance and support mass selling and personal selling and which help to compete and/or coordinate the entire promotional mix and make the marketing mix more effective.”

According to Philip Kotler, sales promotional tools have three distinctive characteristics:

1. Communication – They gain attention and usually provide information that may lead the consumer to the product.

2. Incentive – They incorporate some concession, inducement, or contribution that gives the value to the consumer.

3. Invitation – They include a distinct invitation to engage in the transaction now.

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According to John A. Quelch:

“Sales promotions are temporary incentives targeted at the trade (called trade promotions), or at end consumers (consumer promotions). While sales promotions generally aim to change purchase behaviour, they vary, whether they attempt to persuade trade customers or end consumers to buy a product for the first time, to buy more, to buy earlier, or to buy more often.”

Don E. Schulta and W. A. Robinson defined sales promotion as:

“Sales promotion is the direct inducement or incentive to the salesforce, the distributor, or the consumer, with the primary objective of creating an immediate sale.”

Sales promotion activities account for the bulk of most firms’ promotional budgets. Firms often use sales promotion to support the other elements of their promotion mix. Sales promotion is a set of non-personal communication tools designed to stimulate quicker and more frequent purchases of a product.

For example, in recent years McDonald’s implemented a sales promotion in which young customers received plastic figures of the cartoon characters The Smurfs in their Happy Meals. The promotion prompted more consumers to buy Happy Meals in an effort to add to their Smurf collections. Successful sales promotions like this have the potential to build short-term excitement and long-term customer relationships simultaneously.

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“Sales Promotion, consists of those marketing activities other than advertising, publicity and personal selling, that stimulate consumer purchasing and dealer effectiveness, such as- displays, shows, and exhibitions, demonstrations and various other non-recurring selling efforts not in the ordinary routine”. In short, Sales Promotion is any activity which supplements or improves the effectiveness of personal selling and advertising.

Sales promotion devices can include premiums, coupons, contests temporary price reduction, free goods, letters to trade, literature, educational material, displays and trade shows. Sales promotion takes into consideration the communication gaps that always exist between the producer and the consumer. Sales Promotion should therefore be closely coordinated with advertising and personal selling.

Sales in the life blood of business. The ultimate aim of production is sale. Sales revenue is the important source of income also. Industrial revolution and technical advancement have brought about a revolution not only in the production field but have also necessitated efforts for sales promotion.

Sales is not a self-generating activity. Acute competition has also increased the importance of sales promotion efforts on the part of the manufacturers. It is an integral part of the promotion mix of a company.

Sales Promotion is an important tool of management which lubricates the marketing efforts. Promotion is responsible for awakening consumer demand for a product. It is that aspect of marketing function which is concerned with the establishment of contacts with customers.

In the words of George W. Hopkins, “Sales promotion is an organised effort applied to the selling job to secure the greatest effectiveness for advertising and for dealers’ help.”

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When a small manufacturing enterprise has produced products which are ready for sale; when the sale price has been fixed after carefully evaluating the cost and market conditions; when the distribution channel is determined; then the entrepreneur has to concentrate on promotion and sales management. It is said that “nothing happens until somebody sales something.” Sales promotion is, therefore, the key to distribution.

Sales Promotion – Elements

Sales promotion consists of all those activities whose purpose is to supplement, to coordinate and to make sure more effective the efforts of the sale force, of the advertising department, and of distributors and to increase sales and otherwise stimulate consumers to take greater initiative in buying.

Sales promotion in a specific sense constitutes those sales activities that supplement both personal selling and advertising and coordinate them and help to make them effective, such as displays, shows and expositions, demonstrations and other non-recurrent selling efforts not in the ordinary routine.

Sales promotion is an important instrument in marketing to lubricate the marketing efforts. Today it is a necessary and not a luxury or a fashion. It is an investment not an expenditure, which can pay rich dividends.

It is an integral part of the marketing effort. For sales promotion, the following four means are used:

(i) Personal Selling

(ii) Advertising

(iii) Publicity

(iv) Public Relations

All the activities which are undertaken to increase sales or to enlarge markets or to introduce new products in the market, are parts of sales promotion. These include exhibition, demonstration, and distribution of coupons, so as to force the buyer to purchase the product, organisation of contests or quizzes and distribution of samples. Sales promotion is made clear with the help of advertising.

In general, all the efforts made by a firm to increase its sales are included in sales promotion. In the words of George W. Hopkins, Sales promotion is an organised effort applied to the selling job to secure the greater effectiveness for advertising and for dealer’s help.

Sales Promotion – Aims and Objectives

The ultimate aim of sales promotion is the same as that of advertising and personal selling, i.e., increasing the sale of the goods and services. The objectives, however, could be to introduce new products, to attract new customers to induce present customers to buy more, to increase sales in slack season to encourage dealers to increase their stock of goods. Dealers are therefore, given quantity discounts to encourage them to purchase goods in large quantities.

Thus techniques are generally used to convert the awareness of the consumer created by advertising into a concrete buying decision. Sometimes these techniques are used independently of advertising.

The sales promotion programmes are often designed to accomplish the following objectives:

1. To introduce a new product.

2. To increase the inventories of middlemen and consumers.

3. To increase a products rate of use among existing consumers.

4. To attract new customers.

5. To counter a competitors sales promotion and other activities.

6. To reduce the extent of a seasonal decline in sales.

7. To make it easier for salesmen to secure more orders and arrange displays in retail stores.

Sales Promotion in Marketing – Top 3 Features

1. Objective Based:

Different sales promotion policies are directed towards achieving certain objectives like maintaining sales during off season, to increase sales during a festive season, to combat competition, to clear stocks, to improve image, to promote new products, etc.

2. Short Term Approach:

Sales promotion tools are short term strategies to attain high sales volume immediately. Different sales promotion offers are meant for a short term purpose. Companies make special selling efforts for the specific time period by offering short-term incentives and schemes at consumer level, dealer level or at salesmen level.

3. Non-Recurrent:

Sales promotion activities are non-recurrent selling efforts. Excessive use of sales promotion may affect sales and reputation of company adversely. For instance a frequent offering of discount on purchase to customer, or discount at a specific time during the year or after a specific time interval may result into a speculative attitude amongst customers, as they may hold back their purchases till the discount is offered and purchases only when discount is offered thus damaging the regular sales.

Sales Promotion – Items Used in Sales Promotion Efforts

The following items are used in sales promotion efforts under different conditions:

Advance Premium is a gift given before the sale, usually in return for a promise to buy later or to become a regular customer.

Bill enclosures are small pieces that are mailed in the same envelope with the monthly statement. Brochure is book bound or stitched or stapled in semi-permanent form carrying a complete presentation. Usually more detailed than a catalogue, it gives useful information relating to skills and services. Catalogue is a complete and current listing of all products information necessary to place an order. Circular is an inexpensive hand bill that may be distributed freely.

Counter display covers a wide variety and quality of top-of-the-counter displays, usually made to accommodate one or more of the actual products.

Demonstration means public use of the product, such as making and serving coffee from a coffee maker. Envelope Stuffers are small pieces of giveaway literature used either as bill enclosures or for hand out pieces.

Free offers are free gifts to attract customers in anticipation that a sale of the product will be made.

Giveaways are items of small value packed together with the merchandise such as a measuring spoon given with Chavanprash, or a tooth brush given with toothpaste, or a mug given away with Bournvita tin.

Handbills are printed pieces usually distributed by hand to passersby or within a certain marketing area.

Inserts are printed pieces inserted in the daily newspapers.

Pamphlets are small booklets often used for educational or instructional purposes. Point-of-Purchase Displays are displays which help the customer make a selection without help from the salesperson. This is particularly useful for impulse merchandise.

Premium is an article of merchandise used as an extra inducement to buy another product. Sampling involves distributing merchandise to the trade or to the public in anticipation that further purchase will result from a free trial.

Trade Fairs are exhibitions open to trade only for a certain period of the day, while open to the public at a different time of the day. Visual aids are that part of the sales presentation which demonstrates by being seen, such as- charts, slides, and the like.

In conclusion, it may be stated that sales promotion, just as all other phases of marketing, should be inter-related and compatible with the entire distribution system of the company. The manufacturer must keep the needs of the consumer in mind. The consumer is said to be the king or queen.

Sales Promotion – 7 Tools of Sales Promotion

A variety of sales promotion types are available to the small business owners. Some of them are discussed below. Some authors also term them as tools of sales promotion.

1. Distribution of Free Samples – It is a very effective way of sales promotion. When consumers get free sample of the goods which is shortly to be introduced or has just been introduced in the market, they get an opportunity to test the product and examine its merits before they decide to purchase it.

2. Coupons – It is also an effective promotional tool. Coupon is a sort of certificate which is kept inside the package. It is also distributed by mail or door-to-door. The customer presents the coupon to a retailer concern and gets the goods delivered. This gives the consumer to test the quality and fitness of the product offered for sale to his own conditions. The ultimate motto is to increase the sale of an existing product or to introduce a new product.

3. Premiums – In this method, a purchaser is offered another product free of cost or at less than its actual cost. Premium as a promotional tool is used for various purposes like to introduce a new product, to attract new customers, to improve off season sale, to discourage competitions, etc.

4. Price-Off Promotion – This device of consumer oriented sales promotion provides an opportunity to the purchasers to get the product at a reduced price. This device is generally used to attract consumers for a particular period on a particular occasion. It is available in two forms – first, the reduction in price and the second, more than one item is packed and made available at a reduced price. We find this device generally at the time of festivals.

5. Fairs and Exhibitions – Display of goods in fairs and exhibitions also leads to sales promotion. Now-a-days, fairs and exhibitions are held at national and international levels. In such exhibitions, there is not only product promotion, but the industrialists also get some innovative ideas which prompt them to develop their products for benefit of all.

6. Buying Allowance – It is a short-term device which is used to induce the middlemen for promoting sales. In this method, the middleman gets buying allowance after purchase of goods more than a fixed point. It is generally paid in cash. In few cases it is also deducted from the total payment.

7. Free Goods – This is also an important sales promotion device meant for the middlemen. In this method, the middlemen get few goods free of cost, particularly after crossing the minimum limit.

These are some of the commonly found sales promotion measures practiced by the modern small business enterprises.

Sales Promotion – Sales Promotion Activities: Dealers Sales Promotion Schemes and Consumers Sale Promotion Schemes

Sales promotion activities classified into the following:

1. Dealers Sales Promotion Schemes

2. Consumers Sale Promotion Schemes.

1. Dealer Sales Promotion Schemes:

In such cases, promotional activities are to induce the dealers to keep a very large stock with them. For example, certain units of the products are given free supply advertising material to their dealer, special displays and shows of the products may be arranged.

2. Consumer Sales Promotion Schemes:

The different kinds of sales promotion schemes and methods are used to attract the customers:

i. Samples – Distribution of samples is suitable for introducing new products. But this scheme is very costly.

ii. Price off – Many producers introduce price of offer to the buyers. DRISH SHOES introducing 50% discount scheme on shoes.

iii. Free Goods – It is in offer of a certain amount of product free of cost on purchases of a particular product. For example, Free Car Stereo with every UNO CAR.

iv. Premium – It is an offer of a certain amount of product free to the customers who buy a specified quantity of a product. For example, buy any two Excalibur shirts or trousers, get cotton shirt worth Rs. 545/- Free.

v. Demonstrations – Demonstrations are arranged in store, at fairs and exhibitions. These are most often employed for household appliances.

vi. Coupons discount – A coupon is generally a certificate which offer price reduction to consumers on a particular product.

vii. Instalment Offer – The scheme has been, introduced to the consumers to take home high priced product after paying a small amount and offered the facility of paying the balance amount in monthly installments. For example, DAEWOO Refrigerators introducing instalment scheme.

viii. Quiz Contests – There may be customers quiz contest and dealers contest. These contests are held on radio, newspapers and T. V. For example, “JEETO CHAPPAR PHAAD KE” contest of VEDIOCON BAZUCA dealer and others dealers

ix. Exchange offer – Recently, several companies have been using exchange offers to promote their products. For example, Akai 21″ new coloured T.V. in exchange for any old colour T.V. and save up to Rs. 6000/- KINETIC EXCHANGE OFFER. Exchange your old scooter for a brand new Kinetic without paying anything, balance at 0% interest.

x. Money Refund Offer – Offer of a refund of money to consumer, for mailing in a proof of purchase of a product.

xi. Display of Products – The retailers organize attractive display of certain products in the windows of their shops.

Companies use sales-promotion tools to draw stronger and quicker buyer response. Sales promotion can be used for short-run effects such as to dramatize product offers and boost sagging sales.

Sales Promotion – 4 Important Functions (With Functions of Sales Promotion Department)

The following are the functions of sales promotion:

1. To Motivate Customers:

Sales promotion motivates customers to purchase goods. In sales promotion, free samples of goods are distributed among customers and prize winning competitions are organised. Assurance to return money is given and price is reduced. All these activities motivate customers to buy products.

2. To Help Middlemen:

Many middlemen work in business. Their purpose is to earn profit by increasing sales. Sales promotion helps in their work.

3. To Help Salesmen:

Sales promotion department also helps salesmen. It makes contact with customers and provides information to salesmen.

4. To Work for Advertising Department:

Sales promotion department also helps in the functions of advertising department. It performs various types of advertising functions i.e. to prepare an advertising copy and to plan advertising programmes.

A business-concern sets up a department for sales promotion. This department completes all the functions related to sales. This department removes the distance between advertising and personal selling.

Harry Simous has described the following functions of sales promotion department:

1. Institutional Functions:

In this department the functions of company’s production and functions related to the activities of salesmen are performed.

2. Coordinating Functions:

Under this department the coordination is established between the departmental activities, i.e. to contact sales and production departments.

3. Merchandising Functions:

This department covers the functions of advertising, competition, marketing activities and business activities.

4. Publicity Functions:

The publicity functions are also performed by sales promotion department. This department also covers the fields of advertising, planning, presentation, etc.

5. Educational Functions:

This department also performs educational functions. The functions of correspondence, research and analysis are included in it.

6. Marketing Functions:

Marketing is a part of sales promotion department. This department performs the functions of marketing, i.e. functions relating to retailers and wholesalers, sales demonstration, decorations and to find prospective customers.

Sales Promotion – Important Aspects for Making Successful Sales Promotion

The following aspects are to be considered for making a successful sales promotion:

(i) Maximum effect at minimum cost.

(ii) Motivates consumers to buy more.

(iii) Offers what the consumers want.

(iv) Highly visible sales promotion.

(v) Promotions must be legal.

(vi) Promotions must be implemented efficiently.

(vii) Promotions to motivate sales force and channel members.

In marketing, sales promotion is one of the four aspects of promotion. (The other three parts of the promotional mix are advertising, personal selling, and publicity/public relations). Sales promotions are non-personal promotional efforts that are designed to have an immediate impact on sales. Sales promotion is media and non-media marketing communications employed for a pre-determined, limited time to increase consumer demand, stimulate market demand or improve product availability.

Sales Promotion – Factors that Affect Sales Promotion Decision

Before taking a decision on its sales promotion strategy for foreign markets, a firm has to consider a large number of factors.

Some of them are:

Factor # 1. Corporate Objectives:

The objectives of the firm affect the promotion decision to a great extent. A firm may have different objectives in different foreign markets or different firms may have different strategy in the same market. Firm’s level of commitment to international operations will determined its promotion strategy.

The objective of the firm in international marketing may be to create its image on a long term basis or it may be to maximize its cash resources or profitability in a short time and then withdraw itself from the market. A firm may want to sell its product only to a few customers whereas another firm would like to reach to the masses.

The promotion strategy would be different in each case. A firm’s promotion strategy wanting to sell only to a few customers will be quite different from a firm wanting to sell its product to the masses or to develop its own image in the market. Thus corporate objective shall determine the promotion strategy of a firm.

Factor # 2. Media Availability:

A media which is easily available in domestic country need not necessarily be available in the foreign market. Though one may generalize that identical media are available in most industrialized countries, one should keep in mind that they may vary in institution quality and communications value. In such circumstances, the promotional message, theme and other properties of the media may be adjusted.

But the task of international marketer is compounded where a certain type of media is just not available. For example, in some developing countries, television is not available for commercial communications. India has recently introduced the commercial service on TV network. In such cases, TV cannot be used as a promotion media. Countries having low rate of literacy, may not have sufficient number of journals for advertisements. Hence, the marketer cannot make use of journals and may have to be shifted to other available media.

Factor # 3. Nature of the Product or Services Offered:

The nature of the product or the services offered by the firm is another factor that will determine the promotion strategy of a firm. Certain products are standardized and their promotional themes are also standardized. In such cases standardized promotional strategy can be used throughout the world.

For example soft drinks like coca cola, satisfy the same basic need – thirst of the consumers in different countries. Hence it is possible for a firm selling soft drink to use common promotional themes in all the markets. Besides, there are certain other standardized products which are used in the same form, with slight modifications. The promotional themes and programs may be used in the standardized form or with slight modifications.

As against these products, there are certain other products which are not standardized such as ready – made garments. Such products are differentiated from market to market. As these products do not satisfy the same need in all markets of the world, the standardized promotional strategy cannot be used, to illustrate, garments in France satisfy the fashion need whereas in developing countries, they meet the basic clothing need. Here the standardized promotional strategy cannot be used in the two markets.

Factor # 4. Financial Considerations:

Financial resources of the firm may have serious constraint in deciding the promotion policy. A firm, not having sufficient financial strength, cannot use a strategy involving a heavy expenditure. As against this, a firm having a good financial background, may use any method which may prove useful to the firm.

For example, most firms from developing countries like India do not rely more on advertising because it is expensive. They prefer direct mailing to customers in foreign countries or to participate in fairs and exhibitions. These firms, at times resort to consortia advertisements, in foreign markets.

Such advertisements are often placed by the Commodity Boards or the Export Promotion Councils. But firms having large financial resources, on the other hand, prefer to use advertising and other sales promotion methods to promote their products in world markets. Thus, financial resources of a firm put a limit on the promotion policy and promo tools of the firm.

Factor # 5. Environmental Constraints:

Finally, the firm should evaluate the environmental factors like the level of economic development of a country, the disposable income of the people, consumer’s preferences and attitudes towards advertising and sales presentation, competitor’s promotion strategies and the legal requirements in a given foreign market.

Broadly, a firm should assess the cultural and legal side of the environment and the competitor’s strategies followed in that market:

(i) Cultural Environment:

The culture of the people in a given market influences their attitudes towards the promotion program of a company. If people believe that the advertisement is nothing but a bundle of lie, the promoter should avoid this tool. People in some country are against foreign goods because they violate their cultural traditions, the firm would have to adopt a promotion program which would remove this bias.

The marketer should make endeavor to educate the people on the benefits which would accrue to them through the product use over their traditional products. The better way in such cases may be to localize the product. The marketer may sell the product to the agents or distributors in the foreign markets and they may sell it under their brand names in the manner most suitable to the country’s culture.

(ii) Legal Constraints:

The legal requirements as regards promotion techniques must also be fulfilled by a marketer. Legal system in a target foreign market may be different from that of the domestic country which may seriously affect the promotion decision of the firm. The international marketer must have a clear understanding of such requirements before going for a particular promotion strategy or drawing up a promotion program. Although these legislations vary from country to country, one may observe that there are certain common restrictions in varying degree in almost all countries.

These are:

(a) There are specific prohibitions on advertisements on certain products like wine, cigarettes and tobacco, and certain types of drugs etc. Most countries require that Cigarette Company must warn their consumers against the injurious effects of smoking hence, it is statutorily compulsory to print ‘smoking is injurious to health’ on all packs and advertisements.

(b) Certain words or expressions that may be misinterpreted by consumer or may deceive them are prohibited to use.

(c) There are legislations which prohibit the promoter to make tall claims about their products. In countries where such legislations do not exists the trade has developed its own code of advertising which acts as a self-disciplinary system of control.

(d) Some countries, mainly Islamic countries, ban advertisements which are viewed as obscene.

(e) In certain countries, requirements on packaging such as inscribing the name, address, weight and contents of the inside product, should be strictly observed.

The above legal requirements and there may be certain others which may be peculiar to the target market, must be observed by an international marketer before designing a promotion policy for the market. Any carelessness to such provisions may cause harassment to the marketer.

(iii) Competitors’ Promotional Strategy:

In designing its promotion policy or strategy for the target market, a firm should not ignore the promotion strategies, policies, program and promo tools undertaken by the competitors in the market. The firm should study them and then decide on the promotion policy which is better or if not better, it should at least be similar to competitors’ policy. This, however, depends very much on the company’s resources, culture and attitude of the people, etc.

Thus, the international marketer must consider the above factors into consideration before jumping to any promotion policy. He must not base promotion decision on his hunches or intuition. He should not do what others are doing. He must study and evaluate all the factors relevant to reach a decision for the promotion of his product in the target market.

Sales Promotion – Methods of Evaluation Sales Promotion Techniques

For the sound evaluation of sales promotion techniques, the producers use the following methods:

1. Sales Data Method:

The evaluation of sales promotion programme on the basis of sales data is a widely accepted practice. In this method, sales volumes or market share prior to the introduction of any promotional technique, during and after, are measured.

For example, if market share of a product, before the introduction of sales promotion is measured as 4 per cent, during the period 10 per cent and immediately after the programme 6 per cent, and there after increased to 8 per cent, this shows that new customers are created by the sales promotion programme, and thus sales have been increased.

In case the sales were reduced to the pre-promotional level, after the closure of promotional programme, it is clear that the promotional technique could only change the time pattern but no demands. The sales promotion manager has to identify whether the change in demands were due to the use of promotional techniques or due to some other factors like competition, economic condition, or change in customer characteristics.

2. Consumer Panel Data:

Consumer panel data helps to identify that how the customers have been motivated by the sales promotion techniques for larger purchases. How much quantity of products they have purchased and what changes have been noticed in their buying behaviour after the promotion programme. The consumer panel data also helps to know various classes of the consumer such as old or new customers, youths or grownups, women/men, industrial or general customers, etc.

3. Consumer Surveys:

Consumer survey method collects various kinds of information about the consumers so as to analyze the effectiveness of sales promotion.

The analysis of such information may help to know the following conclusions relating to the consumers:

(i) The number of consumers who have remembered the technique used.

(ii) Their views and opinions about these techniques.

(iii) The number of consumers that have been benefited from the promotional techniques.

(iv) How these techniques have been helpful in influencing the buying behaviour and brand choice of customers?

(v) Do they suggest for any change or improvement in the technique used?

(vi) Are these techniques helpful in improving the image of the firm?

(vii) What they feel about using these techniques throughout the year?

On the basis of the above conclusions, arrived from the analysis, success or failure of these techniques can be measured.

4. Experiment Method:

The effectiveness of sales promotion techniques may also be measured by experimenting them in alternative selected markets. However, these arises certain difficulties in evaluating the sales promotion programme through experiments.

The important difficulties are:

(i) The customer becomes deal-prone rather than advertisement prone. This means that the customers are mainly interested in the purchase of those items which offer premiums or other promotional devices. Long-term brand loyalty does not exist at all.

(ii) The promotional plans are, in certain occasions found to be too costly. When the expected results are not achieved, the expenses made on sales promotion increase the marketing costs, thereby increasing the price of the product.

(iii) There are difficulties in getting cooperation of middlemen.

The sales force do not like in such plans of the producer.

In spite of these problems; sales promotion programme remains as an important ingredient of promotion mix. For a successful and effective sales promotion programme, the following factors are kept in view – (a) A clear definition of sales promotion objects, (b) Selection and formulation of a most suitable method, (c) Pre-testing and effective implementation of the programme and (d) Evaluation of the programme for measuring its effectiveness.

Sales Promotion – Relationship of Advertising and Personal Selling with Sales Promotion

Marketing is concerned with the movement of goods and services from the producer to consumer.

According to L.K. Johnson, “Sales promotion consists of all those activities whose purpose is to supplement, to coordinate and to make sure more effective the efforts of the sales force, of the advertising department, and of the distributors and to increase sales and otherwise stimulate consumers to take greater initiative in buying.”

Sales promotion is one among the three pillars of promotional mix. The other two pillars are personal selling and advertising.

According to Dr. Burden, “Advertisement includes those activities by which visual or oral messages are addressed to the public for the purpose of informing them and influencing them either to buy any merchandise or to act to be inclined favourably towards ideas, institutions or persons features.”

According to Cundiff and Still, “Personal selling is basically a method of communication. It involves not only individual but social behaviour each of a person in face-to-face contact – salesman and prospect influence the other.”

Sales promotion is the connecting link between personal selling and advertising. Sales promotion is an important and specialised function of marketing.

Advertising and sales promotion, being parts of the marketing mix, should be integrated with the marketing objectives and coordinated with other selling effort such as the efforts of salesmen. Salesmen can report about the effects of the different advertising and other promotional appeals as they are in close touch with the market conditions.

Thus, sales promotion is designed to supplement and coordinate personal selling and advertising efforts.

Sales Promotion – Advantages to Manufacturer, Middlemen and Customer

Considering the global economics, the expansion minded marketers, in order to take the advantage of growth opportunities in various regions of the world, developed different promotional schemes and techniques. The growth of promotional activity and development of promotional concept have extended the field of marketing.

The manufacturers should constantly device new methods to increase the volume of sales. Sales promotions bring advantages to the providers, the middlemen and to the consumers.

It may be analysed as follows:

Advantages to the Manufacturer:

1. Sales Promotion ensures expansion of sales.

2. The demand for a new product may be generated.

3. It makes advertisement and personal selling more effective.

4. With the increase in sales and demand it helps to reduce the unit cost.

5. It helps to satisfy the customer more effectively and which in turn will enhance the goodwill of the manufacturer.

6. It helps the manufacturer to maintain better control on the market.

Advantages to the Middlemen:

1. It is easier for the middlemen to sell the product popularly advertised and promoted.

2. Promotion encourages larger demand. The middlemen find it easy to sell the product which has popular demand.

3. The middlemen will feel elated to deal with the product widely known to the consumers.

Advantages to the Customer:

1. Consumers being aware of the product and its features through proper sales promotions, feel confident to purchase the goods.

2. The information regarding the use and the benefits of the product induce the prospective consumer to purchase.

3. Promotion efforts also make the articles available to the customers at competitive rates.

4. Promotion also helps to raise the standard of living of the consumers.

Sales Promotion – Reasons for Rapid Growth in Sales Promotion (With Criticism)

The purpose of sales promotion is to increase sales. Sales promotion is very important in this modern age. Sales promotion increases demand.

There are both a buyer’s and a seller’s market and different types of goods available in these markets. The market where goods are available in plenty as compared to their demand is called a buyer’s market and when supply is less than demand it is called a seller’s market. There are a buyer’s as well as a seller’s market in our country.

The market which is a seller’s market today may become a buyer’s market tomorrow. This sort of trend is being seen even in our country where many goods of a seller’s market have turned into the goods of a buyer’s market. Products like cloth, sewing machine, fridge, tools and furniture are the examples. A seller’s market is not everlasting. However, a seller’s market and a buyer’s market may change form gradually. Sales promotion is important in both the markets.

Criticism of Sales Promotion:

The following are the weaknesses of the sales promotion:

1. Incentives – No real incentives and concessions given under sales promotions.

2. Temporary Schemes – Sales promotion activities are non-recurring in their use and having seldom rescue values.

3. Damages the Brand Image – Too many incentives given under sales promotion damages the brand image.

Sales Promotion – Top 14 Points to be Considered for a Successful Sales Promotion

1. Hire an advertising agency, public relations firm or marketing specialist to analyse your current advertising strategy or develop one for you,

2. Ask customers to bring in the flyer or postcard they received in the mail so that you know which advertisement strategy was effective,

3. For every advertisement you place, whether print or broadcast, include a message that asks customers to mention the ad when they come in,

4. Monitor customer traffic based on the type of medium used for communication,

5. Match revenue increases with the advertising medium and style of ad used during a particular time period,

6. Compute the CPT (Cost per thousand) for different communication media,

7. Hire interns, trainees with care and train them before sending them to shop-floor.

8. Establish contacts with the local media,

9. Position the owner or store manager as a retailing expert,

10. Call local news editors or send news releases to inform them of upcoming in- store events, such as open houses, tent sales, product demonstrations or your store’s involvement in a charity or community activity,

11. Establish a community- oriented strategy,

12. Sponsor charity or community events – they frequently garner media attention,

13. Write a column for the local newspaper,

14. Create a database for use in direct mailing.