Everything you need to know about the methods of sales promotion. Sales promotion is needed to attract new customers, to hold present customers, to counteract competition, and to take advantage of opportunities that are revealed by market research.
Methods used in sales promotion include coupons, samples, premiums, point-of-purchase (POP) displays, contests, rebates, and sweepstakes.
For a marketer resorting to sales promotion, a variety of tools and techniques are available.
Sales promotion letters, catalogues, point of purchase displays, customer service programmes, demonstrations, free samples, discounts, contests, sweepstakes, premiums and coupons are the commonly employed methods of sales promotion.
Some of the methods of sales promotion are as follows:-
1. Consumer/Customer Promotion Method 2. Trade Promotion Method 3. Combined Promotion Method 4. Sales Force Promotion Method 5. Rebate 6. Discount 7. Partial Refund 8. Free Samples
9. Quantity Gifts 10. Product Combination/Bonus Offer 11. Packaged Premium 12. Prize Contest 13. Lucky Draw 14. Trade Fairs and Exhibitions 15. Word – of – Mouth Promotion 16. Telemarketing and a Few Others.
Sales Promotion Methods, Tools and Techniques
Methods of Sales Promotion – Free Sampling, Money Back and Rebates, Loyal Customers Reward Point, Bonus Packs Offers, Mobile Couponing and a Few Others
Sales promotion is needed to attract new customers, to hold present customers, to counteract competition, and to take advantage of opportunities that are revealed by market research. Methods used in sales promotion include coupons, samples, premiums, point-of-purchase (POP) displays, contests, rebates, and sweepstakes.
1. Free Sampling – Consumer gets one sample free, after their trial and then could decide whether to buy or not, this helps in boosting sales.
2. Offer of Price discounts/price deals – A temporary or seasonal reduction in the price, such as flat 50% off, is a good technique of attracting customers.
3. Money back and Rebates – Consumers are offered money back if the receipt and barcode are mailed to the producer.
4. Loyal customers Reward Points – Consumers collect points, miles, or credits for purchases, and redeem them for rewards, gifts or money.
5. Price-pack/Bonus packs offers – The packaging offers a consumer a certain percentage more of the product for the same price for instance, ’25 percent extra’, ‘10% extra’, is seen mostly on goods. In yet another type of deal a customer is offered two products for the price of one.
In this scenario, bonus pack is disguised as a gain because buyers believe that they are obtaining a free product, though bonus pack is often wasted and is viewed as a “loss” for the consumer as the customer may not want the free product that came along with the purchase.
6. Gift Coupons or cash back coupons – coupons have become a standard mechanism for sales promotions. Many times the discount coupon issued can be redeemed on the next purchase only.
7. Mobile couponing – Coupons are available on a mobile phone. Consumers show the offer on a mobile phone to a salesperson for redemption.
8. Loss leader policy – the price of a popular product is temporarily reduced below cost in order to stimulate other profitable sales.
9. Free-standing insert (FSI) – A coupon booklet is inserted into the local newspaper for delivery, though it may not give the real benefit as mostly customers do not carefully see the pamphlets or stickers in the newspaper.
10. Attaching a small sample in the leading newspapers – especially on weekends or holidays, many companies stick their free samples such as a shampoo pouch as a sales promotion gimmick. In fact this gets noticed and the consumer feels happy on receiving a small gift like this.
1. Dump bin – this is a very popular method with big stores or Big Bazarr where bins full of products dumped inside are kept at various strategic places in order to attract attention.
2. Aisle interrupter – A sign is put up which juts into the aisle from the shelf.
3. Dangler – in order to make a customer take notice, a sign is hanged that sways, every time when a consumer walks by it.
4. Glorifier – A small stage is usually built that elevates a product above other products and glorifies it.
5. Wobbler – it is a sign that jiggles or wobbles and makes the kids, in particular, feel very good about it. Many big departmental stores keep it as a sales promotion gimmick.
6. Lipstick Board – Aboard is built on which messages are written in crayon. This also is an eye catcher and attracts attention.
7. Necker coupon – A coupon placed on the ‘neck’ of a bottle indicating that the particular brand or a particular size has a scheme on it.
1. Trade contest – A contest is organized with an intention to reward retailers who have sold big quantity of the product.
2. Offering Trade discounts – These are payments to distribution channel members for performing a particular function or achieving a certain target.
3. Trade credit period – a bigger trade credit period is offered to the most loyal and big dealer as an incentive.
4. Point-of-purchase displays – this technique is used to create the urge of “impulse” buying and selling the product on the spot.
5. Training programs – dealer employees are trained in selling the product and usually the training programme is kept at attractive destinations.
6. Push money or extra commission – it is also known as “spiffs” wherein extra commission is paid to retail employees to push products.
7. Trade allowances – this refers to short term incentive offered to induce a retailer to stock up on a product.
8. Dealer loader – An incentive given to induce a retailer to purchase and display a product. This is the reason we see some products displayed by the store some better products may not be seen.
9. Trade shows – Thousands of manufacturers display their wares and take orders at trade shows. Trade shows provide unique opportunities. First, trade shows provide a major opportunity to write orders for products. Second, they are a chance to demonstrate products, provide information, answer questions, and be compared directly with competitors.
10. Sales meetings – Sales meetings are usually sponsored by manufacturers or wholesalers. Whereas trade shows are open to potential customers, sales meetings are targeted to the company sales force and/or independent sales agents. These meetings are usually conducted regionally and directed by sales managers and their field force, to explain the product or the promotional campaign, or simply to answer questions.
A fence sitter is a consumer who remains neutral or undecided amongst various alternative products. Such a consumer can be motivated to jump on the side of the marketer through effective advertising.
Brand switching is also known as brand jumping, brand switching is the process of choosing to switch from routine use of one product or brand to steady usage of a different but similar product. Much of the advertising process is aimed at encouraging brand switching among consumers, thus helping to grow market share for a given brand or set of brands.
Methods of Sales Promotion – Consumer/Customer Promotion Methods, Trade Promotion Methods, Combined Promotion Methods, Sales Force Promotion Methods
For a marketer resorting to sales promotion, a variety of tools and techniques are available. Sales promotion letters, catalogues, point of purchase displays, customer service programmes, demonstrations, free samples, discounts, contests, sweepstakes, premiums and coupons are the commonly employed methods of sales promotion.
1. Consumer/Customer Promotion Methods:
The consumer promotion methods of sales promotion are the methods which directly encourage consumers to buy the product in more and more quantity.
These methods may be as follows:
(i) Distribution of Free Samples:
Under this method, the producer distributes free samples of the product to consumers. They are also given to introduce a new product and expand the market. It increases the sales volume when the product is new to customers. It is an effective device when the product is purchased often, i.e. soaps, detergents, tea, coffee etc.
It is a method of demand creation. Sampling gives a change to consumers to compare products with other substitutes. Samples are given to doctors by medical representatives. The specimen copies of books are given to teachers. The idea behind this is that they recommend these products for use to patients or students.
Coupons are supplied along with products. A coupon is a certificate that reduces a price. When a buyer gives a) coupon to the dealer, he gets the product at a lower price (Regular price is Rs.100; with a coupon it may be Rs.80). Coupons (same as money) are accepted as cash by retailers.
Coupons normally perform two specific functions for the manufacturer. Firstly, they enthuse consumers to exploit the bargain. Secondly, they serve as an inducement to the channel for stocking the items.
The manufacturer thus succeeds in attracting consumers as well as in prompting the channel to stock the merchandise by introducing coupons. They are useful for introducing a new product as well as for strengthening the sale of an existing product.
According to John F. Luick and Zieglar, “A coupon is a certificate that when presented for redemption at a retail store, entitles the bearer to a stated saving on the purchase of a specific product.”
(iii) Price Reduction or Price off Promotion:
It stimulates sales during a slump season. It gives a temporary discount to the consumers, i.e. goods are offered at a rate less than the labelled rate. Fans are sold at a reduced rate in rainy and winter seasons.
For example, Hawkins pressure cookers have come up with several sales promotion schemes during the last few years.
For sales promotion different contests are conducted by producers.
According to John F. Luick and W.L. Zieglar, “A contest is sales promotion device in which the participants compete for a prize or prizes on the basis of their skills in fulfilling a certain requirement, usually analytical or creative.”
In these competitions questions are put to customers. Sometimes pictures are printed to test the general knowledge of customers and they are asked to give the detailed description of these pictures. No fees are charged from customers for participating in these competitions.
But they have to send the empty packets of the product, cash memo, prescribed entry information form and necessary information. The purpose of these competitions is to find prospective customers and to circulate a new product.
It is the instruction to educate consumers in the manner of using the product. It is a promotional tool to attract the attention of consumers. When products are complex and of a technical nature, demonstration is necessary, e.g., computers, field machinery, electrical pumping set, etc. Demonstration is done in front of consumers for mixer, wet grinder in retail shops, etc.
Premium method is also used to attract the consumers towards the product. In this method, consumers are provided some other useful product freely along with the purchased product. This is an effective method which is practised today for sales promotion.
The purpose of giving premium is to motivate new customers. But its main purpose is to induce the old customers of that product. According to George Christopolous, “A premium is an item of merchandise that is offered at cost or at relatively low cost as a bonus to the purchases of a particular product.”
According to Alfred Gross, “A premium is an article of merchandise or other thing of value offered as an inducement to purchase a product or service.”
The article of premium is packed in that packet and information is written that packet contains some article. Sometimes the information regarding premium item is printed on the packet or customers are directed to collect the premium item from the shopkeeper. Sometimes, there is a coupon inside the packet which is returned to the shopkeeper and premium item is collected.
(vii) Money Refund Offers:
It is the most important method of sales promotion. If the purchaser is not satisfied with the product, money is refunded. It is stated on the package. It creates new users and strengthens brand loyalty.
(viii) Fairs and Exhibitions:
India is a country in which various fairs and exhibitions are organized in different times. These fairs and exhibitions are organised on local, regional, state, national or even at international levels.
Businessmen and manufacturers take part in these fairs and exhibitions and display their goods. Since these fairs and exhibitions are visited by a large number of persons, businessmen and manufacturers get a good opportunity for advertising their goods.
(ix) Special Prizes:
Under this method, every purchaser of the product is given a prize coupon during a certain period. All the coupons distributed during this period are put into a box and a lottery is drawn therefrom. Winners are given some attractive prizes. Thus, this scheme also lures consumers to purchase and use the product.
(x) Aftersales Service:
Under this method, the producer gives a guarantee to customers to maintain the product for a certain specified period. Aftersales service and warranty increase the sale of the enterprise.
Trade promotion methods are also known as dealers’ promotion methods. These include all the methods which are adopted with a view to encouraging dealers and distributors to purchase and resell the product in more and more quantity.
Dealers’ promotion methods include the following methods:
This method is aimed at stimulating and motivating distributors, dealers, sale-staff, etc. This is an indirect way of boosting sales. This type of contest is conducted at the level of retailers and wholesalers. This is in the form of window display, store display, sales (volume), etc. A prize is awarded for the outstanding achievements.
(ii) Buying Allowance Discount:
Buying allowance discount increases the sale of the manufacturer and the profits of the dealer. The buying allowance or discount may be given at a fixed percentage on each minimum quantity of the product purchased during a stated period of time.
A premium is an article of merchandise or other thing of value offered as an inducement to purchase a product or service.
Premiums are used by wholesalers to induce retailers to promote or push their products. The objectives of premiums are generally to
(a) Induce consumers to switch from a competitor’s product to the seller’s,
(b) Induce consumers to try larger sizes of products,
(c) Increase off-season sales,
(d) Introduce a new product.
In this method, producers announce some incentives to the dealer. It is also an effective tool for increasing sales. For this purpose special prizes are fixed for dealers if they achieve their pre-determined targets.
(v) Credit Facility:
Under this method the producer allows credit to their dealers, based on the quantity purchased by them. This enables them to purchase a bulk quantity.
(vi) Advertising Allowance:
Under trade promotion methods, advertising allowance is also given to the dealer. The allowance is offered to the dealer to display the manufacturer’s product in the shop.
Under this method, producers give attractive and useful articles to dealers against their orders. The articles are transistor, radio, television-set, clock, watch, etc. Some manufacturers offer free holiday family tours to the dealers who place more orders.
Through this method, producers train their dealers so that they may make more and more sales of products easily and smoothly.
(ix) Dealers Listed Promotion:
This is the most important method of sales promotion. Listing dealers is a part of advertising. It gives a list of dealers or retailers who stock the product or who are engaged in its promotion. For example, the advertisement of L.G. product in newspapers carries the names of the stockists of their products. The consumer can buy products from anyone of the listed dealers. This method induces dealers to stock their products.
(x) Point-of-Purchase Advertising:
The point-of-purchase display is the silent salesman that calls the attention of the customer to the product in the hope of initiating buying action. Point-of- purchase is also known as dealer hopes, dealer aids, dealer displays, merchandising and point-of-sale material. Point-of-purchase advertising means advertising at the point of purchase. It is generally at the level of a retailer’s shop.
For sales promotion, consumer promotion methods and trade promotion methods are applied. Both these methods are complementary to each other. The first is consumer promotion method which motivates consumers to purchase. The second is trade promotion method which increases the business.
For the success of any business both the promotion methods are necessary. Without consumers’ promotion trade promotion cannot run. In the same way without trade promotion consumers’ promotion cannot run. They are not competitive of each other but are complementary.
As a man needs two legs to walk, so both are compulsory for promotion. The work of sales promotion can be performed if there is balance between the planning of these two promotions. Therefore, consumers’ promotion method and trade promotion method should be implemented together for sales promotion. For good results, it is necessary that a right balance should be set between them.
Sales force promotion schemes are necessary to increase sales.
The tools for sales force promotion are:
This is an incentive given to the sales people to sell more products to cross the quota or targeted sales. The manufacturer sets a target of sales for a year. If the sales force sells the products above the targeted figures, bonus is offered to them.
Contests stimulate salesmen to sell more products. This method is used to increase sales. For this purpose, prizes are given to salesmen who secure the maximum sales in sales contests.
Meetings are conducted by producers for the purpose of educating, inspiring and rewarding salesmen. Under this method, new products and new selling techniques are described and discussed with salesmen.
(iv) More Commission:
Sometimes, sellers are offered more commission by offering cash incentives and sometimes sellers are given such goods that they may use them for personal purpose or for official jobs. In this regard the example of Life Insurance Corporation is worth citing.
For example, if the amount of insurance policy increases more than set quantity then the rate of commission offered is 15% besides additional bonus which is also given. If the field officer insures more than his quota then increments are given and telephone facility is also provided.
Methods of Sales Promotion – Rebate, Discount, Partial Refund, Free Samples, Quantity Gifts, Product Combination/Bonus Offer, Packages Premium and a Few Others
According to American Marketing Research Association, “Sales promotion includes those marketing activities other than personal selling, advertising and publicity that stimulate consumer purchasing and dealer effectiveness, such as displays, shows and exhibitions, demonstrations and various non-current selling efforts other than the ordinary routine.”
The main aim of sales promotion is increasing sales and profits, but it is different from advertising and personal selling.
Tools or Techniques used for sales promotion:
i. Rebate – It refers to selling of products at a special price which is less than the original price for a limited period of time. This offer is given to clear off excess inventory (stock) or to block competitive moves.
ii. Discount – This refers to reduction of certain percentage of price from list price for a limited period of time. Discount induces the customers to buy more.
iii. Partial Refund – A firm may use the strategy of refunding a part of the price paid by the customer on the production of some proof of purchase of its product. For instance, the buyer of two packets of a branded soap may be refunded Rs.10 on returning the empty packages to the dealer.
iv. Free samples – Free samples of smaller size may be distributed to a few selected customers specially for introducing a new product.
v. Quantity Gifts – Sometimes sellers devise special packaging, which gives extra quantity of the product to the buyer at a lesser price or at no price. For example, ‘Buy three get one free’ offer or ‘50% extra’, etc.
vi. Product Combination/Bonus Offer – The retailer may offer another product as a gift on the purchase of a specified product, such as a free bucket on the purchase of 4 kgs of Surf detergent.
vii. Packaged Premium – In this type of sales promotion, marketers pack some gifts or scratch cards inside the product package. The gifts create a lure to buy the product.
viii. Prize Contests – The consumers are given rewards for analytical and creative thinking about the product in the form of slogan writing, sentence completion, quiz, etc. Rewards are given to successful contestants in the form of cash, goods or free travel, etc. These contests are held through newspapers, magazines and radio or television.
ix. Lucky Draw – The customer is given a card containing a lucky draw number (or sometimes the Cash Memo Number is also used) and if it is the drawn number the customer gets the prize.
x. Trade Fairs and Exhibitions – Trade shows, fashion shows or parades, fairs and exhibitions are important techniques of sales promotion.
Methods of Sales Promotion – 2 Main Methods: Word-of-Mouth Promotion and Telemarketing
Gift, contests, discount and commission, entertainment, travel and tours, additional allowances, fairs and shows are some of the important tools of sales promotion offered to both, the providers as well as the users. The motives are increasing the selling activities, touching the target, excelling the competition, increasing the market share, clearing the old products to be declared absolute in the near future or so. This makes it clear that the instrumentality of sales promotion is substantially influenced by the sensitivity of tools selected for the said purpose.
More innovative the tools of sales promotion, more positive would be the results. It is not wisdom that you just copy the measures adopted by the competitors. Your wisdom and professional excellence would make the ways for innovative measures. We can’t deny the fact that the tools of sales promotion should be for both the parties involved in the process such as the providers or traders who offer the goods or services and the customers who ultimately consume or use.
A hotel company distributed a small gift pack to its customers. The customers were advised to open the pack at their homes and after opening they found in the pack seeds of an attractive plant with suitable instructions for plantation and transplantation. The trees started blooming and the attractive flowers of the said tree was found point of attraction. The friends, relatives, by passers asked about the plant and the narration of facts promoted the business of that hotel for years and years to come.
This makes it clear that the tools of sales promotion, if innovative, become very much instrumental in promoting sales. The professionals serving the organisations bear the responsibility of innovating the tools so that the process of making the buying decisions being influenced by the sales promotion is found effective.
Much communication about the performance of the service generating organisations actually take place by word-of-mouth information which is also as word-of-mouth promotion. In the service generating organisations, we find use of different components of the promotion and in this context; we find this element of the promotion mix very effective. The word-of-mouth recommendations by the hidden salesforce make the process of communication effective.
This is testified by the fact that whatever we receive from our friends, relatives or the persons having domination in the society have a far reaching effect on our buying decisions. The process is to cost nothing but to throw a positive effect on the impulse of the prospects/users. The local leaders, social reformists, popular leaders are found dominating the social behaviour and therefore whatever we receive from them influence our impulse sizeably vis-a-vis govern the buying decisions considerably.
It is against this background that we find it significant to talk about this component of the promotion mix. We can’t negate the fact that the high magnitude of effectiveness of this tool is due to the high level of trust. The growing sensitivity of the words and experiences of hidden salesforce simplify the task of promoting the business.
The advertisements, sales promotion measures, the personal selling may of course be effective but the word-of-mouth recommendations are found acceptable in all the conditions by almost all the prospects. If we keep on moving the process of satisfying the users, our task of increasing the numbers of hidden salesforce is simplified considerably.
The executives and the front-line staff serving the organisations need to assign an overriding priority to this element of the promotion mix. We call the process two-step flow of communication in which messages are directed to the opinion leaders in society rather than to the masses. About the opinion leaders, it is right to mention that persons having domination on the social behaviour are known as opinion leaders.
The representatives of mass media, social workers, leaders of an organisation or even others having a say in the society can act as opinion leaders. We can’t negate that even the satisfied group of users also act as opinion leaders. This makes it pertinent that the service generating organisations assign a transcendental priority to the quality of services offered. The task of word-of-mouth promoters or the hidden salesforce is found much more difficult when the quality of service product is found poor.
An important question regarding the word-of-mouth promotion is related to its intensity of sensitivity and acceptability. Why do we find this element of the promotion mix so much effective? Of course, a plain answer to this question is the positive and right opinions. If the word-of-mouth promoters start advocating the wrongs, the acceptability would be minimised considerably. If our friends communicate to us the specialities of their positive feelings about the services of a particular organisation; we trust on them blindly albeit without a detailed narration.
If our relatives convey to us their feelings about the outstanding services offered by a bank or hotel in which they stayed, we try to use the services as and when we get an opportunity. It is in this context that this element of the promotion mix is found significant to the service generating organisations. We find a strong emphasis on the quality of services-offered failing which the promotion processes would hardly be effective.
Telemarketing is found instrumental in promoting the business and even the service generating organisations have been found using this element of the promotion mix. The telemarketing helps in activating the process of advertisement in addition to its instrumentality in increasing the sale. The service generating organisations in general and the banking, insurance, transport, hotel, tourism organisations in particular have been found using telemarketing with the two-fold objectives of selling and advertising.
The instrumentality of telephones and televisions are found effective in the process of promoting the business. The transmission of information regarding services or schemes help the customers/prospects in developing their awareness, specially regarding the new product.
They if informed and sensed in a right fashion and persuaded in a right way go to the telephone numbers, make necessary queries or enquiries, if they need so or, even send their representatives to collect detailed information and/or, call the numbers and let them know their decisions.
This makes it clear that we find advertising even in the process of selling since the users/prospects before the television screen come to know about the new developments or arrivals. It is right to mention that advertisements persuade the users and the telemarketing also instrumentalises the same process, of course, in a bit different way.
The instrumentality of telemarketing in persuading the users is substantially influenced by the quality of personnel supposed to discharge the responsibility. The creativity is found to be an important aspect and this makes it essential that advertising professionals are well aware of the expectations and attitudes of users/prospects. It is against this background that we find increased temptation for this element of the promotion mix not only in the developed countries but even in the less developed countries like ours.
In the present world when we find it much more difficult to manage the people, the telemarketing occupies and would continue to occupy a place of outstanding significance. The telemarketing, no doubt, minimises the dependence of service generating organisations on the salespeople since just a counter or a centre listed in the call numbers serves multi-dimensional purposes.
The interested person(s), organisation(s) come to the centre and get further information or they can do everything even on their phones or they can also send their representatives. Since we have a perception of everything automated, it is possible with the frequent use of developed or sophisticated communication technologies, we find telemarketing gaining popularity and the process would continue even in future.
In the Indian perspective, we find only the beginning but in the coming days, it is to gain momentum. A number of foreign banks, hotels and tour operators have been seen promoting telemarketing. We have a big network of the telecom and telecast services and therefore, the future looks prosperous.
The aforesaid facts make it clear that an important sub-mix of the promotion mix, i.e., telemarketing is a process of promoting the business. Both the goods manufacturing as well as the service generating organisations can rationalise their selling expenses fantastically if they assign due weightage to telemarketing. Not only the selling processes but albeit advertisement processes find telemarketing instrumental in their desired goals of offering more but taxing less.
Methods of Sales Promotion – Top 3 Methods: Point-of-Purchase Advertising, Trade Shows and Samples, Coupons and Premiums
This type of non-personal selling is so varied that many find it difficult to comprehend or define it clearly. Essentially, it applies to assorted, non-recurrent, and somewhat extraordinary non-personal selling efforts.
Firms that wish to conduct a sales promotion campaign have various methods to choose from point-of-purchase advertising, trade shows, samples, coupons and premiums, contests and trading stamps.
More than one of these options may be used in a single promotional strategy; but probably no promotional strategy has ever used all in a single programme. While they are not mutually exclusive, the union sales promotions are generally employed on a selective basis.
(i) Point-of-Purchase Advertising:
Displays and demonstrations that promote the product at a time and place closely associated with the actual decision to buy are referred to as point-of-purchase advertising. The in-store promotion of consumer goods is a common example. Such advertising may be extremely useful in carrying forward a theme developed in another element of promotional strategy.
Cartoon characters used in TV advertising, for instance, may become realistic in-store displays. The most common types of in-store display promotions include counter cards, wall signs, banners, and display bins. The importance of these devices has been steadily increasing for a number of product classes sold in retail stores, such as photography, cosmetics, cloth, liquor and medicines.
Firms should carefully plan their displays to fit the needs of the dealers. They should provide salesmen with presentations to show retailers how the displays may be used. Many manufacturers compensate dealers for the space required for these displays.
(ii) Trade Shows:
To influence channel members and resellers in the distribution channel, it has become a common practice for a seller to participate in a trade show, exposition, or convention. These shows are often organized by an industry’s trade association, and may be part of the association’s annual meeting or convention.
Vendors serving the particular industry are invited to the show to display and demonstrate their products for the association’s members. An example is the professional meetings attended by college professors in a given discipline.
Here, the major text book publishers exhibit their publications to the channel members in their marketing system. Shows are also used to reach the ultimate consumer. Trade shows are elaborate, and reach retailers as well as individual consumers. Most marketers find demonstrations at these events, particularly useful in promoting new products or product innovations.
(iii) Samples, Coupons and Premiums:
The distribution of samples, coupons and premiums is probably the best known sales promotion technique.
A sample is a free distribution of an item in an attempt to obtain consumer acceptance. This may be done on a door-to-door basis, by post, by demonstrations, or insertions in packages containing other products. Sampling is especially useful in promoting new products. One problem of sampling is the cost.
It is expensive, not only to manufacture the product but also to distribute it across the country to consumers. Also, many samples are wasted. They either go to consumers who are not interested in it or to people who have already used the product.
Coupons offer a discount, usually of 5 to 10 per cent, on the next purchase of a product. They are readily redeemable with retailers, who receive a handling fee. Mail magazine, newspaper or package insertions are standard methods of distributing coupons.
Contests– Firms may sponsor contests to attract additional customers. They offer substantial cash or merchandise prizes to call attention to their product.
Premiums are bonus items given free with the purchase of another product. They have proved to be effective in getting consumers to try a new product or a different brand. Premiums are also used to stimulate direct mail purchases.
Methods of Sales Promotion – Applied at Different Levels: Consumer Level, Dealer Level and Sales Force Level Sales Promotion
Different sales promotion methods are applied at different levels:
1. Consumer level sales promotion,
2. Dealer level sales promotion, and
3. Sales force level sales promotion.
1. Consumer Level Sales Promotion:
Consumer level sales promotion aims to provide information to consumers and educate them about the product. Such sales promotion tools stimulates their buying behavior and induces them to buy the product.
The popular tools of consumer level sales promotion include:
i. Distribution of Free samples to customers.
ii. Premium – extra gift with product like balls, stickers, pens, cards, diaries, calendars, manuals, and other literature.
iii. Discount Coupons are given to customers. It gives buyers a saving when they purchase the product.
iv. Cash refund offers – The customer gets a coupon at the time of purchase and on production of the same to the manufacturer, the buyer gets a refund of part of purchase price.
v. Credit facilities
vi. Exchange offers common in case of consumer durables where buyer can exchange an old product for a new one. The price payable by the customer for new product is adjusted against the value of the old product.
vii. Price discount and rebate or temporary price-cut
viii. Seasonal discount
ix. Installment payment scheme
x. Extra quantity/excess product
xi. Free demonstration at retail shops
xii. Display – arranging products in attractive manner
xiii. Free trial – permitting consumers to use product for short time
xiv. Contests among customers and prizes
xv. Free home delivery and installation, instructions and other services.
2. Dealer/Channel Level Sales Promotion:
Dealer/Channel Level Sales Promotion is short-term incentives offered to middlemen to motivate and encourage them to make more efforts to sell particular brands.
Popular dealer level sales promotion tools are as below:
i. Trade discount and cash discount
ii. Credit facility
iii. Gifts on excess sales
iv. Organizing Parties and meetings
v. Gifts on special social occasions and festivals
vi. Storage facilities
vii. Free transportation and insurance
viii. Free tour or visits to visiting places
ix. Awards, prizes, momentous, and certificates
x. Sales contests
xi. Free deals like one package free on buying twelve packages
xii. Free display material to retailers
xiii. Free window display services
xiv. Advertising display allowances to dealers.
3. Sales Force Level Sales Promotion:
Sales Force Level Sales Promotion may be financial and non-financial incentives offered to sales persons to encourage them to make more sincere efforts to improve sales.
The sales promotion tools are as follows:
i. Extra commission – high rate or more amounts
ii. Free training
iii. Sales materials and samples for customers
iv. Gifts articles
v. Offering products at free-of-costs or at concessional rate
vi. Bonus – extra payment for extra and/or excellent performance
vii. Free holiday-home
viii. Customer entertainment allowances
ix. Participation in formulating sales policies and strategies
x. Appreciation, recognition, and praise
xi. Sales contests among salesmen
xii. Awards, prizes and certificates
xiv. Sales force conventions (conferences, meetings, seminars, discussion, etc.)
Recent developments in marketing – Social Marketing, online marketing, direct marketing, services marketing, green marketing, rural marketing; Consumerism.