Everything you need to know about the tools and techniques of sales promotion.
Various tools of sales promotion, also known as methods of sales promotion may be divided into two parts – (i) Consumers Promotion Methods (ii) Dealer Promotion Methods.
Consumer promotion methods are those which directly encourage consumers to buy product in more and more quantity.
Dealers promotion methods are those which encourage dealers and distributors to buy and resell more and more quantity of the product.
The tools of sales promotion are employed primarily by two of the principals of marketing – the manufacturer and the retailer. Although a few of the elements are used in common by each, for the most part the needs of the retailer differ from those of the manufacturer.
Some of the commonly used tools and techniques of sales promotion are:-
1. Coupons 2. Free Samples 3. Price-Off Offer 4. Fairs and Exhibition 5. Free Gifts 6. Competitions or Contests
7. Free Services 8. Special Rebate 9. Full Finance @ 0% 10. Scratch and Win Offer 11. Money-Back Offer 12. Exchange Schemes.
Tools and Techniques of Sales Promotion
Sales Promotion Tools and Techniques – Consumer Promotion Tools, Trade Promotion Tools and Business Promotion Tools
1. Consumer Promotion Tools:
1. Samples – Small quantity, sometimes free of cost or sometimes at minimum price, sent door to door personally or through mails or with other products etc.
2. Coupons – A certificate that gives buyers a saving when they purchase specified products.
3. Cash refund offers or rebates – Are like coupons except that the price reduction occurs after the purchase rather than at the retail outlet. Consumer sends proof of purchase and manufacturer sends the refund part of the purchase price to the consumer.
4. Price packs (cents-off deals) – Offers consumers saving off the regular price of the product, directly cuts price on the label, or combination of two products (tooth paste and tooth brush).
5. Premiums – Goods offered either free or at low cost as an incentive to buy a product. Sometimes premium are costlier than the product it is sold with, (brass tray free with a product).
6. Advertising specialities – They are useful articles imprinted with an advertisers name given as gifts to consumers, e.g. pen, dairy, calendars, key etc.
7. Patronage reward – Cash or gift, for the regular use of a particular product of the company like privilege card membership given by the company to the regular user of the products.
8. POP displays – (Point of purchase promotion) Right display at right place to attract consumers.
9. Contests, Sweepstakes, game –
(i) Contests- Submitting the entry
(ii) Sweepstakes – Calls for consumers to submit their names for draws
(iii) Games – Daily games
10. Demonstrations can be at –
(i) Retail stores
(iii) Door to door
(iv) To key people
11. Sales promotion letters and catalogues.
2. Trade Promotion Tools:
Here the focus is more on the wholesalers and retailers as compared to the consumers, i.e. roughly a ratio of 60:40 is maintained in dealing both of them. Trade promotion can persuade the wholesaler, retailers or distributor to carry a brand, advertise or give a shelf space to the products of a particular company.
From company’s point of view, shelf space is so important that if it is provided by the wholesaler or retailer to a particular product or company the consumer will buy it. Customer will buy those products or services that are highly advertised, mostly seen etc. For that, company provides extra commission, buy back guarantee, price offs, allowances, gifts, free goods to them.
3. Business Promotion Tools:
Promotion for industrial customers – These promotions are used for such purposes as generating business leads, stimulating purchase, rewarding customers, and motivating sales people.
It uses many tools as used in trade promotion and consumer promotion. Its main focus is on conventions, trade shows and sales contests.
Convention – By this the company gets many benefits like finding new sales leads, contacting customers, introducing new products, meeting new customers, selling more to present customers, and educating customers with publication and audio-visual materials.
Sales contest – It involves salesmen or dealers to motivate them to increase their sales performance during a given period, with prizes going to those who did best.
Sales Promotion Tools and Techniques – 12 Commonly Used Tools: Coupons, Free Samples, Price-Off Offer, Fairs, Exhibition, Free Gifts, Competitions and a Few Others
To increase sales of any product, producers adopt different measures like distributing samples, gifts, coupons, bonus, etc. They are known as techniques of sales promotion.
Some of the commonly used tools of sales promotion are as follows:
Coupons are issued by producers of packaged goods or by retailers that enables customers to buy the product next time at a reduced price. These coupons are either advertised by producers/retailers in newspapers or distributed in weekly flyers via mail across households. For examples, Big Bazaar issues coupons for selected items in their weekly flyers that are distributed via mail or along with newspapers.
2. Free Samples:
Free samples are small and packaged portion of the (main) merchandise distributed for free. Free samples are developed for introducing new products. These samples may be distributed door-to-door (through personal selling) or retail stores. For examples, Sensodyne Toothpaste meant for relieving tooth sensitivity is unique product introduced in India. The manufacturer of Sensodyne has been reaching out to local dentists of Mumbai who have been distributing free sample of these toothpastes to create awareness among their patients.
3. Price-Off Offer:
This involves offering products to consumers at discounted or reduced prices by a certain percentage from the regular price of the product. This activity aims at attracting consumers to other or newer brands, seasonal and unseasonal goods. For example- a 15 to 60 percent off on clothes before some festive season in retail shops are examples of sales or sales promotion.
4. Fairs and Exhibitions:
Fairs and exhibitions may be organised at local, regional, national or international level to introduce new products, demonstrate the products and to explain special features and usefulness of the products. For example- ‘International Trade Fair’ held in New Delhi in November every year.
5. Free Gifts:
Producers may distribute a free gift along with their product as a incentive to the consumers for purchasing the product. For example- milkshake along with Nescafe, toothbrush along with a toothpaste.
6. Competitions or Contests:
Producers can organise competitions or contests among salespersons to encourage them to generate more sales from new customers. Companies can offer a car or consumer durables for generating a certain percentage sales in a particular month or quarter.
7. Free Service:
Producers/retailers may promise free service to consumers for a specified period of time after sales. For example- few car retailers offer free servicing for the first 6 months if certain car components are damaged or are under performing.
8. Special Rebate:
Rebate is a partial refund to someone who has paid more or extra on purchase of a specified quantity or value of goods within a specified period. Unlike, price cut off or discounts, rebates are provided after the full payment of full invoice amount.
9. Full Finance @ 0%:
Under this method, the product is sold and money is received on installment basis at 0% or without interest rate. The seller determines the number of installments in which the price of the product will be recovered from the customers.
10. Scratch and Win Offer:
Under this scheme, a customer scratches a specific marked area on the package of the product and gets the benefit according to the message written therein.
11. Money-Back Offer:
Under this scheme customers are given assurance that full value of the product will be returned to them if they are not satisfied after using the product. This creates confidence among the customers with regard to the quality of the product.
12. Exchange Schemes:
It refers to exchange of old product for a new product at a price less than the original price of the product. This is useful for drawing attention to product improvement. Example—”Exchange your black and white television with a colour television.”
Sales Promotion Tools and Techniques – Price Deals, Price Pack Deals, Refunds and Rebates, Coupons, Sweepstakes, Premiums, Sampling, Continuity Plans and a Few Others
All tools of sales promotion are fairly simple and can be reduce to twelve in number. Almost all promotions make use of one or more of these tools, alone or in some carefully developed combination.
i. Price deals (price-off, price-cut, cents-off, denote the same thing)
ii. Bonus-packs (price-pack)
iii. Refunds and rebates (both terms are used interchangeably)
v. Contests and sweepstakes
vi. Premiums –
a. In-packs, on-packs, near packs and container premiums
b. Free—in-mail premiums
c. Self-liquidating premiums
viii. Continuity plans
ix. Trade coupons
x. Trade allowances and deals
xi. Exchange offers
xii. Displays, trade fairs, exhibitions, and event sponsorship.
The list apparently appears to be short, however, considering the possible combinations, the figure reaches to about eight million different approaches. In most cases a combination of two or more techniques will combine the strengths and compensate for the weaknesses and will produce better results compared to either technique used alone.
Promotions directed at the ultimate consumers are called consumer promotions. These promotions can be developed for durable as well as non-durable goods. Most of these products are typically used by individuals or households and are generally sold by retails stores. Same techniques, which are used for consumer promotions are also used to promote products to business users, such as stationary, computer systems and consumables, machinery, automobiles, and many other products. Most of these techniques can be used both for consumer as well as trade promotions.
There is plenty of variety, flexibility, and motivation to action. A judicious combination of techniques can be used to achieve almost any promotion objective. The flexibility of sales promotion has the potential of being used by small and large companies, selling goods or services, and by profit and nonprofit organisations. Customers are motivated, stimulated, and influenced to respond in a predictable manner to sales promotions.
i. Price Deals:
Price deals are probably the most commonly used promotional techniques. A price deal for customers means a reduction in the price of promoted product and the customer saves money on purchase. Such a deal is designed to stimulate customers to try a new product, to encourage new users to try an existing product, or to encourage customers to continue product patronage, increase purchase quantity, purchase multiple units, and accelerate usage rate, etc., such deals are suitable when the brand loyalty is low, product category is considered a commodity, and price is the primary consideration by the customers.
A price discount can be used as a defensive as well as an offensive tool. More often discounts are offered to match or beat the competitor’s prices. When used as an offensive weapon, the objective is to generate additional sales and increase market share and long run profits.
Price discounts (also called cents-off deals) are communicated to the consumers through advertising, at the point-of-purchase by listing the reduced price on the package or signs near the product or window display, or by the sales people. Such discounts may appear in newspapers, magazines, and television advertisements. Similar discounts are often advertised by retailers in local media (called feature advertising) and by manufactures in national print and audio-visual media.
Manufacturers often offer extra incentives to retailers to gain their cooperation. Retailers may announces price discounts for a variety of reasons. By announcing a price discount on some popular consumer item, the retailer’s intention is to increase store-traffic. Whenever the store-traffic increases, customers visiting the store not only buy promoted product, but some of them buy other products as well.
It is also possible that the retailer bought excessive stocks when the manufacturer offered trade deal and to clear this excess inventory the retailer offers a price discount to consumers. Yet another reason can be that when retailer feels threatened, then the only way to respond to competitive situation is to offer a price discount to consumers to move the product off the shelves.
Determining the quantum of discount depends on the consumers’ price perceptions and may be difficult to decide. There is no precise answer, however, experts generally agree that discount should be at least 5% to 20% of the normal price. Of course, the discounts may differ across product categories. Price discount generally do not stimulate consumers to buy a product in large quantities if the unit value is low, product is not bulky, and the holding cost is not high.
If advertising support has been effective, or prior to offering price discount, there has been a sample drop of the product, then even first time buyers may purchase the product.
Such promotions work very well in gaining the attention of consumers, particularly at the point-of-purchase (POP) among similar brands, and may also encourage unplanned or impulse buying. If there are three different models of a product and because of the discount offer the price of the higher end model appears not too high to the consumer, compared to the lesser- priced model, then consumer may buy the higher end model.
For example, if the price of a more expensive wristwatch is Rs. 3000 and the next lesser model is priced at Rs. 2400. The discount offer on higher model is 12%, then the effective price of higher end model would be Rs. 2640, and the customer may buy the higher end model.
ii. Price-Pack Deals:
Price-packs are also called value-packs. This may take any of the two forms, bonus pack and banded pack. In case of bonus pack offer, an additional quantity of the same product is offered free when the standard pack size of the product is purchased at the regular price. This type of deal is often seen in case of laundry products, food products, and personal care products, etc.
This is a way to reward the present consumers and may not have any impact on the users of competitive brands. A variation of this offer, and more commonly observed, is when the marketer develops special packs of the product containing more quantity, but the price is proportionately low. For example, the regular price of a standard pack of a product is Rs. 50 and the quantity contained in the pack is 100 gms.
For the purpose of sales promotion the company offers a special pack containing 150 gms, and the price is Rs. 62 only. This is a method to “load” the consumer up with the product. This technique is often used to introduce a new large size of the product, or to encourage continued usage, and also to increase consumption. Many offers of this type are seen in consumer non-durable products consumed on daily basis.
It is termed as banded pack offer when two or more units of a product are sold at a reduced price compared to the regular price (couple of months ago, Lux International offered a similar deal. The pack contained four cakes of soap at the price of three). The products are generally banded together physically, or put together in a blister pack, such as razor-and-blade, toothpaste and tooth-brush, or a smaller size of the same product may be attached to the regular size.
Another variation of this technique is “buy-one-take-one-free”, or some similar offer (it could be “same for less” or “more for the same”). This is a fairly popular technique in cases of footwear, shirts, jeans, towels, and many other varieties of products. Akai offered a 14″ colour television on purchase of 21″ colour television.
Bonus packs are generally limited to low bulk, low-price products, however, of late exceptions, such as Akai offer have been observed. Additional quantity of the same product or additional unit of the product is appreciated as a reward by the consumer. This also offers consumers the satisfaction of being “smart shopper”.
iii. Refunds and Rebates:
The terms refund and rebate are used as meaning the same thing/Long ago, the term rebate was popular by the automobile industry in the developed countries. There is a subtle difference between these two terms. The Random House Dictionary defines a refund as repayment of money, and a rebate as a return of part of the original payment for some service or merchandise. This means a refund is repayment of total money paid for purchase, while the rebate represents repayment of only of part of the money paid for purchase. However, both these terms are used interchangeably in the real world of marketing.
A promotion of offering refund or rebate by a marketer is a promise to give back a certain amount of money after the purchase. The offer may be for a product purchase alone or in combination with other products. Depending on the objectives, refund offers are used to encourage trial of a new product, purchase of increased quantity, or increasing the frequency of purchase, or to encourage the customers to purchase those products whose purchases can be postponed, such as refrigerators, microwave ovens, air-conditioners, and other consumer durable products.
Refund offers seem to work very well in guaranteeing the trial of a product or service, since there is no risk involved for the customer because of the promise of total refund of the purchase amount.
Evidence suggests that customers look at refunds as rewards for purchase. This appears to build brand loyalty rather than diminish it. For example, Maruti announced a gift cheque of Rs. 1,30,000 as a loyalty reward on purchase of a Maruti Esteem car, if the family already owned any other Maruti car. The offer was valid for a month only.
Gillette announced a refund offer. A customer was required to buy a pack of & 7 O’clock P II for Rs. 55.50. On returning the empty pack, the customer gets Rs. 55.50 off on Gillette Sensor excel.
A computer magazine, “Chip”, offered a refund of Rs. 350 on sending one- year subscription, which the customer can use to purchase special issues of the magazine.
When consumers increase purchase quantity, they carry more stocks of the product and stay out of markets. This dampens the competition for a while.
In diverse product categories, such as exercise equipment, mixers and juicers, hair dryers, ceiling fans, inkjet printers, and magazines, etc., refund offers are fairly common. Some of these promotions appear in audio-visual or print media. ‘Readers Digest’ regularly makes this offer. Some of them offer a free trial period, and in case the customer is not satisfied, there would be total refund or money and no questions asked. The customer has to send back the product within a specified period of time. In these situations the refund offer is being used to encourage trial at no risk to the customer. This is a powerful method of ensure trial.
Refunds are quite effective in competitive situation where consumers perceive little or no differentiation among brands. The refund offer may sway the decision in favour of the promoted product. When the product is good but the brand share is low, a refund seems to work very well. There are occasions when the company decides to move in new geographic markets, such refund promotion may prove to be quite effective in motivating high-risk perceivers to decide in favour of the promoted product as the perceived risk is likely to appear as manageable.
In local-convenience stores, the shopkeepers recommend certain products of commodity type, such as rice, flour, or cooking oil to consumers. The assurance given to customers is that if the product is not liked after usage for any reason, total money will be refunded or the customer will have the option to buy any other product of choice. This type of refund policy builds store loyalty among consumers who continue the patronage.
Refund offer is limited only by the imagination of the promotion planner and the budget allocation. Refund offers can be used to achieve a variety of promotion objectives, such as to guarantee trial, to reward loyal consumers, to load consumers, to increase purchase frequency, to introduce new products, to enter new markets, to encourage the purchase of related products, etc.
Coupons can be considered as certificates offered by retailers or manufacturers that entitle the owner to some stated savings or claim the specified thing. Coupons bear a date of expiry and cannot be redeemed after the cutoff date. Offer of a coupon is a very versatile technique and can be used to achieve many different sales promotion objectives. When coupons are offered by the manufacturer all the costs associated with advertising and distributing the coupons, redeeming their face values, and paying retailers a fee for handling, are borne by the manufacturer.
When retailers offer coupons of their own, they have to bear all the above mentioned costs themselves. Coupons originating from the manufacturers are redeemable at any retail shop that carries the promoted product. The retailers serve as the agents of manufacturer in accepting and redeeming the coupons and send the collected to the concerned manufacturer along with their claims of reimbursement.
Retailer-originated coupons are redeemable only at a particular store or a group of stores (for example, a chain store having many outlets). The retailer- originated coupons generally have one objective, to encourage the consumers to shop at a particular store. Their interest is not tied up with any brand or manufacturer, unless there has been an agreement with the marketer of some co-operative venture. In such a case the objective would be to encourage shopping at a particular store and buy a certain manufacturer’s brand. Coupons are particularly attractive to consumers who are price sensitive.
Research has shown that the tendency to use coupons rises under certain conditions:
(a) When consumers perceive that there is need to control the budget
(b) Consumers are inclined to experiment with new products or services
(c) Consumers use coupons for products which are consumed regularly, such as tea, coffee, laundry products, etc.
Consumers who are strongly loyal to brands, or those who consider that collecting coupons is not worth the effort, are least likely to use coupons. Coupons generally attract older, better educated, urban, middle-income families. Comparatively, coupons seem not to be so popular with young, less educated, unmarried individuals. In case the coupons happen to be related to some current fashion or fad, then younger, middle-income individuals are likely to be attracted.
v. Contests and Sweepstakes:
These are part of Interest promotions because such sales promotions create not only interest but also produce excitement and enthusiasm in consumers. There seems to be quite a bit of confusion in understanding these terms. A contest requires the participants to perform some task. For example, the participants may be required to write a slogan, choose a name, or create a design, etc. To decide which entries are first second, or third, etc., an expert or a panel of experts examines the entries and judges the winning ones.
The prizes, depending on the announced number of prizes, are declared. A contest is based on testing the skill or ability and may not involve the proof-of-purchase (this is called a “consideration”) to enter the contests.
A sweepstakes is a random drawing and is sometimes called a chance contest. This too may or may not involve the purchase of any product or service.
A lottery prize is decided on the basis of chance and requires a “consideration” for entry that may be proof-of-purchase of ticket or a product.
According to the American Association of Advertising Agencies, “A contest is an event that invites the customer to apply skill to solve or complete a special problem”. The same agency says. “A sweepstakes does not call for the application of skill on the part of the consumer. Winners are determined by a drawing from all entry forms. In other words, prizes are awarded on the basis of chance”.
Often a combination of contest and sweepstakes is employed in some promotions. The winners are decided in two stages. The first part involves a contest in terms of skill, or knowledge. If more correct entries are received, the second stage then involves a draw of chance to decide the winners. A well-known television programme in India, “Surabhi”, is an example of this type of promotion.
Anyone can send the answers to the questions on a postcard. Generally correct entries, running in thousands, are received. Out of these correct entries, depending on the number of prizes to be given, some are picked up on a random basis to declare the winners. In India, contests and sweepstakes are very popular promotional techniques and are frequently used in diverse product categories and services. The range covers low as well as high-involvement products.
Starting from such low-priced product as “Pan Masala” or expensive products such as cars, and almost everything in between, including sporting events, use contests and sweepstakes.
Among all the sales promotional devices, probably the most exciting and highly rewarding are the contests and sweepstakes. Every imaginable prize or reward is used to excite and attract customers to participate. The prizes may be gold or silver jewellery, hefty sums of money, cars, two-wheeler autos, colour televisions, computers, music systems, free air tickets, stay in five star hotels, holiday in health resorts, and anything else depending on the imagination of the marketer.
To add an element of extreme urgency and speed up the response, early bird prizes are announced for the first 25 to 50 or 100 entries. In certain case all those who furnish the proof-of-purchase are given some specified premium.
Experience shows that everyone concerned, consumers, trades people, and sales force, get a share of excitement when the contest or sweepstakes is well planned and executed. The prizes seem to be much larger to contestants than the money spent by the sponsor. For instance, in case the manufacturer plans to distribute free samples of a product, it can cost far more than the total money spent by the manufacturer for the prizes. Contests and sweepstakes generate considerable interest and awareness, and can be used to gain large sales increases.
The success or otherwise of a contest or sweepstakes depends largely on the selection of prizes and prize structure. In most cases the structure represents a typical pyramid, that is there is a bumper prize of very high value. For instance, a car worth Rs. 300,000 or more, or jewellery of the same value, then a number of prizes in the immediate value range, a large number of prizes of small value, and a larger number of consolation prizes.
To make the contest or sweepstakes more tempting, there may be more than one winner of first prize (such as 10 first prizes for ten lucky winners). Different combinations of prizes are evolving. The duration of contests and sweepstakes varies considerably, depending on the objectives set for sales promotion.
A producer of branded wheat flour, “Shakti Bhog Atta”, announced an interesting promotion. Grocery stores owners informed the consumers regarding the possibility of prizes that consumers can win with continued use of the brand. There were no first of second prizes, the top prize was a Santro car, besides many other prizes. Each pack of flour contained a coupon with certain half-word or one-third word printed on it.
For example, to win a Santro car, the consumer was required to collect three coupons that would complete the name of the prize, that is, Santro. On one coupon would be ‘SA’ the other two coupons should have ‘NT’ and ‘RO’, thereby completing the word Santro and entitling the consumer to win a Santro car by submitting the three coupons. No final date of promotion closing was announced.
Consumers kept on buying the same brand and collected many coupons, most not winning anything because in most cases the coupons had the same or different letters, not fit to complete the desired word. Letters on some coupons were part of either the brand of washing machine, television, or wristwatch, etc.
Because of the nature of the product, consumers did not mind continued purchase of the brand and kept on collect the coupons. This is an example of a very clever sales promotion of a product, which is considered a commodity. However, the technique proved to be extremely effective in retaining the customers and motivating them to continue using the same brand for an extended period of time.
In case of consumer durable products, Bajaj Auto announced a promotion to encourage the purchase of any Bajaj Scooter. The promotion named “Crorepati Hungama” lasting one month (1st December to 31st December 1999). The promotion said, “buy any scooter, scratch a card, and win a sure prize”. The prizes were around 8000, the top prize being rupees ten million.
Hundred prizes of Rs. 100,000 each, seven hundred prizes of Sansui music systems, seven thousand prizes of Kodak cameras, and many Timex watches. A very tempting promotion, and simple too. Just buy a scooter, scratch a card and win a sure prize. The factor of chance limited only to what one gets, no losers, all winners.
These two examples present the use of the same method of sales promotion. The first example presents the use of ‘chance’ in case of a consumer non-durable, which is a low-involvement category product and there is hardly anything like brand loyalty. In fact, in most households the flour comes from flourmills where people take their wheat to be converted into wheat flour. Such service providing flourmills are locates in almost all localities.
The same element of chance has been used in case of consumer durable product of high-involvement category. The promotion planning shows how effective the sweepstakes can be in increasing the sales, and block competition.
A premium (gift) is a reward given to the consumer for performing a particular act, generally purchasing a product or service. The premium may be free or available to the consumer by paying a price well below the regular market price. Getting a printer free with the purchase of a computer, or getting a bar of detergent free with the purchase of four cakes of toilet soap, or getting a Swiss knife well below the market when the consumer purchases a microwave oven, are typical examples of premium.
Marketers choose premiums that have much appeal to the consumes, or products that are related in some way to the products of the marketer. For example, Kellogg’s Choices packs contained small plastic toys like different types of dinosaur replicas or sometimes, a plastic lunch box. As the product is primarily targeted at kids, these premiums had great appeal to them. Computer magazines often include a compact disc with each issue.
There are many varieties of premiums and are sometimes referred as direct premiums and mail premiums. Direct premiums are used to reward the customers immediately at the time of purchase, and mail premiums require the customers to take some action, such as mailing the proof of multiple purchases to the marketer. After the receipt of the proof, the marketer sends the premium to the consumer.
a. In-Pack, On-Pack, and Container Premiums:
These various terms for premiums are primarily used to distinguish the difference in methods of rewarding the consumers. Such premiums are attached either to the product, enclosed with the product, or otherwise available with the product when the consumer buys the product. The premiums can be used to solve a competitive price advantage or to counter the competitor’s coupon promotion.
Depending on the consumers’ value perception of the premium, the consumers may even be agreeable to purchase the product at a slightly high total price for the combination of the product and the premium. When all similar products in a certain price range are perceived as basically alike, a premium offer with the purchase of the product is quite an effective method to gain shelf space or even display.
Premium offers provide a point of difference, more so when the product category is fairly crowded. These are all different approaches to offer immediate reward to the consumer at the time of purchase. The premium is likely to offer a reason and an incentive to buy the product.
Free-in-mail premiums are unique because the promotion objectives may be quite different. In-mail premiums do not provide an immediate reward at the time of purchase. Consumers have to take some action to claim the premium, such as sending the proof of a single or multiple purchases and wait for some period of time for the delivery of the premium through mail or courier.
When consumers do not perceive any meaningful persuasive differentiation between brands and the market is competitive, such promotions work very well. The motivation to purchase and continue purchasing the product gets shifted to the incentive of premium as the purchase situation is one of total low-involvement as far as the product category is concerned. Considerable brand switching is possible if only one proof-of-purchase is to be sent to the marketer.
Another factor that may contribute to brand switching is the attractiveness and value of the premium as perceived by the consumers. Where multiple purchases are involved as proof of purchase, generally the usual inter-purchase interval is more, and consumers are more likely to stay with the brand.
If the premium is particularly attractive, there would be a number of consumers who would want the premium in a hurry and make the required number of purchases. This would help to load-up the consumer. Or, there may be some flexibility in conditions, such as the consumers may have the option to send one, two, or more proofs of purchase along with a specified sum of money to obtain the premium quickly. Much depends on the ingenuity of promotion planner.
Sales Promotion Tools and Techniques – 2 Important Methods: Consumers Promotion Methods and Dealer Promotion Methods
Various tools of sales promotion, also known as methods of sales promotion may be divided into two parts – (i) Consumers Promotion Methods (ii) Dealer Promotion Methods. Consumer Promotion Methods are those which directly encourage consumers to buy product in more and more quantity. Dealers promotion methods are those which encourage dealers and distributors to buy and resell more and more quantity of the product.
A. Consumers Promotion Methods:
1. Coupons, Premiums and Samples:
These are at the heart of sales promotion.
i. Discount Coupons:
A discount coupon is a certificate enabling a consumer to get discount on buying a particular product. Couponing is in effect controlled price reduction. Several types of coupons are in use viz., (a) Coupon with a rub-off spot, (b) Instant coupons, easily detachable to buy immediate package, and (c) Special Price Coupons.
a. ‘Free’ immediate reward premiums.
b. Pack premiums on packs, as bonus packs.
These must be of small size but adequate quantity.
a. Free door-to-door samples – This technique however is costly.
b. Samples given while purchasing a product in a retail store.
c. Coop Sampling in which several different products are delivered in same container or at same time and distribution costs are shared by various manufacturers.
d. ‘Trial-size’ Salable Samples e.g., mini bottles or cartons of a product such as shampoo, offered at nominal prices at stores, Both retailers and consumers like this kind of promotion, Retailers like because they keep the profit while to consumers, it reduces the risk of trying new products.
e. Samples given to professionals to recommended product; e.g., doctors by pharma Cos.
2. Point of Purchase Displays (POP Display):
Here, the display material of a product or brand is placed close to the point of sale inside retail stores. Such displays act as last minute inducement to buy. POP can be very effective if done properly i.e., using better quality POP materials instead of cheap paper signs or ill- conceived displays. POP material is often tied in with television or print messages to increase effectiveness. Indian companies using this method are – Proctor and Gamble, Nestle and Parle.
3. Other Techniques:
i. Trade Allowances and Deals.
ii. Price Deals (Price-off, Price cut, Cents off)
iii. Free Goods – An attractive coffee mug free with a pack of 200 gms. of Nescafe coffee.
iv. Refunds and Rebate – An offer by manufacturer to give back certain amount of money to consumer.
v. Sales Contests and Sweepstakes – Three kind of contest prizes are – (a) Cash awards, (b) Merchandise Prizes, (c) Special Honour viz., winner to appear in a TV show.
vi. After sale service free of cost during certain period.
vii. Exchange Offers
viii. Price Reductions on some specific occasions e.g., 20% to 30% discount on all products of Gandhi Ashram on Gandhi Jayanti.
ix. Displays, Trade Fairs, Melas and Exhibitions in different parts of country.
x. Trade Association Meetings, Conferences and. Conventions displaying their wares to large audiences at relatively low cost.
xi. Event Sponsorship e.g., Sponsorship of sporting events.
xii. Specialised correspondence (through specialised correspondence section) with prospects, potential customers, and established customers.
xiii. Demonstration at retail stores, fairs and exhibitions or (Demo) even door-to-door.
xiv. Money Back Guarantee – Producers guarantee that if their product does not meet certain standards, consumers can return the product and get their money back. This develops faith and confidence in consumers about the product.
xv. Cheap Bargain – To get another product at a very cheap rate while buying a product; e.g., A bucket of plastic of 5 litres only at Rs.6 with every pack of ‘SURF’ of 1 kg.
xvi. Entertainment of Customers (when standardised product is sold in bulk lots).
xvii. Advertising Novelties, that is, small, interesting or personally useful items, low cost, and eye catching can be used for sales promotion.
B. Dealer Promotion Methods:
1. Booster for Dealers – For example, Telco offered 2% discount to dealers if payments, made upfront to reduce mounting inventories and boost sagging morale of dealers.
2. Advertisement Allowances/Materials, encouraging dealers and distributors to advertise products. Adv. materials may be Diaries, calendars, Literature, Sign Boards, Packing Bags, Posters, etc.
3. Quantity Discounts for purchasing product in large quality.
4. Incentive to Salesmen e.g., some prize of salesmen achieve their predetermined targets.
5. Special Commission on achieve pre-determined sales targets, Higher rate for Higher sales.
6. Training to Salesman by producers for certain period to enable them buy larger quantity.
7. Free Gifts to Dealers/Distribution; such gifts increase with increase in quantity of purchases.
8. Meetings and Seminars by Producers of all dealers/ distributors where all problems of middlemen are discussed and solutions given.