Everything you need to know about the objectives of sales promotion. Sales promotion objectives should be specific, measurable, clear and concise, practical and realistic, affordable and attainable.
There can be a number of sales promotion objectives, depending upon the firm’s policies, marketing objectives, nature of the product and its stage in product life- cycle, level of existing and anticipated competitive activity, consumer response pattern, economic conditions, and the target group (consumers, traders, or sales force), etc. Sales promotion objectives could be either proactive or reactive.
Some of the objectives of sales promotion are:-
1. Increase in Sales Volume 2. Launch New Product and Increase Trial 3. Encourage Repeat Purchase 4. To Block Competitor’s Moves 5. Encourage Dealers to Participate in Display and Sales Contest 6. Deflect Customer’s Attention from Price 7. To Supplement Advertising and Personal Selling Efforts.
The basic purpose of sales promotion is to increase the sales of a product by creating demand. Sales promotion has a capability to complement and supplement the advertising functions of the marketing.
It helps marketers to realize a variety of objectives. These objectives are for both marketers and traders.
Sales Promotion Objectives: Increase in Sales Volume, Encourage Repeat Purchase and To Block Competitor Moves
Sales Promotion Objectives – Top 7 Objectives: Launch New Products and Increase Trail, Encourage Dealers to Participate in Display and a Few Other Objectives
There can be a number of sales promotion objectives, depending upon the firm’s policies, marketing objectives, nature of the product and its stage in product life- cycle, level of existing and anticipated competitive activity, consumer response pattern, economic conditions, and the target group (consumers, traders, or sales force), etc.
Sales promotion objectives could be either proactive or reactive.
The most common objectives under proactive category are:
i. To gain additional market share or additional revenue.
ii. To expand the target market.
iii. To develop favourable consumer experience with the product.
iv. To add extra value to the product and develop brand franchise.
Reactive sales promotion objectives are developed in response to some unfavourable market situation or where the objectives are essentially short term, such as the following-
i. In response to competitive moves.
ii. When excessive inventory poles up.
iii. To generate short-term cash.
iv. When the decision is to discontinue a product, or close down the business.
Some of the important objectives are mentioned below, and the more important ones have been discussed briefly and can accomplish many sales promotion objectives:
i. Increase sales volume
ii. Speed up the sales of slow moving products
iii. To check the fluctuations in sales
iv. Attract new customers
v. Launch new product and increase trial
vi. Encourage repeat purchase
vii. Clearance of excessive inventories
viii. Motivate dealers
ix. Encourage dealers to participate in display and sales contests
x. To gain advantageous shelf-space
xi. To increase store traffic
xii. Improve relationship with dealers
xiii. To block competitors’ moves
xiv. Motivate sales force
xv. To supplement advertising and personal selling efforts
xvi. Deflect customers attention from price
Objective # 1. Increase in Sales Volume:
The sales volume of any product depends on so many basic factors of marketing, such as product quality, its price, distribution, effectiveness of marketing communications, and macro-environmental factors (demographic, economic, technological, political/legal, and competitive, etc.).
Definitely, sales promotion cannot be a substitute for weaknesses in marketing strategy. There could be a number of reasons for companies to go for short-term increase in sales volume.
i) To reduce inventories before financial year-closing
ii) To increase the stock-holding of retailers, or even consumer before the introduction of a competing brand, or
iii) To push stock of the old brand before the introduction of new model.
Generally, the brand switchers or marginal buyers, who buy when a product is on promotional deal, contribute more toward increasingly sales volume. One possibility, though, cannot be ignored that these brand switchers sometimes get exposed to better products and some of them may become repeat purchasers, almost every sales promotion that offers immediate value at the time of purchase may contribute to increasing sales-volume.
These immediate value promotions can be directed toward those who like trying new products, and those who are regular users of the product. Such promotions can be particularly useful in new markets, and can also be used to introduce a sense of urgency in consumer or the trade to buy the product now.
Objective # 2. Launch New Products and Increase Trail:
Small budget companies who cannot afford sustained advertising expenditures to introduce new products, or match the competitive advertising blitz, find sales promotion to be more cost-effective and helpful in generating more sales volume. Companies, who have small market share, cannot match the substantial advertising budgets of market leaders in the same industry.
It is also difficult for smaller companies to get proper shelf-space in retail shops without offering incentives to the re-sellers, or encourage trail by consumers without offering some immediate or extra benefit. A free sample, along with a new product by consumer, and may also lead to purchase of the regular pack from the market. A free sample is generally welcome to almost all consumers and increases the probability of trail, and in some cases, purchase as well.
A number of personal care products, such as shampoos, cosmetics, toilets soaps, or laundry products, such as detergent powders and cakes etc., have been introduced successfully in the last few years. Colgate Palmolive launched ‘Palmolive’ toilet soap in 1989. Its sales in Chennai, which is one of the largest markets for toilets soaps, were below all India levels.
Market research studies revealed that the cause of below-level acceptance was inherent conservatism of the consumers in this market. They do not change brands easily, and consumer awareness and trial was low, despite heavy advertising. The trial retention ratio suggested that once consumers tried ‘Palmolive’ soap, they liked the quality and stayed with the brand. During four-month period (February-May 1990). Promoters called on about half a million households in this city.
To encourage consumers to buy from the promoters, a stainless steel teaspoon was given with only one cake of ‘Palmolive’ soap; subsequent cakes were sold on a marginal discount. The focus was on an incentive, which would ensure trial of even one cake. For this period dealer were hired to place attractive displays to make ‘Palmolive’ soap a highly visible brand in the windows of retail stores.
Sales increased substantially in March, and informed people say, it almost doubled by the end of the April 1990. Product adoption increased just by stimulating trial rate by consumers, leading to growth in sales which was maintained subsequently. Samples distributed free, with or without a coupon, are often used to introduce a new product or induce trial of even an existing product by consumers.
Small budget firms have to exercise extreme caution and use such promotion judiciously, because this may prove to be quite expensive proposition. For them, it would be appropriate to choose selected markets with high potential.
Objective # 3. Encourage Repeat Purchase:
Repeat purchase by customers, leads to increased sales volume. Such sales promotions are communicated to encourage existing consumers to forward- buy, for example, promotions, such as “get one free on purchase of four”. Frequent-flier offer by some airlines is one such scheme, where the customer is allotted certain number of points, and on collecting specified points, gets a free offer of value.
Some promotions offer free merchandize or cash refund offer by collecting tokens on purchases of a specified value. In the month of January 1983, “Nescafe’ announced a consumer contest. Contestants were required to suggest one word as a prefix or suffix to describe ‘Nescafe’. There was no limit on the number of entries one could send. The only condition was that with each entry the contestant must enclose an empty pouch of 50 gm. ‘Nescafe’ as proof of purchase.
There were 1565 prizes to be won. An independent panel of judges was to select the most appropriate entries for different category of awards. The first prize was Rs. 200,000. Regular users of coffee, or even occasional users, responded with enthusiasm, because not only the contest was exciting, the prize money too, were quite substantial.
Objective # 4. To Block Competitor Moves:
In business warfare, it is not uncommon that sometimes challengers resort to offering discounts. New product launches by competing companies are backed up by aggressive advertising and sales promotion campaigns. A firm that feels threatened would like to protect its loyal customers from switching to the new competing brand. Such a threatened firm would plan to loan load consumers so that they are in no need to go shopping for that product category.
The firm may also announce some attractive trade-deals so that shelf space in retail shops in blocked. To accomplish the objective, normally a combination of “push-pull” strategy is used. To pre-empt competition, presence of certain favourable conditions is necessary. The inter-purchase interval, that is, the interval between two successive purchases should be long for the consumers.
The product should be such that it can be stocked without occupying much space. There should be reliable information about the competitive moves, and the inventory holding costs should not be high. Detergent powders and cakes, toilet-soaps, shampoos, oral care products, and other non-durable products, which are consumed everyday, may respond well to such promotions. This objective may also be accomplished for certain consumer durable goods in case of trade segment.
Objective # 5. Encourage Dealers to Participate in Display and Sales Contests:
An important objective of sales promotion is to encourage re-seller participation in displays and contests. Display is a powerful tool to enhance sales. Displays attract consumer attention who, are passers-by, or window shopper, displays serve them as reminders, encourage unplanned purchases, and increase store traffic.
The space available for displays in retail store and display material, number of displays is limited. Generally in an average store there may not be more than ten or fifteen items that get major display spare at any given time. Generally these displayed items generate a higher sales volume.
Contests are used to motivate dealers. A certain sales quota is fixed for dealers, and those who exceed the quota by a specified margin or by the largest margin are awarded cash or merchandise, and often a certificate too.
Everything about contest, whether display or sales, should convey the idea that it is something special. Such contest should be held infrequently and not become a routine feature, which would reduce their importance and lead to decline in interest. Contests can help in attaining short-term objectives and improve the company-reseller relationship.
Objective # 6. Deflect Customers Attention from Price:
Price increase can often have a negative effect on sales. Marketers can develop appropriate sales promotion to accomplish the objective of reducing the negative impact on sales, if the price of the product was Rs. 50 before the price rise, and the new price is Rs. 60, then a coupon with a face value of Rs. 5 is provided that places the product’s price between Rs. 50 and Rs. 60, making the effective price only Rs. 55.
When the coupon would be available, the new price does not appear to be so high relative to the new price of the product. Consumers develop a new reference price for the product and the increase does not appear to be as high as it was perceived earlier. Of course the coupon should be of immediate value, instantly redeemable “on-package”, or the discount should be given at the time of purchase.
Objective # 7. To Supplement Advertising and Personal Selling Efforts:
A company’s objectives can be to enhance the attention getting power of advertising and put power in personal selling efforts of the sales force. A coupon or a premium offer in a print advertisement increases the attention getting ability of ad. When consumers see in bold print “FREE”, their attention is focused on the advertisement.
They may read not only the headline but also the copy, and may get exposed to the advantages and benefits associated the brand. Bowman (1980) cited the evidence indicating that print advertisements containing coupon are more likely to be noticed and recalled than are the same advertisements not containing coupons.
Sales Promotion Objectives – For both Marketers and Traders
These objectives are for both marketers and traders.
Following are the Objectives of Sales Promotion:
i. It improves the performance of middlemen and acts as a supplement to advertising and personal selling.
ii. It motivates sales force to give desire emphasis on new accounts, latent accounts, new products and new territories.
iii. It increases sales and makes sales of slow moving products faster and stabilize fluctuating sales pattern.
iv. It attracts channel members to participate in manufacturer promotion effort.
v. Motivating the dealers to buy high volumes of products and push more of the brands that are on promotion.
vi. Supporting and supplementing the advertising and personal selling efforts.
vii. Making consumers to switch brands in favour of firm.
viii. To overcome the seasonal fluctuation of products.
ix. Inducing retailers to promote the brand by local advertising and POP display.
x. Sales promotions motivate the salesmen to sell more and to sell the full line of products.
xi. To reduce the perception of risk associated with the purchase of a product.
Sales promotions encourage the customers to try a new product. For example, companies distribute free samples of their new product. To attract new customers distribute free sachets to households. Some companies offer a free pack with purchase of a product like free soap with purchase of detergent. Henko detergent introduced scratch card scheme in which customers usually received discount coupons so that customers buy the same product (Henko detergent) again. These encourage the customers to use the product or service and make them brand loyal.
Sales Promotion Objectives – The 3 Fundamental Objectives: Informing, Persuading and Reminding
Sales promotion objectives are consistent with marketing objectives. However, they may vary with the type of target market and points of channel. The objectives for retailers may be to carry new items, encourage off-season buying, and offset competitive promotions, build brand loyalty, and so on.
The objectives for the sales force may be to encourage a new product or model, stimulate off-season sales, and persuade more prospective buyers, and so on. The objectives for consumers may be to encourage more usage and purchases of a larger number of units and attract competitors’ brand users.
In spite of the several objectives of sales promotion, there are three which are fundamental, viz., informing, persuading and reminding. These objectives are attained through effective communication.
Informing is to educate the consumers about the product. They must have some knowledge about the product offered by the producer. They should, therefore, be informed of the new product and told that the new product works better than all similar existing products. Free samples may be distributed to leading consumers who may be a source of advertisement for other prospective consumers.
Sales persons persuade consumers to buy products. They develop or reinforce a favourable set of attitudes and influence their buying behaviour. They supply comparative information on various products so that consumers may be willing to purchase the products promoted by them.
Reminding leads the firms to reinforce the previously satisfactory behaviour of the customer. For this purpose, it provides suitable knowledge for recollection. Reminding the consumers of their past satisfaction will persuade them to stay with the product and prevent them from shifting to competitors.
Sales Promotion Objectives – Educating Customers, Stimulating Sales, Facilitating Co-Ordination, Attracting New Customers, Introducing New Products and a Few Others
The various objectives of sales promotion are as follows:
1. Educating customers – Educating customers/dealers and salesmen simplifies the efforts of salesforce and motivate them for larger purchase.
2. Stimulating sales – Sales promotion helps in promoting larger sales in certain specified segments of market. To stimulate maximum sales on special occasions such as Diwali, religious festivals, and other such occasions.
3. Facilitating co-ordination – Sales promotion facilitates co-ordination and proper link between advertising and personal selling.
4. Helping firm remain competitive – Sales promotions maybe undertaken to meet competition from a firm.
5. Increasing sales in off season – Buyers may be encouraged to use the product in off seasons by showing them the variety of uses of the product.
6. Increasing the inventories of business buyers – Retailers may be induced to keep in stock more units of a product so that more sales can be affected.
7. Developing patronage habits among customers – It can be done by popularising goods and services of the producer among the potential consumers and to motivate them towards larger purchases.
8. Inducing present customers to buy more – Present customers may be induced to buy more by knowing more about a product, its ingredients, and uses.
9. Attracting new customers – New customers may be attracted through issue of free samples, premiums, contests, and similar devices.
10. Introducing new products – To induce buyers to purchase a new product, free samples maybe distributed or money and merchandise allowance maybe offered to business to stock and sell the product.
Sales Promotion Objectives – 7 Main Objectives: Introduction of New Products, Attracting New Customers, Inducing Present Customers to Buy and a Few Others
Sales promotion secures the following objectives:
1. Bridge between Advertising and Personal Selling:
Sales promotion consists of those activities other than personal selling, advertising, and publicity. Particularly, sales promotion serves as a bridge between advertising and personal selling. It supplements and coordinates effort in these two areas.
2. Introduction of New Products:
Sales promotional devices help introduce new products in the market. They induce buyers to purchase a new product by distributing free samples in the market. They induce buyers to purchase a new product. Free samples are distributed or money or merchandise allowance is offered to the dealers to stock and sell the new product.
3. Attracting New Customers:
Sales promotion aims at wooing new customers. Sales promotional devices at customers level include samples, coupons, demonstration, contacts, money refund offers, premium offer, free trials etc. These stimulate customers to make purchase promptly on the sport.
4. Inducing Present Customers to Buy:
Sales promotion induces present customers to buy more of the product. Sales promotion methods work faster than advertisement. Moreover, sales promotion is used to retain customer’s interest in the product during offseason.
5. Increasing Sales during Off-Season:
Some products are seasonal in nature. After the sessions over, they are not demanded any more. Sales promotion is used to retain customer’s interest in the product during off-season. Short term incentives offered to the buyers stimulate sales.
6. Encouraging Business Buyers:
Wholesalers and retailers purchase goods for resale. Promotional activities are undertaken to attract retailers and wholesalers to stock the product more.
Display and advertising allowance are granted to dealers to compensate them for the space given for the display of manufactured products. Premiums are offered for purchasing a particular level.
7. Improving the Public Image of the Firm:
Huge amounts are now being spent on determining appeals for arresting the attention of the prospect towards the product. Consumer’s dissatisfaction about a particular brand can be removed by aggressive sales promotion programmes. Sales promotional devices make products popular among customers. Ultimately, they enhance the public image of the firm.
Sales Promotion Objectives – 2 Most Important Objectives: Consumer-Oriented Sales Promotion and Trade-Oriented Sales Promotion
Objective # 1. Consumer-Oriented Sales Promotion:
Companies must consider what they want to achieve through their consumer-oriented sales promotion programs and how to mix these with other promotional activities such as -advertising, direct marketing and personal selling. Marketers have to consider the impact of sales promotion on brand’s image in the long term while designing sales promotion programs. The basic goal of most consumer-oriented sales promotion programs is to induce purchase of a brand.
However the marketer may have a number of different objectives for example:
i. Obtaining trial and repurchase,
ii. Increasing consumption of an established brand,
iii. Defending current customers,
iv. Targeting a specific market segment, or
v. Enhancing advertising and marketing efforts.
Consumer-Oriented Sales Promotion Techniques:
Marketers use various sales promotion techniques to meet the objectives.
The following are the sales promotion techniques:
i. Sampling – Consumers are given some quantity of a product for no charge to induce trail. Although it is expensive sampling is generally considered the most effective way to generate trial. Manufacturers of packaged goods products such as – food, health care items, cosmetics, and toiletries are using this method.
ii. Couponing – Coupon is one of the oldest and most effective sales promotion tools used by marketers. These coupons may be mailed directly to customers or by publishing ads in newspapers and magazines along with Re off coupon offer customers will get them. Re off coupon is most appealing to price sensitive consumers. Coupons encourage nonusers to try a brand, encourage repeat purchase among current users, and make users to try new, improved version of a brand.
iii. Premiums (Gifts) – A premium is an offer of an item of merchandise or services either free or at a low price that is an extra incentive for purchasers. Free premiums are usually free gifts or merchandise included in the product package. For example, Hindustan Lever Ltd., offering with their Brooke Bond BRU 50 gm coffee packs an attractive glass bowl.
iv. Contests and Sweepstakes – A contest is a promotion where consumers compete for prizes or money on the basis of skills or ability. A sweepstake is a promotion where winners are determined purely by chance; it cannot require a proof of purchase as a condition for entry.
v. Refunds or Rebates – Refunds also known as rebates are offers by the manufacturer to return a portion of the product purchase price, usually after the consumer supplies some proof of purchase. Products such as – cameras, sports goods, appliances, television, audio and video equipment, computers, and cars frequently use rebate offers to appeal to price-conscious consumers.
vi. Bonus packs – A Bonus pack offers the consumer an extra amount of a product at the regular price by providing larger containers or extra units. Bonus packs provide more value for consumers as they get extra product for the money they spend. Colgate offers 25gm extra on their 200gm pack at the same price.
vii. Price-off deals – This is the direct price-off deal offered by manufacturer by reducing the price of a brand. Price-off reductions are typically offered right on the package through specially marked price packs For example, on Palmolive shaving brush Rs. 8/- reduction is offered. Nature Fresh edible oil 1 liter pack is available at Rs. 55/- whereas the MRP is Rs. 70/-.
viii. Frequency Programs – One of the fastest growing areas of sales promotion is the use of frequency programs also known as continuity or loyalty programs. Consumers get points on every purchase and get the offers from the companies as points accumulate. Airline companies introduced frequent flyer programs, where the customer gets points on every trip and gets discount in the form of extra miles or in the form of price reduction.
ix. Event Marketing – Event marketing is a type of promotion where a company or brand is linked to an event or where a themed activity is developed for the purpose of creating experiences for consumers and promoting a product or service.
These are some of the sales promotion techniques adopted by the marketers to accomplish the desired objectives.
Objective # 2. Trade-Oriented Sales Promotion:
Trade-oriented sales promotion programs are designed to get the trade support. These trade promotions are targeted to marketing intermediaries such as – wholesalers and retailers.
The objectives of this program are:
i. Obtaining distribution and support for new products,
ii. Maintaining support for established brands,
iii. Encouraging retailers to display established brands, and
iv. Building retail inventories.
Sales Promotion Objectives – Increase in Sales Volume, Stock Clearance, Emphasizing Variety, Tempting Customers, Seeking More Involvement and Introducing New Arrivals
Sales promotion objectives should be specific, measurable, clear and concise, practical and realistic, affordable and attainable.
It is usually difficult to choose a particular sales promotion tool for achieving the specific objectives. An important area that concerns sales promotion objectives is directly related to the specific promotional techniques to be used. The techniques may be used which can measure the results easily or may be difficult to measure in a straightforward manner.
For examples, it is easy to measure the impact of discount offer on sales, but it is difficult to measure the impact of premium on the perceived value of the promoted brand. The promotion objectives relate to the Promotion-mix only and on the sales promotion uses “Pull-Push” strategy while advertising uses “Pull” strategy only.
If the promotion objectives have consumer and trade orientation the sales promotion strategies focus on different consumer promotions and trade deal. Sales promotion is often referred to by the names of “Extra Purchase-Value” (EPV) and “Below-the-line-selling”. While the primary objective of advertising is to create an enduring brand image the primary objective of Sales promotion is to get a sale quickly or induce trial. If advertising is an indirect approach the sales promotion is a direct approach for persuading customers to buy.
Some of the Objectives are:
1. Increasing short-term sales volume.
2. Stock clearance of slow moving, non-moving, outdated, defective or inferior quality goods.
3. Emphasizing variety, novelty offered by the retail outlet. Through some sales promotion scheme or offer, the retailer can attract more number of customers to his outlet. Then the customers come across the variety and novelty offered by the retailer, which they might not know before.
4. Tempting customers for the impulse purchases.
5. Seeking more involvement of the customers especially in the contests, demonstration, participation in the events for winning the big prizes.
6. Introducing new arrivals and creating platform/awareness for newly launched products.
Sales Promotion Objectives – Providing Information, Increase Sales Volume, To Keep the Memory Alive, To Arrest Seasonal Decline, To Induce Middlemen and a Few Others
Sales Promotion includes all activities which promote sales of the company’s product and services. These activities are called promotional activities and serve as the objectives of sales promotion.
The following are described below:
(1) Providing Information – Promotion is an exercise in information, persuasion and influence. Thus, its major role is persuasive communication. The producer through promotional means provides information regarding the quality, different uses and the price of the product or service to the consumers. The promotional means may be salesmen, dealers, press, and other supplementary activities.
(2) Increase’ Sales Volume – The main purpose of all Promotional activities is to increase the sales of the product or products of the company. Promotional activities increase or help increase the sale by making effective upward change in the elasticity of demand of the product or service through various techniques i.e., by distributing samples, free gifts, purchase premium, discounts etc. Such activities make the product popular and are complementary to press and other media of advertising and personal selling.
(3) To keep the Memory Alive – One of the objectives of the sales promotion is to keep the memory of the product alive in the minds of the present customers. This work is done mainly by advertisement but other promotional activities help achieve this objective.
(4) To Arrest Seasonal Decline – In slack season, the promotional activities help in maintaining the sales of the product. Middleman (Distributors and retailers) and consumers offered attractive discounts and free gifts to lure them to purchase more and more. In this way, the producer arrests the seasonal decline in the demand of his product.
(5) To Induce Middlemen – The middlemen-wholesalers and retailers are induced to purchase more stock of company’s product by offering more facilities such as credit facilities, higher cash and trade discounts, free gifts etc.
(6) To Face Competition Effectively – Promotional activities help the producer or seller to meet the competitive situations in the market. The competition may be from manufacturers or sellers of similar products or of substitutes. Competition in similar products may be quality competition or price competition.
Promotional activities such as advertising giving information regarding price and quality of the product as compared to other similar products existing in the market or offering various facilities to middlemen with a view to sell company’s goods in preference to other goods or offering gifts and discounts to customers, help arrest competition. In case of competition from substitutes having superior technology, promotional activities cannot help much. The only remedy of such type of competition is to improve the quality of the product through research and innovation.
Sales Promotion Objectives – With Reasons for Growth
The promotional objectives are to be considered and framed by the organisations on the basis of an in-depth study of the economic environment, nature of competitive situations, the attributes of the product, the stage of the product in the product life cycle, consumer’s perception about the product and the image of the organisation.
In the total marketing process, the marketing goal of the organisation and the marketing strategy should be formulated at the time of programming the promotional activities. Promotional tools should be developed and applied as a supplementary to the other devices like public relations, publicity, advertising etc. The stages of the product, in the life cycle should be taken into account while introducing any particular sales promotional method.
The target group of consumers, their behavioural patterns, their attitude and perceptions should be given due importance in order to ascertain the effectiveness of the programme. The promotional tools should be administered and controlled in a well-planned fashion to avoid the hazards and complexities. The positive aspects and the limitations of the promotions should be scanned properly to attain the pre-set target and to fulfil the desired objectives.
The promotional programmes may be consumer -oriented or trade-oriented. The consumer-oriented programmes stimulate the consumers, and evoke the desire to take purchase decision. The consumers may feel an urge to buy the product, considering certain benefits of the purchase.
On the other hand, trade-oriented promotions inspire the middlemen like dealers, distributors, wholesalers, retailers to work hard to gear up their business in order to reap more profit. It provides a platform to generate a better relationship with the consumers and the prospects.
The objectives of sales promotion may be analysed as follows:
Objective # 1. To Ensure the Present Market Position and to Gain Additional Market Share:
In the event of increasing competition, new products and brands are coming up with intense competitive terms, and the brand proliferation is becoming a common phenomenon. In order to survive in the market and to retain the market share, the marketers adopt different promotional schemes. To retain the present position and to gain new market share, different promotional strategies may be applied.
Objective # 2. To Introduce New Products:
When the product is at the introductory stage of the product life-cycle, advertising alone cannot support the marketer to penetrate into the prospective market. To generate a favourable attitude towards the brand and to develop the awareness regarding the special attributes of the product, sales promotion devices are adopted effectively. The trial use, through distribution of samples or demonstration may convince the prospects regarding the positive features of the brand introduced.
Objective # 3. Special Offers may Generate Brand Preference and Brand Loyalty:
Special promotional offers like price-offs, coupons, premia, bonus packs will attract the consumer towards the products offered. It shall develop a strong positive impact on the purchase decision, a preference for the brand for the extra value offered. The satisfied consumers may generate a habit of purchasing the product in a repetitive fashion with brand preference and loyalty.
Objective # 4. To Counteract the Moves of the Competitors:
The fast growing markets and increased competitions, lead the marketers to give emphasis on sales promotion. To combat the situation, it is becoming a form of compulsion on the part of the marketer to develop different promotional tools and devices. This situation is generally known as ‘sales-promotion-trap’. As described by W. E. Myers in the competitive field, it is becoming necessary to differentiate its product or service from other competitors claim, through sales promotion devices.
Objective # 5. In Order to Dispose off Excessive Inventory:
In some situations, organisations may feel that excessive stock should be disposed off in a quicker fashion in order to allow the fresh stock to come in. The old stock may be disbursed through the outlets, adopting different promotional schemes like ‘price-offs’ or sale of ‘seconds.’ This is generally known as ‘stock clearance sale’.
Some outdated brands may also be withdrawn from the regular market and may be disposed off, adopting different schemes, allowing the consumers to buy the products at a concessional rate.
Objective # 6. In Order to Generate Immediate Liquid Funds:
In order to meet certain commitments or funding some other immediate projects, it may be necessary to generate some liquid funds in quick fashion, by an organisation. Under the situation, the organisation may decide to dispose of the excess stock in a short period of time, introducing different promotional schemes to attract the prospective consumers to sell the products immediately.
In order to achieve the objectives of the sales promotion, the marketer should be specific regarding the mission to be fulfilled as set by the organisation. As stated by Schultz and Robinson in ‘Sales Promotion Management’ the objectives should be – a) Specific, b) Clean and concise, c) Practical and realistic, d) Measurable, e) Affordable and f) Attainable.
The reasons for the growth of sales promotion is mainly due to:
1. Intense competition.
2. Development of customer relationship understanding.
3. Generation of brand awareness and brand attitude.
4. Price-sensitivity of the consumers.
5. Accessibility and availability of the products.
6. Standardisation of the products.
7. Development of the effective distribution systems.
8. Demand of the distributors, dealers and sales force to introduce and enhance promotions.
9. To influence consumers behavioural patterns.
1. Intense Competition:
In the present market condition to face the challenges of increasing competition, the marketers develop different promotional schemes to augment sales to satisfy the need of the prospective consumers. Different lucrative offers are launched to generate a favourable attitude of the consumers.
2. Consumer Relationship:
The basic objective of sales promotion, is to develop good relationship with the customers and to establish a better understanding. It should be the aim of the marketing and sales persons to satisfy the consumers’ demand and the basic needs and also to assure better services for future relationship. The “satisfied” consumers should feel “delighted” to retain long-term understanding for mutual satisfaction.
3. Generation of Brand Attitude:
Sales promotion is the avenue to reach the product or the brand in the mind of the prospective consumers and to develop a brand image with favourable attitude towards the product. It shall attempt to generate a bondage between the awareness and perception of the consumers and the personality of the brand and its features.
Basically the consumers are conscious about prices. In the competitive market it is becoming obvious for the marketers to analyse the rationality of pricing of the particular product with its available features and attributes. Sales promotion programme should be developed to generate the confidence of the consumers regarding the claims focused.
5. Accessibility and Availability:
In order to establish high brand equity and to generate brand loyalty, the promoted brands or the products should be easily accessible and readily available to the consumers. In order to provide better facilities the organisations should concentrate on effective distribution system and should establish scientific logistic framework to satisfy the demand of the consumers. Ready stock should be made available through different outlets, approachable and accessible to the target consumers.
With the advent of scientific development, the products are available to the consumers according to their need and specifications. The products are categorised and standardised to suit the specific consumer demand. Promotional features should highlight the suitability of special attributes to specific targeted segments.
7. Distribution System:
The promotional strategy shall encourage the effective distribution system to enable the middleman and the sales people to equip themselves with ready stock, to meet the demand of the consumers.
8. Encouragement for Distributors, Dealers and Sales-Force:
Lucrative sales promotion schemes shall encourage the dealers, distributors and sales-force to give more effort to increase sales for mutual benefit of producers and middlemen. Increase in sales shall generate more profit to the organisation, the share of which in turn shall percolate to the sales persons and consumers. Through this effort push and pull strategy may be effectively introduced.
9. Consumer Behavioural Pattern:
It is the focus of market-driven companies to develop and sustain relationships with the consumers. Consumers desire superior customer value, which includes quality products and service that are competitively priced. Marketers should provide continuous reinforcement to resist brand switching and to encourage brand loyalty.
Sales Promotion Objectives – Increase Sales Volume, Launch New Product, Increase Trial, Encourage Repeat Purchase and Deflect Customers Attention from Price
Some of the important objectives are mentioned below, and the more important ones have been discussed briefly:
1. Increase sales volume.
2. Launch new product and increase trial.
3. Encourage repeat purchase.
4. To block competitors’ moves.
5. Encourage dealers to participate in display and sales contests.
6. Deflect customers’ attention from price.
7. Speed up the sales of slow moving products.
8. To check the fluctuations in sales.
9. Clearance of excessive inventories.
10. Motivate dealers to stock and sell more.
11. To gain advantageous shelf-space.
12. To increase store traffic.
13. Improve relationship with dealers.
14. Motivate sales force.
15. To supplement advertising and personal selling efforts.
1. Increase in Sales Volume:
The sales volume of any product depends on many basic factors of marketing such as product quality, its price, distribution, effectiveness of marketing communications and macro-environmental factors (demographic, economic, technological, political/legal, and competitive, etc.).
Definitely, sales promotion cannot be a substitute for weakness in the marketing strategy.
There could be a number of reasons for companies to go for short-term increase in sales volume:
(i) To reduce inventories before the close of financial year.
(ii) To increase the stock-holding of retailers, or even consumers, before the introduction of a competing brand, or
(iii) To push stocks of the old brand before the introduction of new model.
2. Launch New Products and Increase Trial:
Small budget companies, who cannot afford sustained advertising expenditures to introduce new products, or match the competitive advertising blitz, find sales promotions to be more cost effective and helpful in generating sales volume.
Companies, who have a small market share, cannot match the substantial advertising budgets of market leaders in the same industry. It is also difficult for them to get proper shelf-space in retail shops without offering incentives to re-sellers, or encourage trial by consumers without offering some immediate or extra benefit.
A free sample, along with a coupon of attractive value, may prove to be more effective in inducing trial of a new product by consumers and may also lead to purchase of the regular pack from the market. A free sample is generally welcome to almost all consumers and increases the probability of trial and, in some cases, purchase as well. A number of personal care products, such as shampoos, cosmetics, toilet soaps or laundry products, such as detergent powders and cakes etc., have been introduced successfully in the last few years.
Consumers often use samples that are distributed free, with or without a coupon, to introduce a new product or induce trial of even an existing product. Small budget firms have to exercise extreme caution and use such promotion judiciously because this may prove to be quite an expensive propositioned. It would be more appropriate to choose selected markets with high potential.
3. Encourage Repeat Purchase:
Repeat purchase by customers leads to increased sales volume. Such sales promotions are communicated to encourage existing consumers to forward-buy. Promotions, such as discount coupons, not only encourage existing consumers but may also stimulate purchase by infrequent buyers, or even new tries.
To encourage repeat purchase, extra benefit offers are particularly effective. Delayed-value promotions that may require multiple purchases are also quite effective. There could be specific incentives, such as ‘get one free on purchase of four.’ Some promotions offer free merchandise or cash refund offer by collecting tokens on purchases of a specified value.
4. To Block Competitor’s Moves:
Aggressive advertising and sales promotion campaigns back up new product launches by competing companies. A firm that feels threatened would like to protect its loyal customers from switching to the new competing brand. Such a threatened firm would plan to load consumers so that they are in no need to go shopping for that product category. The firm may also announce some attractive trade-deals so that the shell space in retail shops is blocked.
To accomplish the objective, normally a combination of ‘push-pull’ strategy is used. There should be reliable information about the competitive moves, and the inventory holding costs should not be high. Detergent powders and cakes toilet-soaps, shampoos, oral hygiene products, and many other non-durable products, which are consumed every day, may respond well to such promotions. This objective may also be accomplished for certain consumer durable goods in case of trade segment.
5. Encourage Dealers to Participate in Display and Sales Contests:
An important objective of sales promotion is to encourage re-seller participation in displays and contests. Display is a powerful tool to enhance sales as it attracts the attention of consumers who are passes-by or window-shoppers. Displays serve them as reminders, encourage unplanned purchases and increase store traffic.
The space available for displays in retail stores and in showrooms is limited and expensive depending on the size of the store and display material, number of displays is limited. In an average store, there may not be more than ten or fifteen items that get major display space at any given time. Generally these displayed items generate a higher sales volume.
Contests are used to motivate dealers. A certain sales quota is fixed for dealers and those who exceed the quota by a specified margin, or by the largest margin, are awarded cash or merchandise, and often a certificate too. Everything about a contest, whether display or sales, should convey the idea that it is something special.
Such contests should be field infrequently and not become a routine feature which would reduce their importance and lead to decline in interest contests can help in attaining short-term objectives and improve the company reseller relationship.
6. Deflect Customer’s Attention from Price:
Price increase can often have negative effect on sales. Marketers can develop appropriate sales promotion to accomplish the objective of reducing the negative impact on sales. If the price of the product was Rs.50 before the price rise, and the new price is Rs.60, then a coupon with a face value of Rs.5 is provided that places the product’s price between Rs.50and Rs.60, making the effective price only Rs.55.
When the coupon would not be available, the new price does not appear to be so high relative to the new price of the product. Consumers develop a new reference price for the product and the increase does not appear to be as high as it was.