SALES PROMOTION- Marketing

Sales promotion is essentially a direct and immediate inducement that adds an extra value to the product, so that it induces the dealers and ultimate consumers to buy the product. It is defined as “those sales activities that supplement both personal selling and advertising and coordinate them and help to make them, effective, such s display, shows and expositions, demonstrations and offer non-recurrent selling efforts not in the ordinary routine”.

Sales promotion measures are temporary promotion methods. It is practiced as a catalyst and as supporting facility to advertising and personal selling.

NEED FOR SALES PROMOTION

Marketers resort to sales promotion to meet the following needs:

(1) To introduce new product.

(2) To overcome a unique competitive situation.

(3) To exhaust accumulated inventory

(4) To overcome seasonal slumps

(5) To get additional customers

(6) To retain the existing customers

(7) To supplement to the advertising effort

(8) To supplement to the salesmen’s effort

(9) To persuade the salesmen to sell the full line of products

(10) To persuade dealers to procure more.

The sales promotion effort may be aimed at consumers, traders dealers and salesmen.

Methods of Sales Promotion

The sales promotional methods aimed at consumers include:

(1) Samples

(2) Coupons

(3) Premiums

(4) Contest, Sweepstakes and Games

(5) Point and Purchase Promotion

(6) Discounts / Rebates

(7) Advertising Specialties

(8) Demonstrations

(9) Trade fairs and exhibitions

Samples

Samples are offers of a trial amount of a product. Some samples are free, for others, the company charges and small amount to offset its cost. The sample might be delivered door to door, sent by mail, handed out in a store, attached to another product, or featured in an advertisement. Sampling is most effective – but most expensive – way to introduce a new product.

Coupons

Coupons are certificates which offer price reductions to consumers during the subsequent purchase of same items. Coupons are distributed through newspapers and magazines, advertisements or even by direct mail. These are useful for introducing new product and to increase the sale of existing product.

Premium or Bonus Offer

An offer of a certain amount of product at free of cost to buyers who buy a specified amount of product is called premium offer or bonus offer. For example one silver spoon with Horlicks or plastic bucket with 1 kg. of Surf powder. A premium may come inside the package or outside the package. If reusable, the package itself may serve as a premium.

Contests, Sweepstakes and Games

In contest, an opportunity is provided for consumers to participate in a contest with chances of winning cash prizes, goods, free air tickets, cricket match tickets etc. Contests take variety of forms such as quiz contest, beauty contest, car rallies, lucky draws etc. A sweepstake involve merely inclusion of the customer’s name of his bill number who buy more than the specific value of productgs in the drawing of prizes winners. A game presents consumers with something – missing letters or completing a slogan – every time they buy, which may or may not help them win a prize.

Point of Purchase (POP) Promotion

Point of Purchase promotions include display and demonstrations that take place at the point of purchase or sale. Attractive displays of products in the shelf space to induce the consumers to buy the product.

Discount / Rebate

It is giving discount on certain products to induce buyers to buy the products. One could see grand discount sales during festival seasons on textiles, home appliances etc. to stimulate sales.

Installment offer and credit sales are other popular methods of sales promotion.

Advertising Specialties

Companies also distribute gifts to customers such as pen, calendars, diaries, table decorations etc. which will carry companies name and logo.

Demonstration

Firms resort to product demonstrations when they introduce new products. Vacuum Cleaners is a best example. Demonstrations may be done at retail stores, schools, homes and in trade fairs and exhibitions.

Trade Fairs and Exhibitions

Firms can introduce their products by displaying them in trade fairs and exhibitions to induce the buyers to buy the product. Especially in international marketing international trade fairs play a vital role.

Promotional Decisions- Advertising in Marketing Management

The main purpose of promotin is to attract customers and stimulate them to act in the desired manner. The need for promotional activities has been recognized by the marketer for the following reasons:

i) The physical separation of the consumers and producers and an increase in the number of potential customers.

ii) Improments in physical distribution facilities have expanded the area limits of the markets

iii) Availability of a large number of wholesaling and retailing middlemen in the market

iv) To restore the demand for the existing product when sale begin to decline.

A company’s promotional program – called promotion mix- consists of the specific blend of advertising, personal selling and sales promotion.

MEANING

The term ‘advertising’ originates from the Latin word ‘adverto’, which means to ‘turn around’. Advertising, thus, denotes the means employed to draw attention towards any object or purpose. In the marketing context, advertising has been defined as “an paid form of non-personal presentation and promotion of ideas, goods or services by an identified sponsor”. It is a component of firm’s promotional mix. It is a common technique of mass selling. Publicity is different from advertising. Publicity is not normally paid for and sponsor could not be identified. It is not easily controlled by the firm. Advertising can have both long-term and short-term objectives.

OBJECTIVES OF ADVERTISEMENT

1. To inform and influence the buyers to buy the product and thereby increase the sales.

2. To introduce a new product to potential customers

3. To influence the middlemen to store and handle the product.

4. It helps build up brand image and brand loyalty to the products

5. Advertising may be necessary to publicize the changes made in prices, channels of distribution, any improvement made in the quality, size, weight and packing of the product.

6. It may be issued, sometimes, to compete with or neutralize competitor’s advertising.

7. It helps build up corporate image.

8. In the case of mail order business, advertising does the selling job by itself.

9. By supplementing personal selling, advertising makes the job of sales force easier.

10. It helps increase the effectiveness of sales promotion campaign.

11. Finally, it encourages the creative arts and the artists.

Decision Areas in Advertising

The decision areas in advertising comprises of:

1. Identifying the target audience

2. Determining the response sought

3. Deciding the advertising objectives

4. Deciding the advertising budget

5. Deciding on the advertisement copy

6. Deciding the media

7. Evaluating the effectiveness of advertisement

IDENTIFYING TARGET AUDIENCE

A marketing communicator starts with a clear target audience in mind. The audience may be potential buyers or current users, those who make the buying decision or those who influence it. The audience may be individuals, groups, special publics or the general public. The target audience will heavily affect the communicator’s decisions on what will be said, how it will be said, when it will be said, where it will be said, and who will say it.

DETERMINING THE RESPONSE SOUGHT

The stages involved in purchase-processes are awareness, knowledge, linking, preference, conviction or purchase. The target audience may be in any of the six stages and the marketing communicator needs to know where the target audience now stands and to what stage he needs to be moved. This helps the marketer to develop a suitable promotional programmes.

DECIDING THE ADVERTISING OBJECTIVES

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DECIDING THE ADVERTISING BUDGET

Deciding how much money to be spent on advertising is not an easy task. The type of products involved the competitive structure of the industry, legal constraints, environmental conditions etc. influence advertising expenditure. The decision cannot be taken a standard formula. The answer varies from industry to industry and from company to company within the same industry. The same company’s advertisement expenditure may differ from time to time.

Methods of Advertising Budget

(1) Affordable method

(2) Competitive parity method

(3) Percentage of sales method

(4) Objective and task method

Affordable Method

This method as the name indicates rests on the principle that a firm will allocate for whatever it can afford. Usually small firms follow this method. Even the limited funds provided for advertising may get reallocated for other items depending upon the emergent requirements.

Competitive Parity Method

Under this method, the firms make their advertising budget comparable to that of their competitors. They simply do what others are doing.

Percentage on Sales Method

Under this method, the advertising budget is set in terms of a specified percentage of past year sales anticipated. The fact that different products brands at different stages of their life cycle will require varying levels advertisings support which is not taken into account by this method.

Another limitation is that the level of sales determined the level of advertising budget but the actual ‘functional relationship’ would seem to be reserve. Hence it is advisable that percentage of projected sales be allocated rather than percentage of previous year’s sales.

Objectives and Task Method

In actual practice, marketers usually blend some of the well accepted methods to afgjhk at a compromise budget which is logical. In other words, the budget decision is closely linked up with the advertising objectives, the media decisions and copy decisions. These four decisions areas in advertising interact among themselves and influence each other. The decision-making is an integrated process, which takes into account the total task of advertising to be performed.

DECIDING ON THE ADVERTISEMENT COPY

The term ‘copy’ includes every single feature that appears in the body of advertisement such as the written matter, picture, logo, label, and designs.

Developing the copy is a creative process. It is an area where not rigid rules can be applied. Some essential qualities that must be present in a good advertisement are that it must be able to (i) attract the attention of audience (ii) afggfsd interest (iii) create desire and (iv) stimulate the actions of buying. This is known as AIDA (Attention, Interest, Desire and Action).

Formulating the copy requires the consideration of the following:

(1) Message content – what to say?

(2) Message structure – how to say it logically?

(3) Message format – how to say it symbolically?

(4) Message source – who should say it/

Message Content

The advertiser has to decide ‘what do say’ to the target audience to produce the desired response. The basis is ‘advertising objectives’. Depending on the nature of the product and the target market, the message can have rational value, emotional value, moral value, educational value, attention value, humour value, etc.

Message Structure

The structure deals with the organisatoin and arrangement of the various elements of a message. The communicator must decide how to handle three message-structure issues. The first is whether to draw a conclusion of leave it to the audience. The advertiser is better off asking question and letting buyers come to their own conclusion. The second message structure issue is whether to present a one-sided argument, or to two-sided argument. Usually one-sided arguments are more effective in sale presentations – except when audiences are highly educated. The third message-structure issue is whether to present the strongest arguments first or last. Normally presenting them first gets strong attention.

Message Format

The marketing communicator also needs a strong format for the message. In a print advertisements, the communicator has to decide on the headlines, copy, illustration, and color. To attract attention, advertisers can use novelty and contrast; eye-catching pictures and headlines; distinctive formats; message size and position; and color, shape and movement. If the message is to be carried over the radio, the communicator has to choose words, sounds and voices.

If the message is to be carried on television or in person, then all these elements plus body language have to be planned. Presenters plan their facial expressions, gestures, dress, posture and hair style. If the message is carried on the product or its package, the communicator has to watch texture, scent, color, size, and shape.

Message Source

The source of the message has great deal of persuasive influence on the buyers. The persuasive influence depends mainly on the credibility of the source.

Source factors such as a level of expertise, trust worthiness and likability usually decide the source’s credibility with audience. Expertise is the degree to which the communicator has the authority to back the claim. Doctors, Scientists, and Professors rank high on expertise in their fields. For example, when a doctor is seen to render a message about a paid reliever, the receiver of a message is tempted to accept it as authentic information. Trustworthiness is related to how objective and honest the source appears to be. If an audience perceives the source as sincere, honest and trust worthy, the source will be effective in communicating the message. Likability is how attractive the source is to the audience; people like open humorous and natural sources. The most highly credible source is a person who source high on all three factors.

DECIDING ON MEDIA

The communicator now must select channel of communication. There are two broad types of communication channels – personal and nonpersonal.

In personal communication channels, two or more people communicate directly with each other. They might communicate face to face, over the telephone, or even through the mail. Personal communication channels are effective because they allow for personal addressing and feedback.

Nonpersonal communication channels are media that carry messages without personal contract or feedback. They include major media, atmosphere and events. Major media include print media (newspapers, magazines, direct mail); broadcast media (radio, television); and display media (billboards, signs, posters).

Events are stages occurrences that communicate messages to target audiences. For example, public relations departments arrange press conferences, grand openings, shows and exhibits, public tours and other events.

Channels of Distribution- Marketing

Channels of Distribution are the most powerful element among marketing mix elements. The main function of this element is to find out appropriate ways through which goods are made available to the market. It is a managerial function and hence proper decisions are to be taken in this matter.

When the product is finally ready for the market, it has to be determined what methods and routes will be used to bring the product to the market, i.e. to ultimate consumers and industrial users. This process involves establishing distribution and providing for physical handling a distribution. Distribution is concerned with various activities involved in the transfer of ownership from the producer to the consumer.

A channel of distribution for a product is the route taken by the goods as they move from the organisation to the ultimate consumer or user.

DEFINITION

Cundiff E.W. and Still R.S. define a marketing channel as “a path traced in the direct or indirect transfer of title to a product, as it move from a producer to ultimate consumes or industrial users”.

According to American Marketing Association, “A channel of distribution, or marketing channel is the structure of intra-company organisation units and extra-company agents and dealers wholesale and retail, through which a commodity, product or service is marketed.”

Philip Kotler difines a marketing channel as “the set of firms and individuals, that take title, or assist in transferring title, to the particular goods or services as it moves from the producer to the consumers.”

A distribution channel is “a set of interdependent organizations involved in the process of making a product or service available for use ro consumption by the consumer of business user.”

Thus, it may be noted that every marketing channel contains one or more of the ‘transfer points’ at each of which there is either an institution or a final buyer of the product. From the view point of the producer, such a network of institutions used for reaching a market is known as a marketing channel.

A channel always includes both the producer and the final customer of the product, as well as agents and middlemen involved in the transfer of title. However, the channel does not include firms such a bank, railways and other institutions which render a marketing service, but play no major role in purchase and sales. If a consumer buys rice from the cultivator, or if the publisher sells a book by main direct to a lecturer, the channel is from producer to consumer. On the other hand, if the publisher sells books to booksellers who in turn sell to the students and teachers are channel is from producer-retailer-consumer.

CHANNEL FUNCTIONS

The primary purpose of a distributive channel is to bridge the gap between producers and users by removing differences between supply and demand. For this, certain essential functions need to be performed. They are:

1. Information: gathering and distributing marketing research and intelligence information about actors and forces in the marketing environment needed for planning and aiding exchange.

2. Promotion: developing and spreading persuasive communications about an offer.

3. Contact: finding and communicating with prospective buyers

4. Matching: shaping and fitting the offer to the buyer’s needs, including such activities as manufacturing, grading, assembling and packaging.

5. Negotiation: reaching an agreement on price and other terms of the offer so that ownership or possession can be transferred.

Others help to fulfill the completed transactions.

6. Physical distribution: transporting an storing goods.

7. Financing: acquiring and using funds to cover the costs of the channel work.

8. Risk taking: assuming the risks of carrying our the channel work.

The importance of these functions varies depending upon the nature of the goods themselves. For example: transportation and storage tend to predominate in the case of bulky raw materials such as coal, petroleum products and iron one, where price and specification are standardized and the market comprises a limited number of buyers and sellers. As the complexity of the product increases, the provision of information and product service becomes predominant; for example, computers, automobiles etc. Therefore, it is necessary to consider the precise nature of the product and the seller-buyer relationship to determine their relative importance.

MAJOR CHANNELS OF DISTRIBUTIONS

There are a number of channels of distribution available to the producer which may be employed by him to bring his products to the market.

Distribution of Consumer Goods

Consumer goods may be distributed generally through various channels. The channels used are:

i) Producer to Consumer

ii) Producer-Retailer-Consumer

iii) Producer-Wholesaler-Retailer-Consumer.

iv) Producer-Wholesaler-Jobber-Retailer-Consumer.

Distribution of Industrial Goods

Industrial goods are distributed by manufacturer, through four important channels, although he may also use his sales brand or sales office for the purpose.

i) Producer-Industrial User: Through this direct channel are sold, large installations like generators, plants etc. to users.

ii) Producer-Industrial distributor-User: Through this channel are sold operating supplies and small accessory equipment, such as building material, construction equipment, air-conditioning equipment.

iii) Producer-Agent- User: This channel is often used when a new product is introduced, or a new market is entered.

iv) Producer-Agent-Industrial distributor-User

FACTORS AFFECTING THE CHANNELS OF DISTRIBUTION

A large number of channels of distribution are available to the manufacturer for bringing his product to the ultimate consumer. From this vast number of potential distribution arrangements, the marketing executive must screen those that may be appropriate for distribution of the product at least expense per unit of merchandise and which secure the desired volume of sales.

Efficient distribution at the least cost and attaining the desired volume of sale can be secured only after experience, study and analysis. The notice of the product, its unit value, its technical features, its degree of differentiation from competitive products etc., are the factors which may limit the number of potential channel alternatives.

The best channel is one that works best in the marketing strategy selected by the company. The channel chosen should achieve ideal market exposure and should meet target customer’s needs and preferences.

The channel choice is influenced by-

s Distribution Policy

s Product Characteristics

s Supply Characteristics

s Customer Characteristics

s Middlemen Characteristics

s Company Characteristics

s Environmental Characteristics

s Cost of Channel

Distribution Policy

A firm’s distribution policy may be of intensive distribution selective distribution or exclusive distribution.

Intensive distribution refers to maximum distribution though every possible type of outlet. This policy requires the use of more thant one channel to reach the target market with many intermediaries.

Selective distribution is the sale of product through only those outlets which will be able to sell more products.

Exclusive distribution involves granting of exclusive rights to the channel member to distribute the products. Thus the distribution policy of the firm decides the choice of a channel.

Product Characteristics

The product Characteristics such as the use of the product, its frequency of purpose, perishability, value, the service required etc. decide the channel.

For example, perishable products require more direct marketing; convenience goods such as soaps, match box which are frequently purchased and low unit value require long channel. Shopping goods such as refrigerator require selective channel.

Supply Characteristics

Small number of producers, geographically concentrated use short channel. If the number of products are large, and geographically dispersed, they use long channel.

Customer Characteristics

Customer characteristics such as their number, geographical dispersion, frequency and regularity of purchase greatly influence the channel selection.

Middlemen Characteristics

The choice of channel is also depends on the strengths and weaknesses of various types of middlemen performing various marketing functions. Their behavioural differences, product lines, the number and locations affect the choice of the channel.

Company Characteristics

The choice of channel is also influenced by company charachericsits such as its financial position, size, product mix, past channel experience etc. The company marketing policies such as speedy delivery, after-sales services etc. also influence the choice of channels.

Environmental characteristics

Environmental characteristics such as economic conditions and law also influence the channel selection. For example, when economic conditions are depressed the products prefer shorter channels to reduce cost.

Cost of Channel

As each channel will be doing some of the marketing functions, the cost of performing such marketing functions at each distribution level and the total cost of performing the entire marketing task has an influence in the choice of the channel. Those channels which ensure efficient distribution at least expense and which secure the desired volume of sales should be chosen.