Sales promotion is required to motivate three parties – the consumers (“pull strategy”), the distributors (“push strategy”), and the sales force of marketer as well as the distributor to push the products.
Consumer Sales Promotion Methods/Tools/Techniques:
To motivate consumers-Price Promotions; Prize Promotions – free prize draws, sweepstakes/games, and competitions; Self-liquidating Offers; Free Mail-ins; Partner Promotions; Charity Promotions; and Tailor-made Promotions are used.
1. Price Promotions:
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These kind of promotions have not much ingenuity. Indian print and electronic media are often full of such ads and these promotions include – Up to 51% off, i.e., cutting down price through discounts. In India this is very popular especially at the end of season sale ( Shoppers Stop 51% off Sale begins Jan 21 Reliance fresh in its ‘save save save’ ad on 21st January, 2012 in Times of India not only gives prices of different items but also claims “Get Double The Difference, if found cheaper”.
Festival Season accounts for almost 70% of retail sales in the country. Tata’s Croma, electronics store, offered 5% cash-back, besides running a promo for big spenders (over 25,000) with all expenses-paid holidays package to Switzerland and necklace worth Rs 1 lakh for winners.
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i. Extra-Fill Packs:
20% extra free, i.e., extra fill without any charge. This is very popular in India in toothpaste segment, where consumers are often motivated through extra filling without extra charge. In 2012, in case of Rin detergent powder it offers 100 gms free.
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ii. Free Offers:
Buy two pieces and one piece is free, i.e., extra unit free. This has been very popular sales promotion method for apparel marketers. Koutons in India often used to sell shirts – ‘Buy two and third one is free’. Times of India offered Vox Room Heaters saying – “Buy 1 Get 1 Free”. In case of Colgate toothbrush, it offered 1 free with the purchase of every two brushes. Another free offer can be in the form of free samples to motivate people to try the product.Yakult, a nutrional supplement brand from Japan, endorsed by Bollywood star Kajol, distributed free samples in and around Delhi to stimulate its trial.
iii. Reduced Shelf Price:
The most common form of price promotion is Reduced Shelf Price. A standard product is on sale with a shield sticker showing a reduced price offer.
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iv. Reduced Price Offers (Rpos):
RPOs are flashed on-pack, offering a saving (Rs 10) or a price slashed through and a lower price given.
v. Cash Rebates:
The customer is invited to collect tokens from a number of packs and send them to receive a cash voucher.
vi. Cash Share-Outs:
A sum of fixed money is divided among all those returning the requisite number of proofs of buying the a product or service.
vii. Discounts:
On single unit of higher value purchase sales through discount Coupons is made. Often jewellers and furniture makers engage into this type of sales promotion. Some writers call it immediate discount. Discounts may be seasonal discounts, quantity discounts, and cash discounts.
viii. Repurchase Offers:
Manufacturers of consumer durables, like cars, fridges, stereos, are offered a commitment by them to buy back at a specified point in the future. Nowadays many other manufacturers also agree to buy back a particular product even of a competitor. Maruti Suzuki also buys its own old car if the customer buys a new Maruti car.
Ix. Frequent-User Incentives:
Most of the Airlines offer this facility to their fliers. The free miles offered are greater in business class. Economy class fliers can use free miles to upgrade their tickets. Many tour operators also provide next trip to a particular station free along with the present tour ticket.
x. Coupons:
Issue of coupons is very popular way of sales promotion. Sometimes a coupon booklet is inserted into the local newspaper for delivery or sometimes newspaper hawkers are paid for inserting such coupons in the newspapers. At times Coupons are kept at the shelf where the product is available. At other times the customer is given a coupon based on products purchased on checkout.
Coupons can also be made available on line. Consumers print them out and take them to the store. Nowadays there are some coupon companies who can manage discount especially on dining, wining, etc. In India such companies include snapdeal.com, Mydala, Kooys, Dealsandyou, Sosasta (Indian arm of Groupon) and Ebay. Though coupons are issued for millions of rupees but a negligible portion is redeemed.
Coupons should be easily recognisable and describe the offer clearly. Coupons incentivise present users, bring back former users, and encourage buying in larger quantity. A large number of coupons distributed in India belong to fast food category. Some of the limitations of the coupons are – first, there is chance of fraud and misredemption; second, coupons are losing value as too many marketers are issuing them; third, many consumers redeem coupons only for the products they normally use, and finally, most of the times coupon items are not found in the stores.
xi. Sale:
A sign on store item – “Sale”can increase sales by 50%, even if the price is unchanged. However, the price is normally lower than otherwise. However, in some of the cases, when customers hardly know about the regular price, the opportunity does exist for higher prices with a bigger “Sale”sign. The sign “Sale”is important for two reasons – first, the customers perceive that the price is lower, and the second is the sign “Sale”draws more attention.
xii. Finance Deals:
Many manufacturers, especially, the consumer durables, give either interest free facility or finance at low rates to buy the product. Bajaj Auto provides this facility to consumers who want to buy their motor cycles. Similarly Tata motors provide a large credit facility for Nano cars.
2. Prize Promotions:
Prize promotions include free prize draws, sweepstakes, and competitions.
i. Free Prize Draws (And Lotteries):
It involves putting the names of all the entrants in a computer and deciding winners by chance. In European countries this practice is considered similar to lottery and is therefore, not permissible. In India, there is no such ban. This tool of promotion adds excitement and interest and many people buy the product to enter the draw.
Thus, this is not pure lottery, but to be eligible, one has to buy a product. The promotion of this kind is very popular among retailers. In case of annual sale the retailers of Connaught Place, New Delhi, themselves offer one prize daily to the people who buy from any of them.
ii. Sweepstakes / Games:
“A sweepstake is a contest where the distribution of prizes is dependent on the random distribution of predetermined winning tickets.”The participants exercise no control. Sweeps generate awareness and involvement with a brand. The most cost effective sweepstakes prize is travel, which has a substantially higher perceived value than its cost. Another popular sweepstake method is ‘Scratchcard’ promotion or ‘instant wins’.
Recently Indian Oil has used it for the promotion of ‘Servo’ engine oil – scratch the card and win sure shot prize from Rs 25 to Rs 50,000. Another variant of sweepstake is the ‘rare’ package (can, box, bottle, jar) offering an instant win, for example, ‘Is there a car in this jar?’ P.C. Jewellers apart from flat 8% discount on diamonds offers 200 diamond jewelleries to be won through lucky draw.
iii. Competitions:
A competition is a contest where the winner is determined on the basis of exercise of skill. Marketers use competitions to dramatise the brand (especially if the promotion is featured on the pack), attracts trade support (for display, retailer’s advertising), to educate the consumer, and forces purchase. The main forms of competitions include —
1. Order of merit: ‘List the following five items in order of importance’.
2. Complete a slogan: ‘Complete the sentence in not more than 10 words’.
3. Question plus slogan: ‘Answer these five questions-and complete the slogan in not more than 10 words.’
4. Spot the difference: ‘Identify 10 differences in the two pictures’.
5. Estimate: ‘How many packs will fit inside this car’.
6. Spot the ball: ‘Mark the position of football or golf ball on this photograph’.
7. Identify: Identify these celebrities (mostly film actresses) from their eyes’.
8. Be Creative: ‘Draw a picture or write a story’.
9. Treasure Hunt: ‘Use the clues to find the hidden treasure’.
3. Premium Promotions:
In this kind of sales promotion, the benefit comes in the form of an item of merchandise. Premium can be in any form.
i. On-Pack Offers:
in it the premium is physically attached to the product. If it is in the pack, it is called ‘in-pack’ promotion.
ii. With-Purchase Premiums:
The premium is available at the point of purchase. These are also called ‘near-packs’ as retailers keep the premium near to the pack. Maruti Suzuki provides with-purchase premiums.
iii. Self Liquidating Offers:
These are the promotions where consumer is offered gift. The customer gets something in addition to the main purchase. A toothpaste maker may offer a free tooth brush. HP laptop computer marketer gives the carry bag free along with the purchase of its laptop. This type of promotion is widely used for – subscription – based products (e.g. magazines) and Consumer luxuries (e.g. perfumes).
Sometimes the customer is asked to pay for all the cost of the premium and the handling charges. Such an offer can’t be termed as ‘free’. At best it can be termed as a ‘bargain’, where the cost is still below the market price. At times the marketer may provide the cash back. Most of the aviation portals like ‘makemytrip, com’ offers cash back facilities as part of their sales promotion efforts.
The gift or cash are given only after proof of purchase is given to the marketers. These schemes are often viewed with some suspicion by customers – particularly if the method of obtaining a refund looks unusual or onerous. Godrej Inerio offers 10% discount and an assured free gift.
iv. Free Mail-Ins:
Here the consumer is offered ‘free gift’ in exchange of one or more proofs of purchase (POP). These POPs may be labels, or bottle caps (as it was in case of Coca Cola). The customer has to bear no cost. These promotions are a very popular method of adding value to the product. However, some of the Indian companies make misuse of this method. They ask the consumer to bear the cost of postage and send money in advance for the same. Even the gift is not found worthwhile.
v. Partner Promotions:
From February 2, 2012 McDonald’s India every purchase of its meal, the customer will Rs 50 off on a movie ticket for “agneepath”. Few lucky winners will get a chance to win free tickets or preview the movie before its launch, and some chosen ones will get the mega prize of having a lunch date with any of the stars in the movie.
This category of promotions involves two parties, not competing with each other. In the above example, food and movies go together. Any marriage between the companies and products need to be matching and compatible. A new car and free insurance cover, a tour operator and sunglasses, a soft drink and a snack brand or cinema are good examples of this matching.
vi. Charity Promotions:
Such promotions appeal to the good nature of consumers. The company may announce that for each unit sold Rs 5 will go to charity. Charity promotions are good but not for luxury fragrance, bear companies, or jewellers. The choice of charity is crucial from the customers’ point of view (children, animal, earthquake, tsunami, India, overseas, and so on).
vii. Tailor-Made Offers:
Such offers may include exchange offers. In case of Durian, impported furniture company, has announced six days of EXCHANGE OFFERS Jan 21-26, 2012.
4. Off-The-Shelf Offers:
There are some offers which come up again and again because they work again and again.
The leading off-the-shelf offers can be:
i. Free Accomodation:
Particularly for hotel industry. The offer now extends to be ‘two nights for the price of one’.
ii. Holiday Vouchers:
These provide a good saving to customers. Some companies give cash discount, traveller’s cheques, duty-free shopping voucher, etc
iii. Discount Coupons:
Nowadays many firms offer such vouchers. In India such firms (operate on-line) include snapdeal.com, sodexo, etc. Snapdeal.com provides discount vouchers for health and beauty, entertainment and adventures, mobiles, apparel, lifestyle, electronics, computer, jewellery, books and movies, footwear, home and kitchen, kids and toys, and Travel categories. Recently such firms are on a rise in India.
iv. Two-For-One Flight:
Especially budget airlines offer this facility. Even the regular flight airlines offer free ticket for the spouse.
v. Insurance Offers:
Mostly the car manufacturers provide free insurance for the first year as part of sales promotion during sleek season.
5. Hybrid Sales Promotion:
i. Trade Fairs:
The modern trade fairs can be traced back to the 1844 French Industrial Exhibition held in Paris to encourage improvements in agriculture and industry by sharing knowledge. Soon many European countries of continental Europe started organizing such exhibitions. Since the 1967 Montreal Expo, they started getting addressed as expos rather than fairs. Today many countries try to improve their national image.
Most noticeably, Australia, Finland, Japan, Spain and China have used these expos to brand their new global positions. Fairs create awareness and direct sales. According to Global Association of the Exhibition Industry – in 2010, there were 30,700 exhibitions across the world which were held at places which were 500 sq m or larger. About 2.8 million companies participated and these shows were visited by 260 million people.
In Europe, the leisure, hobby, and entertainment industry rented the largest proportion of space available in these fairs followed by general products, construction, engineering, and furniture, interior decor industries. In Asia, general and furniture/interior decor industries rented the largest proportion of space, which was a bit more than textiles.