A modern approach to sales promotion

The committee on definitions of the American Marketing Association has defined “Sales promotion” as follows:- “Sales promotion, in a specific sense refers to those sales activities that supplement both personal selling and advertising and coordinate them and help to make them effective such as displays, shows and expositions, demonstrations and the other non- recurrent selling efforts not in the ordinary routine.”

A careful reading of the above definition would show that personal selling and advertising are outside the purview of sales promotions. To many this may appear to be incorrect way to define sales promotion. This is because, if, sales promotion is accepted as an exercise in making the marketing activities more effective and efficient, it would not be correct to treat it as something different from personal selling and advertising. A correct definition of sales promotion should include personal selling, advertising and all supplementary selling activities.

However, at the same time, it would not be appropriate to ignore the subtle difference of meaning between advertising and sales promotion. Advertising includes all forms of mass communication directed toward influencing the end customer. Sales promotion on the other hand includes the forms of mass communication directed toward informing and influencing the channels of distribution. Thus, if any literature relating to a product is mailed directly to the consumer, it is advertising, but any literature distributed to the distributors will amount to sales promotion. Advertising moves the buyer toward the product while sales promotion moves the product toward the buyer.

Sales promotion activities with diversified objectives should be undertaken at different levels such as at dealers’ level, consumers’ level and consumers’ level.

At dealers’ levels it should be done in the following ways:

(i) Advertising material: It is a usual practice with most producers’ of goods to supply advertising material to their dealers e.g. sign board, banners etc.

(ii) Store demonstration: Within this framework, sales personnel of the manufacturer carryout special demonstration of their products for the benefit of both their dealers and consumers. The object is to educate the dealers and consumers about the qualities of the targets product, how it is to be used etc. and to remove their doubts.

(iii) Special displays and shows: during trade fairs and exhibitions, special displays and shows of the company’s products might be arranged with a view to popularizing them.

(iv) Dealer contests: Under this, dealers are offered additional incentives for attaining pre-determined sales targets or for arranging attractive displays and demonstrations of the products of the manufacturer concerned.

(v) Dealer premiums: Within this, for buying a specified quantity of the goods produced by a manufacturer during a given period, dealers might be offered attractive discounts or prizes in cash or kind.

At consumers’ level it should be done under the following methods:

(i) Coupons: It is a scheme under which consumers might be given a coupon which is put inside the packages purchased by them. Each coupon with the buyer would entitle him to claim a special discount at the time of next purchase by him of the same product. At times such coupons might be made a part of a “Lucky Draw”.

(ii) Reduction Sales: During off- seasons consumers might be offered special discounts or reduction in prices.

(iii) Samples: Under this scheme, prospective customers might be offered free samples of a new product, so as to enable them to test the veracity of the claims made on its behalf.

(iv) Money refund offer: Under this the producer might offer to refund the price paid by the buyer if for any reason he is not fully satisfied with the product

(v) Trading stamps: Within this scheme consumers are given a certain number of stamps every time they buy a certain quantity of the goods of a particular brand. The stamps are later redeemed by way of special gifts or reduction in price.

(vi) Trading in: Under this scheme, the buyer might be required to buy a certain number of articles of the producer at regular intervals. At the time of purchase of the last item as stipulated, the first item might be taken back by the producer and replaced by a new item at a reduced price.

(vii) Premiums: These might be by way of coupons put inside of pasted outside the package or a free gift item put inside the package or given away along with the package.

Sales promotion at salesperson’s level :- It might be done by providing special incentives to the salesmen employed by the producer, whether in cash or in kind or by way of promotion to the next higher position in the organization, if they could achieve a predetermined sales target or popularize the products in any other manner.

Undertaking sales promotions activities yield certain benefits to the enterprise. The main benefits accrued are:

(i) Lower production costs- Companies engaged in large scale production would be able to enjoy economies of scale. As such the production costs would be less. Sales promotion activities help to increase sales, there by lower costs of production.

(ii) Sales support:- Sales promotion is an exercise in informing, persuasion, and influencing. This should be coordinated with advertising, individual selling, and publicity there by provides strong support to marketing activities.

(iii) Aid to product acceptance: Sales promotion schemes, whether at the level of dealers’, consumers’ or salesmen have far greater potential to make the product acceptable to the market than advertising, which is impersonal in nature.

(iv) Effective management control: The management of a company can keep an effective check on the results achieved through various sales promotion schemes, because it is in a better position to analyze the costs incurred or benefits derived.

However, sales promotion is not free of criticism. The incentives offered through sales promotion schemes are fictional and not real. This is because the producer realizes the costs of these incentives by raising the price of the goods. Generally sales promotion schemes are carried out during particular seasons, they lack permanence. So the results achieved through them are short lived. The moment the incentives are withdrawn, the benefits in terms of increased sales might be gone. Poor quality products generally need sales promotion support. Therefore, sales promotion is a scheme which carries both gain and loss.

The writer is former Director General of Export Promotion Bureau. He can be contacted at hassan.youngconsultants@gmail.com