Marketing Management notes.

1.  Sales Promotion:- Sales promotion is an indispensible part of
marketing.
 The ultimate objective of the marketer is to sell the product
that is produced in the factory.
 Similar to advertising, Sales promotion is also a type of
marketing communication.
 Advertising is generally used to reach a disparate target
audience, who get a broad view of a brand’s attributes.
An advertisement may or may not result in a sales
transaction. However, sales promotion is designed to ensure
just that.
 Sales promotion can be defined as ‘Media and Non–Media
marketing pressure applied for a predetermined, limited period
of time in order to stimulate trial and impulse purchase,
increase consumer demand, or improve product quality’.

2.  It can be also defined as ‘A marketing discipline that utilizes a
variety of incentive techniques to structure sales related
programmes, targeted to consumers, trade, and / or sales
levels that generate a specific, measurable action or response
for a product or service’.
 Sales promotion aims directly at inducing purchasers to buy a
product. It involves demonstrations, contests, price-off,
coupons, free samples, special packaging and money refund
offers.
 Sales promotion is not only aimed at end users, but also at
wholesalers and dealers.
 Selecting the right trade promotion tool at a given time requires a
study of the market of competitors’ sales promotion strategies,
and of the expectations of dealers and wholesalers.
 Sales promotion activities also cover the business and sales teams
of the company.
Ex:- Participation in trade shows and conventions, sales contests,
promotional material, incentives in cash or kind etc.

3.  An organization has to look at all the links between itself and the
end consumer in determining its promotional strategy.
 Sales Promotion Tools in the Marketing Mix:- The marketing
mix includes Four major Ps – Product, Price, Promotion and
Place. Many more Ps have been added over a period of time, which
includes Perceptions, People and Packaging.
 When we talk about Promotion, we include Advertising, Public
Relations, Personal Selling and Direct Marketing.
1. Advertising:- Advertising is the most visible tool of sales
promotion. Advertising is also known as Mediated
Communication as it uses one or more mass media.
 Advertising is a technique through which a manufacturer is able
to have a direct link with existing and potential consumers of a
brand.
2. Public Relations:- Public relation is a wide field and is of great
importance to the marketer, as, any marketer, if becomes effective
in developing the public relation with its existing and potential
customer then it generally enjoys a great brand image and
sales.

4. 3. Direct Marketing:- In the device of direct marketing, the
manufacturer interfaces with the customer directly, snapping
off the supply chain between the company and the end user.
 Consumer Promotions:- Consumer promotions are those
promotional activities and schemes which are aimed at the
consumer either directly by the manufacturer or in co–
ordination with the supply chain.
1. Promotion Offers:- Two or more brands are tagged together to
generate more sales.
Ex:- McDonald and Coca Cola.
2. Coupons:- A coupon is a price reduction offer to a consumer
either on present or on future purchases.
Ex:- Domino’s, Big Bazar. Etc.

5. 3. Price–Offs:- This kind of promotion offers a consumer a certain
percentage of discount that is generally reflected on a price–
tag.
 The old price is crossed out and the discounted one stamped in, to
assure the customer of the value transfer on purchase.
4. Premiums:- These are prizes, gifts and special offers that the
consumers are offered at the time of purchase.
 It is important to offer a premium that enhances the
manufacturer or retailer’s image. Cheap premiums can be
humiliating to the purchase.
 The principle to be remembered while deciding on a premium is
that the item must be able to build a rational or emotional
involvement with the product or service, to which the premium is
attached.

6. 5. Contests and Sweepstakes:- Generally a person becomes eligible
to enter a contest after he / she makes a purchase whereas to
enter a sweepstake, a person may or may not make a purchase.
6. Refunds and Rebates:- Refunds and Rebates are offered to
consumers or to the traders, following the purchase of a
product.
 In this case, the consumer is expected to pay full price against
purchase and to present the proof of purchase; the
manufacturer then reimburse a portion of the purchase price.
7. Sampling and Trial offers:- Many a times Sampling and Trials of
new products are made to initiate new purchases.
Ex:- Car manufacturers and dealers often announce a trial run on
new brands.

7. 8. Loyalty Programmes:- Loyalty programmes are initiated by
companies to express their bond with loyal customers.
Ex:- Loyalty bonus and Loyalty points.
 Trade Promotions:- The supply chain forms the backbone of any
marketing program.
 Every product can not be sold directly by the manufacturer to
the customer.
 Trade promotion tools are hence aimed at building a robust
relationship with wholesalers and dealers.

8.  The trade promotion is aimed at the trade, to achieve broadly the
following aims:-
1. To encourage storing of the manufacturer’s merchandise in the
stores.
2. To ensure higher visibility of the merchandise vis-à-vis other
similar products.
3. To enthuse the trader to push a particular merchandise at the
cost of competing products.
4. Often to create excitement about reaching the target sales.
5. To build loyalty for manufacturers in case of stiff competition.

9.  Techniques used for Sales Promotion:-
1. Trade Deals:- Under this scheme, the manufacturer offers
discounts, free goods (as bonus), higher commissions if a
target is reached, gift in kind, holidays at exotic places or
better credit facilities.
2. Co–operative Advertising tip-ups:- Here the retailers advertise
the product of a manufacturer with some financial support
from the manufacturer.
 This trend is very common and effective in cases of cost intensive
products like automobiles and electronic items.
3. Participation in Trade fairs and Trade shows:- Traders are the
backbone of a company’s supply chain.
 In order to educate them on the latest techniques and displays,
many manufacturers take their traders to trade fairs, seminars
and workshops, which helps them in providing the right
exposure, besides building a rapport with them.

10. 4. Direct Stimulation of Trader’s Sales team:- The sales team of a
retailer is encouraged to push a brand of a particular
manufacturer against competing brands, with special
incentive from the company side.
5. POP Display:- POP (Point of Purchase) forms a very significant
part of the sales promotion scheme.
 The connect helps in reinforcing the brand message. POP
materials include banners, signs, dispensers, racks, display
cartons, price card etc.
6. Push–Money:- Push–Money, also known as spiffs, is a monetary
benefit paid to a retail outlet based on units sold over a period
of time.
7. Dealer Loader:- This is a premium given by a manufacturer to a
dealer for buying a certain quantity of merchandise.

11. 8. Industry Tie-ins:- Many a times, tie-ups between and among
business partners are organized to promote certain products.
Ex:- Buying a refrigerator of a particular brand and getting an
iron of another brand as a gift.
9. Event Sponsorship:- Companies either use events revolving
around their brands or sponsor sports, fashion, social or
national events.
 The basic aim behind event management is to create top-of-the-
mind recall through stressing a corporate identity and also to
be seen as being associated with a worthy cause.
10. Celebrity Endorsements:- Involving celebrities, works for both
the sponsor and the celebrity.
 It assures more participation from people, good media
coverage for the company and a better public image for the
celebrity, who wishes to be seen endorsing a public sentiment or a
cause.
Even many companies in the social sector invite celebrities
from various fields to be their brand ambassadors.

12.  Objectives of Sales Promotion:- Sales promotion objectives
should always be consistent with the marketing objectives.
 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, offset competitive promotions,
build brand loyalty and so on.
• The objectives for the sales force may be to encourage a new
product or modes, stimulate off-season sales, persuade more
prospective buyers, and so on.
• The objectives for consumers may be to encourage more usage
and purchases of a large number of units and attract
competitors’ brand users.

13.  In spite of these several objectives, there are three fundamental
objectives of sales promotion. These are:-
1. Informing:- To educate the consumer about the product. The
consumer must have some knowledge about the product, they
should, therefore, be informed of the new product and the
benefits of the new product.
2. Persuading:- Sales persons persuade consumers to buy products.
They develop or reinforce a favorable set of attitude and
influence their buying behavior. They supply comparative
information on various products so that consumers may be
willing to purchase the products promoted by them.
3. Reminding:- Reminding leads the firm to reinforce the previously
satisfactory behavior 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.

14.  Sales Promotion Budgets:- It is extremely important to
determine sales promotion budgets before resorting to sales
promotion activities.
 The resources and sales potentials are estimated before the
formulation of budgets.
 Sales promotion budgets should be adequate, so that they might
achieve promotion objectives.
 The following methods are used in order to decide upon the
sales promotion budget:-
1. Arbitrary Budgeting Method:- Some marketing managers use this
method based on trial and errors.
2. Percentage–of–Sales Technique:- A formula is framed to fix the
budget level, which is generally 0.5% of the sales, which may be
increased up to 1.0% in a competitive environment.

15.  But this method is not very logical as sales promotion is the
cause and not the effect of sales.
 If the sales have increased because of external factors, the
increase in sales promotion budget has no logical background
for it.
 However, this method of budgeting is commonly used in sale
promotion activities because of ease of calculation.
3. Maximum Possible Expenditure:- The expenditure on sales
promotion is a sort of long–term investment, which may
enhance the name & fame of the company.
 Hence, many companies, specially the new ones, favour
maximum expenditure on sales promotions.
 Many a times, a competitive environment also dictates that
there should be maximum possible expenditure on sales
promotion activities.

16. 4. Return on Investment Method:- The total expenditure on all
sorts of promotion is fixed on the basis of the return on
investment.
 The ROI of the past five to ten years is averaged to arrive at the
standard rate of return.
 The maximum limit on the promotion budgets is discounted on this
basis. The promotion budget is then rationally divided into
sales promotion, personal selling, publicity and advertising.
 The total expenditure on sales promotion is fixed on the basis of
objectives and tasks.
 The marketing manager choose the technique which is best
capable of enabling him to attain the objectives.
 The sales promotion objectives & budgets are decided at the
time the objectives & budgets of other methods of promotion
are evaluated and fixed.

17.  The expenditure on sales promotion and other methods is also
determined on the basis of expenditure trend in the industry.
 Competition is also another important factor which determines
the volume of expenditure on sales promotion.
 The responsiveness of the budget is evaluated on the basis of
the return in industry on promotion expenditure.
 The market share of the company is also taken as a guide for
fixing the amount of expenditure.
 A crude evaluation of the responsiveness may be done by the
comparative analysis method of additional promotion
expenditure and additional sales realization.
 However, it is difficult to evaluate the impact of promotion
expenditure as a whole because of the different sales
promotion activities, cost of production & sales, quality of the
product, promotional plans and external environmental
variables.

18.  The responsiveness also varies in accordance with the life cycle
of the product.
 Industry sales are less responsive to promotion during maturity
and more responsive to promotion during the introduction and
growth phase.
 Evaluation and Control of Sales Promotional Strategy:- Sales
promotional strategies should be evaluated at the stages of
Implementation & Final Performance as implementation
control will suggest improvements during the application of the
promotional strategy, while performance control will be a
guide for the future.
 Implementation control covers Initial Planning, Objectives,
Promotional Packages, and Printing of Special Premium &
Packaging Materials, Distribution of Retailers etc.

19.  It is said that 95% of implementation control has improved sales
results, although very few firms adopt this strategy.
Many manufacturers believe only in performance control.
 Performance or Sales results are evaluated in the light of
planned objectives.
 Consumer panel data, consumer surveys and consumer
experiments are also used to evaluate the performance of a
particular mode of promotion or form of sales promotion.
 These evaluation techniques show how far the sales promotion
techniques have been effective in increasing sales through
motivating consumers & sellers and point the way to improve
sales promotion.