University of Mumbai

Academic year:- 2012-2013

Project on:- Agency Management (sales promotion)

Submitted by:-Dhruv Chauhan

T.Y.B.M.M. (Advertising)
M- 307

Submission date:- 12 - 03 - 2013

Project guide:- Prof. Achala Bhatt

College name:- Khar Education Society’s College

of Commerce and Economics.
 Declaration

I, Master. Dhruv Chauhan of Khar Education

Society’s College of T.Y.B.M.M. semester VI hereby
declare that I have completed the projected of
Agency Management in the academic year 2012-2013.
The information submitted is true and original to the
best of my knowledge.

Signature.
 Acknowledgement

I would like to thank my professor guide Mrs. Achala

Bhatt who provided me with essential and relevant
information throughout my project and helped me to
widen my horizons. I would like to thank my BMM co-
ordinator’s and my college who helped me during my
project. Above all I would like to thank all those
people who helped me directly and indirectly who
helped me complete my project successfully.
 Certificate

I Professor Achala Bhatt hereby certify that Master. Sagar Kadam

of Khar Education Society’s College of T.Y.B.M.M. of semester VI
has completed project of Agency Management in the academic year
2012 – 2013. The information submitted is true and original to the
best of my knowledge.

Signature.

Principal. Project Guide.

BMM Co-ordinator. External Examiner.

 Topics

1. What is sales promotion?

2. Definition.
3. Objectives.
4. Advantages & Disadvantages.
5. Types &Techniques of sales
promotion.
6. Tools of sales promotion.
7. Opinion about a product.
8. Conclusion.
 Sales Promotion
Sales promotion is one level or type of marketing aimed either at the consumer or at the distribution
channel (in the form of sales-incentives). It is used to introduce new product, clear out inventories, attract
traffic, and to lift sales temporarily.

Sales promotion is one level or type of marketing aimed either at the consumer or at the distribution
channel (in the form of sales-incentives). It is used to introduce new product, clear out inventories, attract
traffic, and to lift sales temporarily. It is more closely associated with the marketing of products than of
services. The American Marketing Association (AMA), in its Web-based "Dictionary of Marketing Terms,"
defines sales promotion as "media and non-media marketing pressure applied for a predetermined, limited
period of time in order to stimulate trial, increase consumer demand, or improve product availability."
Business pundits and academic students of business have developed almost fancifully sophisticated views
of sales promotion. In down-to-earth terms it is a way of lifting sales temporarily by appealing to economic
motives and impulse-buying behaviour. The chief tools of sales promotion are discounts ("sales"),
distribution of samples and coupons, the holding of sweepstakes and contests, special store displays, and
offering premiums and rebates. All of these techniques require some kind of communication. Thus sales
promotion and advertising are difficult to distinguish.

The need for promotion arises from the intensity of competition. Sellers must somehow attract
customers' attention. In the open markets of old (and farmers markets of today), sellers did and do this
by shouting, joking with customers, and sometimes by holding up a squealing piglet for everyone to see.
Priya Raghubir and his coauthors, writing in California Management Review, identify "three faces" of
consumer promotions: these are information, economic incentive, and emotional appeal. Information may
take the form of advertising the availability of something, incentives are offered in the form of discounts,
and emotional appeals are made by displays and, of course, by the low price itself.

Precisely because sales promotions must provide incentives—whether to the distribution channel, the
company's own sales people, or to the consumer—they cost money by definition and must produce
additional volume to pay for the expenditures. A grand sale that clears out the inventory but, with added
advertising costs factored in, reduces margin too is—a failure. Sales promotions therefore must be
carefully calibrated to achieve the purpose. Holding promotions too frequently will habituate customers to
buy only when promotions are in effect. Avoiding promotions altogether will let competitors draw
customers away. Alas, business never fails but to challenge the participant'
 Definition of Sales Promotion

 According to Philip Kotler, “Sales Promotion consists of a diverse collection of incentives tools,
mostly short term, designed to stimulate quicker and/or greater purchase of particular product or
services by consumer or by trade”

Sales promotion is the process of persuading a potential customer to buy the product. Sales promotion is
designed to be used as a short-term tactic to boost sales – it is not really designed to build long-term
customer loyalty.

Some sales promotions are aimed at consumers. Others are targeted at intermediaries (such as agents and
wholesalers) or at the firm’s sales force.

When undertaking a sales promotion, there are several factors that a business must take into account:

 What does the promotion cost – will the resulting sales boost justify the investment?
 Is the sales promotion consistent with the brand image? A promotion that heavily discounts a
product with a premium price might do some long-term damage to a brand
 Will the sales promotion attract customers who will continue to buy the product once the
promotion ends, or will it simply attract those customers who are always on the look-out for a
bargain?
 OBJECTIVES OF SALES
PROMOTION
Building Product Awareness – Several sales promotion techniques are highly effective in exposing
customers to products for the first time and can serve as key promotional components in the early stages
of new product introduction. Additionally, as part of the effort to build product awareness, several sales
promotion techniques possess the added advantage of capturing customer information at the time of
exposure to the promotion. In this way sales promotion can act as an effective customer information
gathering tool (i.e., sales lead generation), which can then be used as part of follow-up marketing efforts.

Creating Interest – Marketers find that sales promotions are very effective in creating interest in a
product. In fact, creating interest is often considered the most important use of sales promotion. In the
retail industry an appealing sales promotions can significantly increase customer traffic to retail outlets.
Internet marketers can use similar approaches to bolster the number of website visitors. Another
important way to create interest is to move customers to experience a product. Several sales promotion
techniques offer the opportunity for customers to try products for free or at low cost.

Providing Information – Generally sales promotion techniques are designed to move customers to some
action and are rarely simply informational in nature. However, some sales promotions do offer customers
access to product information. For instance, a promotion may allow customers to try a fee-based online
service for free for several days. This free access may include receiving product information via email.

Stimulating Demand – Next to building initial product awareness, the most important use of sales
promotion is to build demand by convincing customers to make a purchase. Special promotions, especially
those that lower the cost of ownership to the customer (e.g., price reduction), can be employed to
stimulate sales.

REASONS OF SALES PROMOTION

1. Increasing Competition

The air of change is gaining momentum after the introduction of economic liberalization. Due to increase in
competition, companies are finding it increasingly difficult to compete on quality. They are therefore
resorting to more innovative methods of sales promotion. In order to have a competitive advantage over its
competitors like Levis, Pepe, Killer and others, Spykar Jeans, once a year has a grand sale of upto 50.

2. Customers Have Become More Price Sensitive

This increased price sensitivity is a direct result of rampant inflation. Economic recession is likely to fuel
this trend further, as consumers and dealers become more sensitive towards prices. If the customers get
branded jeans at half the actual price, then they are definitely going to make huge purchases of Spykar
Jeans because they want value for their money, as they are price sensitive.

3. Sales Promotions Generally Create An Immediate Positive Impact On Sales

Advertising, personal selling and other methods of promotion produce slower sales response compared to
sales promotion. Sales promotions are mostly for short duration, for a specified period, leading to a sense
of urgency in consumers to buy now. This creates an immediate positive impact on sales.

4. Products have become more standardized

In many product categories, there is a proliferation of brands; many of them are line extensions and me-
too brands. Most brands are being perceived by consumers to be more or less similar within a given price
range because of the inability of manufacturers to develop truly differentiated products. Under these
circumstances, advertising messages are unable to strongly influence the consumers’ perceptions and
create brand franchise. As a result of these perceptions of similarity among brands, marketers have no
way but to compete on the basis of extra benefit offered through sales promotion. Competing companies
struggle to capture market share by using every tool likely to bring sales success.

There are many unbranded jeans sold at shopping malls and places like linking road, bandra which are
bought at half the price of actual branded jeans. People who are money conscious buy such jeans.
Therefore, Spykar Jeans comes up with such discounts, which helps them in increasing their sales and also
in stock clearance, if any.

5. Consumer Acceptance

As competition intensifies and promotions proliferate, consumers have learnt to earn the rewards of being
smart shoppers. Over a period of time, they have also learnt that brands on promotion are not necessarily
of lower quality.
Spykar Jeans, if sold at disount rates, are not perceived to be a brand of low quality. Instead, if word is
out of a mega discount scheme for Spykar Jeans, then people even time their purchase accordingly.

6. Advertising Has Become More Expensive And Less Effective

All the advertising media have become quite expensive. Audio-visual medium, which is considered as the
most effective for short-duration ads, may cost in excess of Rs. 1 lakh for a 10 second exposure during
prime time. In many cases, consumers have reached a point of boredom due to excessive advertising on TV.
Some consumers even consider advertising as an intrusion into their privacy, leading to zapping (surfing
channels). Firms with small budgets cannot compete with big companies, which spend huge sums of money
on advertising. For these small budget firms, sales promotion is a more cost-effective promotion method to
produce sales results.

7.Trade Has Become More Powerful

Retailers and wholesalers have become powerful and find themselves in a position to demand extra
facilities from the companies. They Channel members demand more incentives to get the desired results.
Manufacturers do not seem to have any alternatives but to concede to their demands, keeping in view the
competitive market conditions. In shopping malls like Globus and Lifestyle, decent margins have to be paid
to them in order to have shelf visibility for your brand.

8. Emphasis On Sales Volumes

Towards achieving the long-term profit goals, manufacturers try to attain high sales volume. Brand
managers and product managers find themselves under pressure to achieve short-term sales results for
the sake of their careers. Compared to any other promotional method, sales promotion is a more effective
method to generate short-term sales volume.

9. Sales Promotions Maximise Profits

A number of economic theories conclude that a company can maximise profits by using sales promotion.
Such promotions can permit price discrimination by allowing the brand to compete in 2 or more different
market segments. Sales promotion may allow a premium brand to compete with a lower tier brand among
price sensitive consumers. For example, a premium brand of toilet soap may be on promotion in some price
sensitive markets, while in the remaining markets it is sold at its normal price.

10. Introducing An Element Of Interest:

There are a number of promotions, which are often called interest promotions. Some of the more popular
interest promotion techniques are samples, contests, and sweepstakes, free premiums and mail-in
premiums. These promotions create an element of interest and excitement, and consumers enjoy these and
response enthusiastically to such contests and sweepstakes, etc.

11. Impulse Buying Is Increasing

The number of marginal customers is increasing. Displays at the point of purchases lead to impulse buying
by consumers, more so if the items on display are not expensive. There is a popular saying in Hindi, “jo
dikhta hai, voh bikta hai.”

12. Sales Promotion Specialists Are Available

As a result of economic liberalisation, the number of management institutions has increased. This has lead
to the availability of specialists, who are not only well paid but can handle this specialised work more
efficiently in the current market conditions, where sales promotion has become more important.

13. Excess Stocks

Because of increasing number of brands, it is difficult for manufacturers and dealers to anticipate future
sales. This, at times, leads to excessive inventories, and the quickest way to clear that is to go for sales
promotion.
 ADVANTAGES AND
DISADVANTAGES OF SALES
PROMOTION

Advantages Disadvantages

Effective at achieving a quick boost to sales Sales effect may only be short-term

Catch attention of the customers It can be copied by competitor

To clear stock May create misunderstanding

Help customer to switch from competitor Customers may come to expect or anticipate further
promotions
It helps repeat purchases
Consumers wait for offers.
Encourages customers to trial a product or switch brands
May damage brand image
TYPES OF SALES PROMOTION

Consumer Promotion

Trade Promotion

Retail Promotion

CONSUMER PROMOTION:

 Consumer promotion takes place between the Manufacturer and Consumer. In consumer promotion,
the promotions take place directly with the consumer no other links are involved in this type of
promotion.

 In this type of promotion consumers get direct concession or discounts from the manufacturer.

 For example: - There are many clothes manufacturers who sell their products directly to the
consumers at the lesser price then the market price.
 Who will
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TRADE PROMOTION:

 Trade promotion takes place between the Manufacturer and Retailers/Wholesalers. In trade
promotion, the promotions take place between the retailer and wholesaler. It depends on the
manufacturer with whom they are doing the deal with.

 If the manufacturer is doing the deal with the wholesaler then the manufacturer will give him
direct or an indirect incentive so that selling of their product takes place and the company/
manufacturer will gain profit. This is also an indirect promotion.

 If the manufacturer is dealing with the retailer then he will give then free gifts or indirect
incentives such as they sell their product more than their competitor’s product.

 For example:- Lays gives a ‘shelf’ where they can keep the packets properly and in such a way that
even the costumers get attracted towards that product or that particular brand.

RETAIL PROMOTION:

 The retailer’s promotion takes place between the Retailer and the Consumer. In this type of
promotion the retailer sells the competitor’s product even though he has the product which the
consumer wants.

 This type promotions takes place either when the retailer has to sell his old stock of a particular
product or when he is been told that he will be given an indirect incentive or a gift, if he sells that
particular product.

 For example:- A customer wants a ‘All Clear’ shampoo but the retailer shop owner sells another
soap which has same ingredient.
 TECHNIQUES OF SALES
PROMOTION

on on
Promoti Promoti
er Sales Sales
Consum Trade

Consumer sales promotion

 Sampling

Providing free samples is a technique used to introduce new products to the

marketplace. Samples give the consumer a chance to see how well they like a
product or try something they otherwise would not normally buy. Local bakeries
can hand out their new creations at a farmer's market. Manufacturers of
scented candles can give away samples at a local gift shop. Sampling is
sometimes used as part of a larger marketing campaign that includes local
newspaper or radio advertising.

 Free Trial

A free trial is a way for a consumer to try a new product while eliminating risk.
It may be used when a product is unique to the marketplace, which can make
consumers leery of trying it out. This technique is commonly used in television
infomercials where the buyer has 30 days to try the product, during which time
he can return it for a full refund if he's not satisfied.

 Free Gifts

Free gifts entice consumers to make a purchase by including a bonus along with
the product. The gift may be included in the outer part of the product
packaging to serve as a visual attraction. It may also take the form of a prize
inside the package. As an example, a local food company could place cash or gift
cards inside random packages of its products.

 Contests

Contests offer the customer a chance to win prizes like cash or store
merchandise. For example, an electronics retailer could hold a karaoke contest
at its store, while using local celebrities as judges. The contestant who is voted
the winner would receive a prize such as a piece of audio or video equipment.
Being creative helps generate more buzz about the contest, and ultimately, the
product you are trying to sell.

 Special Pricing
Special pricing is used to offer consumers a lower price for a period of time or
to purchase in multiple quantities. For example, a retailer may offer a product
that normally costs 50 cents at a price of 3-for-99-cents during the
promotional period. Manufacturers often provide funds to the store to
subsidize the price reduction.

TRADE SALES PROMOTION

 Off-Invoice Allowances

Here marketers allow wholesalers and retailers to deduct a set amount from the
invoice they receive for merchandise.

The incentive for the trade with this programme is that the price reduction
increases the margin (and profits) a wholesaler or retailer realizes on the off-
invoiced brand.

This scheme is in general available for many products, where if the bill amount
is above a certain amount you get a certain percentage discount. The % varies
from around 2% to 10%, from company to company and also from time to time.

 Buying allowance ( Trade Promotion Technique)

It is similar to the off-invoice allowance. It is a discount for the purchase of

the promoted product during the specified period on the purchase of certain
minimum quantity of the product. This trade incentive is often used to gain
more distribution or to maintain the existing one.
  Display and advertising allowance

The retailer is required to arrange the product display in a prominent show-

window or offer discount to consumers and advertise this offer in the local
newspaper or arrange a point-of-purchase display on the shelf corner. The
retailer earns the incentive only after meeting the conditions set by the
manufacturer.

 Buy back allowance

Manufacturers sometimes announce a buy-back allowance to encourage re-

stocking by retailers. This promotion immediately follows another type of deal
offered to resellers and offered some incentive for new purchases. When the
manufacturer realizes that after the initial deal the inventory levels at the
retail level are quite low or depleted, such an offer helps in building the
inventory level with retailers to normal. Eg. Bread, thepalas, perishable gds.
  Bill back allowance

The manufacturer offers a discount for every item purchased during the
promotion period. At the end after the promotion is over, the dealer counts the
discount per unit for all the items bought during the promotion period, adds any
additional promotional allowances as stipulated by the manufacturer and submits
the statement. He also needs to submit the bill for all such items.

 Slotting allowance

These are the fees that a retailer charges the manufacturers to make available
the space on the shelf for their new products. Retail store owners say that the
number of brands in each category is multiplying, there is increasing competition
and margins are decreasing, hence they have no option but to ask for a fee to
keep the product on their shelf and use the money to improve their shelf design
and promotion, etc.

 Merchandise allowance

In the form of free products packed with regular shipments, are payments to
the trade for setting up and maintaining displays. The payments are typically far
less than manufacturers would have to spend to maintain the displays
themselves.

Tools of sales promotion

 Bonus offers.

 Fair and exhibition.

 Scratch card and lucky draws

 Price off offers

 Exchange schemes

 Vouchers
 Free Samples

 Coupons and Discounts

 Opinion on products
 Adidas , had come out with an idea to distribute Free Jerseys of
Liverpool Football Club to those attending the next two games, after they
won the Champions League Trophy for the 5th time. This was done in order
to clear the Stock and increase the Attendance rate for the matches
which proved to be Successful.

Similarly Adidas , who was the official Merchandise partner of Liverpool

football Club, came out specialised , limited edition studs, to mark the
celebration of Steve Gerrard’s 600th appearance for Liverpool. This too
proved to be success as the limited edition studs were sold out within a
week.
To celebrate the 100th century of Sachin Tendulkar, Adidas, released
specialised cricket sets.

WWE inc. had decided to give out free action figures to kids between
ages 5 – 12, on the purchase of tickets for the Live Pay-per-view event of
the 25th anniversary of Wrestlemania.
Also, WWE inc. has millions of viewers and attendees all over the world. On the
occasions of CM Punk, holding the WWE for 400 days, WWE inc. decided to
have a stock clearance sales on their replica WWE championship belt, which was
being sold at $12 only instead of $75. The stock cleared out within 4 days, and
over 1,890 belts were sold all over the world.

 These promotions proved to be successful only because the companies

were in profit. Such sales promotions do not work for companies who are
not the leaders of the market.
 Bibliography
 Agency management text book.

 Advertising text book

Webiographgy

 www.google.com (search)

 www.salespromotion.com

 www.wikipedia.com

 www.google.com (image)

Thank-you.