Question

Define sales promotion. Explain the consumer and trade oriented sales promotion tools.

Answer 1

Answer:

hey here is your answer

The Sales Promotion tools are directed towards Consumers (Consumer promotion tools), Dealers or middlemen (Trade promotion tools), and Sales force. These tools are unique in their way and directed differently to these three groups.

In general, some of the commonly used consumer-oriented promotion tools are as follows:

1. Free samples:

In this case, small units of free samples are delivered door to door, sent through direct mail, attached to another product, or given along with the purchase of some other product (e.g., soaps, soft drinks, detergents or other items). Free samples are normally provided during the introductory stage of the product.

2. Coupons:

This involves offering price reduction or saving to customers on the purchase of a spe­cific product. The coupons may be mailed or enclosed along with other products, or inserted in a magazine or newspaper advertisement.

3. Exchange scheme:

In this case, the customer exchanges the old product for a new one. The old product’s exchange value is deducted from the price of the new product. This sales promotion tool is used by several companies for consumer durables. For instance. Philips came up with five-in-one offer. The offer consisted of Philips TV, two-in-one, iron, mixer-grinder, and rice cooker at an attractive price.

4. Discounts:

It refers to reduction in price on a particular item during a particular period. It is common during festival season or during off-season period. It is very stimulating short-term sales, especially when the discount provided is genuine one. For instance, the Hawkins pressure cooker manufacturer announced an attractive price reduction, up to Rs.150 off, on a new Hawkins in exchange for any old pressure cooker. The advertisement specified that the offer was open only up to a particular date.

5. Premium offers:

These can be extra quantities of the same product at the regular price. Premium offers are used by several firms selling FMCG goods such as detergents, soaps and food items. For instance, Colgate offered 125 g in a tube for the price of 100 g.

6. Personality promotions:

This type of promotion is used to attract the greater number of customers in a store and to promote sale of a particular item. For instance, a famous sports personality may be hired to provide autographs to customers visiting a sports shop.

7. Installment sales:

In this case, consumers initially pay smaller amount of the price and the bal­ance amount in monthly installments over a period of time. Many consumer durables such as refrigerators and cars are sold on installment basis. For example, Washotex came up with a scheme to pay 20 per cent now and take home Washotex washing machine. The consumers were offered the facility of paying the balance in 24 equal monthly installments.

B. Trade-oriented Sales Promotion:

Trade-oriented sales promotion programmes are directed at the dealer network of the company to motivate them to the sell more of the company’s brand than other brands. It is also known as push strategy, which is directed at the dealer network so that they push the brand to the consumers by giving priority over other competitor brands.

Some of the important trade-oriented promotion tools are as follows:

1. Cash bonuses:

It can be in the form of one extra case for every five cases ordered, cash discounts or straight cash payments to encourage volume sales, product display, or in support of a price reduction to customers.

2. Stock return:

Some firms take back partly or wholly the unsold stocks lying with the retailers, and distribute it to other dealers, where there is a demand for such stocks.

3. Credit terms:

Special credit terms may provide to encourage bulk orders from retailers or dealers.

4. Dealer conferences:

A firm may organize dealer conferences. The dealers may be given information of the company’s performance, future plans, and so on. The dealers can also provide valuable suggestions to the company at such conferences.

5. Dealer trophies:

Some firms may institute a special trophy to the highest-performing dealer in a particular period of time. Along with the trophy, the dealer may get a special gift such as a sponsored tour within or outside the country.

6. Push incentives:

It is a special incentive given to the dealer in the form of cash or in kind to push and promote the sale of a product, especially a newly launched product.

hope it help u