Module 1 E-Text

Introduction to Fashion Sales Promotion

Fashion Sales Promotion

Learning Objectives

After reading this lesson, you should be able to:

➢ Understand the and concept meaning of sale promotion

➢ To examine the various objectives of sales promotion
➢ Familiarize with the types of sales promotion tools
➢ Differentiate between advertising and sales promotion
➢ Define Sales Force Promotion

Concept of Sales Promotion

Promotion is a key part of marketing programme and is concerned with efficiently and
effectively communicating the decisions of marketing strategy to target audiences. It is the marketing
function concerned with persuasive communication of the marketing programme to target audience
with the intent to facilitate exchange between the marketer and the customer, which may satisfy the
objectives for both the customer and organization. Promotion is targeted to the target audiences. It is also
goal oriented and the objective may be to create brand awareness, to educate the consumers, to create a
positive image, to build preference. The ultimate goal is to sell the product or service to consumers who
have a need of it.

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 Sales promotion is one of the important components of promotion mix. The components of promotion
mix are as follows:

1. Advertising
2. Personal selling
3. Sales promotion
4. Publicity
5. Direct Marketing

Sales promotion includes several communications activities that attempt to provide added value
or incentives to consumers, wholesalers, retailers, or other organizational customers to stimulate
immediate sales. These efforts can attempt to stimulate product interest, trial, or purchase. Examples
of devices used in sales promotion include coupons, samples, premiums, point-of-purchase (POP)
displays, contests, rebates, and sweepstakes

Promotion Mix

Advertising Personal Selling Sales Promotion Publicity Direct Marketing

In a time when customers are exposed daily to a nearly infinite amount of promotional messages,
many marketers are discovering that advertising alone is not enough to move members of a target
market to take action, such as getting them to try a new product. Instead, marketers have learned that
to meet promotional method in conjunction with advertising.

Other marketers have found that certain characteristics of their target market (e.g., small but
geographically dispersed) or characteristics of their [product (e.g., highly complex) make
advertising a less attractive option. For these marketers better results may be obtained using other
promotional approaches and may lead to directing all their promotional spending to non-advertising
promotions.

Finally, the high cost of advertising may drive many to seek alternative, lower cost
promotional techniques to meet their promotion goals.

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What is Sales Promotion?

Sales promotion describes promotional methods using special short-term techniques to

persuade members of a target market to respond or undertake certain activity. As a reward, marketers
offer something of value to those responding generally in the form of lower cost of ownership for a
purchased product (e.g., lower purchased price, money back) or the inclusion of additional value-
added material (e.g., something more for the same price).

Sales promotions are often confused with advertising. For instance, a television advertising
mentioning a contest awarding winners with a free trip to Goa may give the contest the appearance of
advertising. While the delivery of the marketer’s message through television media is certainly labeled as
advertising, what is contained in the message, namely the contest, is considered a sales promotion. The
factors that distinguish between the two promotional approaches are:

1. Whether the promotion involves a short-term value proposition (e.g., the contest only
offered for a limited period of time), and
2. The customer must perform some activity in order to be eligible to receive value
proposition (e.g., customer must enter contest).

The inclusion of a timing constraint and an activity requirement are hallmark of sales
promotion.

Sales promotions are used by a wide range of organisations in both consumer business
markets, though the frequency and spending levels are much greater for consumer products marketers.
One estimate by the promotion Marketing Association suggests that in the US alone spending on sales
promotion exceeds that of advertising.

Difference Between Advertising and Sales Promotion

Advertising is a message which promotes ideas, good or services communicated through

one or more media by an identified sponsor while sales promotion consists of short –terms
incentives provided by the identified sponsors to consumers and traders to persuadethem to purchase
and stock his products. The major differences between Advertising and Sales Promotion are:

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 Advertising Sales Promotion
(i) A reason is offered to buy. An incentive is offered to buy
(ii) Theme is to build up brand loyalty Theme is to break down the loyalty to a
competing brand.
(iii) Aim is to attract the ultimate Aim is to attract not only consumers but
Consumers. retailers, wholesalers and Sales force also
(iv) Effective in the long run. Effective in the short run.
(v) Heavy advertising makes the brand Heavy Sales promotion leads to the product
image of the product and accords it the being perceived as having a brand image of
perception of higher quality cheaper and lower quality product.
(vii) Advertising includes messages Various types of incentives are offered for
delivered through various types of ➢ Consumer promotion
Media.
➢ Trade Promotion
➢ Sales force Promotion

Comparison of Sales Promotion with Others

Advertising Sales promotion Personal selling Publicity

Timeframe Long-term Short-term Short/long-term Long-term
Primary appeal Emotional Rational Rational Emotional
Primary objective Image/brand Sale Sale/relationship Good will
building
Contribution profit Moderate High High Low

Objectives of Sales Promotion

Sales promotion is a tool used to achieve most of the five major promotional objectives

➢ 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 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

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 use of sales promotion. In the retail industry an appearing sales promotion 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 customer try products for free or at low cost.

➢ Providing Information- Generally sales promotion technique are designed to make

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 e-mail.
➢ 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.
➢ Reinforcing the Brand- Once customer have made a purchase sales promotion can be
used to both encourage additional purchasing and also as a reward for purchase loyalty.
Many companies, including airlines and retail stores, reward good or “preferred”
customers with special promotions such as e-mail “special deals” and surprise price
reductions at the cash register.

Definitions of Sales Promotion

It is difficult to define sales promotion in a precise manner because it involves with a variety of
activities and techniques. sales promotion refers to many kinds of incentives and techniques directed
toward consumers and traders with the intention to create an immediate sales effects. There is no single
definition of sales promotion which is universally accepted by one and all. There is a wide spectrum of
views and different experts have defined sales promotion in different ways.

The definition given by American Marketing Association (AMA,1960)

“In a specific sense, sales promotion include 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 other non-recurrent selling efforts not in the ordinary routine”

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 As per AMA definition it is inferred that all those promotional activities, which don’t fall
under the category of personal selling, advertising and publicity, should be considered under the head of
sales promotion.

Roger A. Strang has defined sales promotion in a few words as:

“Sales promotion is short-term incentives to encourage purchase or sale of a product or service.”

According to Philip Kotler

“Sales promotion consists of a diverse collection of incentive tools, mostly short- term,
designed to stimulate quicker and/or greater purchase of particular product/services by consumers or the
trade”

Sales promotion defined by Kazmi and Batra as

“Sales promotion includes incentive offers and interest creating activities which are generally
short term marketing events other than advertising, personal selling, publicity and direct marketing. The
purpose of sales promotion is to stimulate, motivate and influence the purchase and other desired
behavioural responses of the firm’s customers.”

Types of Sale Promotion

Promotion may be broadly classified either immediate or delayed. Those that offer an immediate
reward tend to be more effective because of their immediacy, which is consistent with the short-term
tactical nature of promotions. Immediate reward promotions include such things as price reduction, bonus
packs, and coupons. Delayed promotion techniques delay the reward, usually until after the target
audience takes some action. Delayed reward promotions include such things as sweepstakes, rebate offers,
and frequent flyer programmes.

Promotions are usually thought of as aimed at consumers, but in fact much more money is
invested in promotion to the trade than to the consumers. There are three fundamental types of
promotion: consumer promotion, retail promotion and trade promotion. They are used to get consumers
to try or to repurchase the brand and to get the retail trade to carry and to “push” the brand. Finally
retailers use promotions to clear their inventory of slow moving, out of season, or shelf-unstable
products. Retailers thus run their own promotions aimed at consumers, such as price off, displays,
frequent shoppers programme and so on.

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Consumer Oriented Promotions

Consumer will not make a distinction between trade promotions delivered at retail outlets, retail
promotions, and consumer promotions. If they see a special display in the store or have a coupon or
see a price special, they are not concened with whether it was the brand or the retailer that was
responsible. But, from the brand’s perspective, there is a world of difference. Consumer promotions
are initiated by the brand, not the retailer, and the brand controls the content.

As it happens, consumers tend to have a pretty good idea about how often brands are promoted.
This is important to the brand, because it will affect consumer buying strategy for the brand in the
light of the perception of the brand’s availability on promotion. so, even if you donot have control over
retail promotions that includes your brand, it is essential that you have knowledge in your promotion
strategy. There are six fundamental consumer can be considered: coupons, refund and rebates, sampling,
loyalty sweepstakes and premiums. Six basic consumer promotions

Coupons Are low cost, and the most common form of promotion
Refund and Offers large price discounts, usually with more expensive products
rebates
Sampling Provides an opportunity to try or use brand at little or no cost
Loyalty Encourages repeat purchase
Sweepstakes Helps create excitement and reinforce brand image at a relatively low cost
Premiums Helps facilitate purchase by offering reward or bonus

Coupons

A coupon is a price reduction offer to a consumer. This could be a percentage off on the
retail price of the merchandise or an offer for the future. Coupons can be of various kinds, each with
a specific objective. Instant redemption coupons can be redeemed with a purchase to reap the benefit
instantly. Some coupons are offered after a purchase has taken place for a repeat purchase. Such a
coupon can be given at the time of delivery or could be in the package.

Refunds and Rebates

This scheme offers 100% refund in case of dissatisfaction after a purchase. Rebates can be a one-
time purchase or could be a coupon issued for the next purchase. This ensures

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 that the shopper returns for the second purchase to avail of the rebate. Fast food giants use this scheme
often.

Sampling

Giving people free samples or trial pack is another promotional technique and is an excellent
way to get consumers to try a product. This form of consumer promotion is found to be especially
useful when one is introducing a product for the first time. It is commonly used in the case of fast
moving consumer goods such as detergent, soft drinks, confectionaries etc. In this case a small
quantity of the product is given as a sample. These samples are distributed either at the residence of the
consumer or even at the retail outlet. Today some of the companies are attaching the samples to the
popular magazines targeted on the group or with some of the products of the company’s product
range.

Loyalty Programmes

Loyalty programmes are initiated by companies to express their bond with loyal customers.
Loyalty points are added by airlines, credit card companies. Indian Airlines have loyalty programme
‘frequent flier’ offer for those flier who continuously purchase Indian Airlines tickets.

Contests and Sweepstakes

These schemes offer a chance for participants to get something for nothing, based on some sort
of skill or ability. These are run to create an excitement amongst the target segment. Sweepstakes
require that participants submit their names which are included in a draw or other chance selection.
Contests are normally advertised extensively and test more often than not the knowledge of the
consumer on the product or some other skill. For example, contest may involve completion of sentence
which might say” I like this product because…….” or it could involve developing a slogan.

Premiums

These are prizes, gifts, and special offers that the consumer are offered at the time of
purchase. Getting an fairness cream along with face wash could work as an attractive premium for
women, or a hair conditioner with shampoo.

Premium can be of varying kinds, including in-mail premiums. In case, the prospect is required
to send proof of the purchase to receive the gift. Sometimes the agent may

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 even bring the entry form. Many magazines have subscription schemes that offer various premiums such as pen
sets, sun glasses, planners, etc.

Retail Promotion

Price Off

This kind of promotion offers a consumer a certain percentage discount that is generally
reflected on the price tag. The old price is crossed out and the discounted price stamped in to assure
the customer of the value transfer on purchase. A price off is simple and attractive phenomenon and
attracts prospective buyers. Price-ofs are generally announced with end-of-season sales, specially at
places that experience strong variation between winters and summers for instance. It makes sense for
marketers to dispose of merchandise in the same season rather than store them for the next year, which
costs money; besides’ fashion may change by then.

Displays and Point-of-Purchase Material:

Point of purchase (POP) displays are an important promotional tool because they can help a
manufacturer obtain more effective in store merchandising of products. Point- of-purchase displays
are very important to marketers since many consumers make their purchase decisions in the store. In
fact, some studies estimate that nearly two-thirds of consumer’s buying decisions are made in retail
store. Thus it is very important for marketers to get the attention of consumers, as well as to communicate
a sales or promotional, messages through POP displays.

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 Many companies run display contest in order to get good exposure for their products, particularly
during the seasonal period, Dealers are expected to buy a a minimum quantity of stock during the
display period and display them prominently in the show windows of the shop and in other prominent
places. Company representatives then visit their shops and judge these display and award prizes to
them.

Point-of-sale material: Trades are given attractive point-of-sale material for displaying the
company’s product. For example coca cola gives attractive cold storage refrigerator for its product;
Cadbury’s give attractive dispensers, etc.

Cooperative Advertising

The final form of trade-oriented promotion we examine is cooperative advertising, which

involves the sharing of cost of local advertising by the dealer and the company. The dealer then has
the name of the outlet printed below the advertisement and gets mileage in terms of consumer enquiries.

The most common form of cooperative advertising is the trade-oriented form, vertical
advertising, in which a manufacturer pays for a portion of the advertising a retailer runs to promote the
manufacturer’s product and its availability in the retailer’s place of business. Manufacturers
generally share the cost of advertising run by the retailer on a percentage basis (usually 50/50) up to
a certain limit.

Trade Oriented Promotions

Trader promotion takes up a significant proportion of most marketing communication budgets.
Whether the promotion directly affects pricing or indirectly affects volume through merchandising
material, the trade views trade promotions from the manufacturer as a way to move more money to its
bottom line. Trade promotions are those that a company runs to elicit better and quicker response from the
trade. These can be done when introducing a new product. to ensure enhanced stocking proceeding a
good season, or to block a competition. Trade promotions are normally part of a push strategy, the
assumption here being that if the trader has excess stock bought during a trade scheme he will be
motivated to push the product in order to recover his investment as soon as possible.

Trade promotion is designed to improve relations with the trade in order to gain and hold new
distribution, to build inventory with the trade, or to obtain trade cooperation and merchandising support.
There are three basic categories of trade promotion that can be considered are: allowances promotions,
display material promotions, and trade premiums and incentives

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 ➢ Allowance promotions provide the trade with a monetary allowance of some
kind in return for buying or promoting a specific quantity of a brand, or for meeting
specific purchase or performance requirements.
➢ Display material promotions are when the manufacturer actually provides
special display material to be used in featuring the brand, often in conjuction with a
trade allowance.
➢ Trade incentives are special gifts or opportunities to earn or win valuable trips or
prizes in return for purchasing specified quantities of the brand or meeting specific sales
quotas.

Allowance Promotion

The type of allowance offered to the trade can take many forms: everything from reduced
prices across the board, to reduce prices according to purchase volume, to free goods.

On-Consignment Sales

This tool is normally used by companies that are new entrants and are not known in the
market place. Such companies encourage the trade to stock their product on an “on- consignment” basis
and pay only when the products move off the shelves. This is a rather risky process and companies
would do this only on a selective product and only with such traders who have excellent credential
in the market place.

Dealer Contests

This is normally linked to the amount of merchandise the dealer purchases. Participating
dealer are ranked across the region by the volume of sales in a particular time frame and get substantial
gifts which may include car, refrigerator, TV sets or even a trip abroad for them and their family.

Dealer Gifts

Some companies regularly give gifts to their dealers to maintain good relations with them.
These could be wall clocks, calendars, diaries even some items for personal use at home.

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Shop Board Painting

Some companies such as the Samsung provide attractive signage for shops which could either be
printed or made of acrylic material.

Dealer Discount

Many companies run trade scheme, which can be in the form of discount on bulk purchases
or free goods such as “buy ten get one free.”

Trade fair participation: Sometimes companies fund partly or fully the participation of their
exclusive dealers to trade meets such as the Inside Outside Fair, in India International Trade Fair, etc.
They also provide promotional materials for display.

Dealer Meets

Some companies organize regular dealers meet at exotic locations within or outside the country.
The expense for such dealers meet is normally paid for by the companies. These dealer meets
recognize star performers through awards and also set target for the coming year.

Display Material Promotion

Display material can be in the form of either a display allowance or actual merchandising
material. Perhaps the primary use of display promotions is to help reinforce consumer promotions,
although they also play an important role in the introduction of new products and line extensions. Given
that many purchase decisions are made at the point of purchase, especially with FMCG brands,
display promotion can be an important part of an integrated marketing communication programme.
Good display material leads to better attention, especially important for brands driven by recognition
awareness. Here you can appreciate the need of for a fully integrated programme. The display material
must be consistent with consumer promotion and advertising, with the same ‘look and feel’, in order to
heighten recognition at the point of purchase.

Good in-store merchandising material can also be a good way to effect cross- merchandising,
where two different brands are being promoted together. The use of display promotion has the advantage
of generally being implemented quickly when needed, and the ability to support consumer promotion
and advertising at the point of purchase. The disadvantage, as with all trade promotions, but
especially here, it is the need for trade

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 cooperation. Unlike trade allowances or trade premium and incentives. If it does not receive wide spread
trade support, it will not be effective.

Trade Incentives

Various Marketing Objectives and Suitable Consumer Promotions

Retain/load Build brand

Promotions Induce product trial
consumers equity
Immediate ➢ product sampling ➢ Price-off deals ➢ Events
value ➢ Coupons ➢ Bonus packs ➢ In-pack or
➢ In-store rebates ➢ In-pack, on-pack on-pack
premiums premiums
➢ Loyalty
programmes

Delayed value ➢ Mail or media ➢ In-pack or on- ➢ Self liquidating

distributed coupons pack coupons premiums
➢ Mail-in rebates ➢ Mail –in rebates ➢ Free in-mail
➢ Free in-mail premiums ➢ Loyalty ➢ Contests and
➢ Internet delivered programmes sweepstakes
coupons

Sales Force Promotion

Sales force promotion normally undertaken to stimulate the sales force to better
performance. This is also part of a push strategy because it results in better stocking at the trade
level. In some product categories it can also be part of pull strategy. For Example; In the case of
pharmaceutical business the trade stocking happens when prescriptions flow from a doctor.

The consumer, in this case the patient, does not have any say in the product that the
consumers, except perhaps in the case of an over-the-counter product. The sales force has to do a good
selling job at the doctor level and good stocking job at the trade level. So he not only has to pull the
product at the doctor level but also push the product at the trade level. Any sales force promotion
scheme developed for such a field force has to recognize this fact.

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 There are several ways for motivating the field force. some of the important tools are:

Incentive Scheme

Most sales force of today is incentivized in terms of their sales performance. Performance
bonuses are awarded for sales over the target. These are normally worked out as a percentage increase
over-and-above the budgeted sales.

Star Awards

Many companies recognize their start performers and reward them handsomely. These could
be a trip abroad for family or substantial cash rewards. Some companies have functions where even the
spouses of the star are invited for a company paid holiday.

Sales Meet

Many companies organize sales meets in attractive places like Goa, Kashmir, kodaikenal,
etc. for their sales force. these are normally no holds barred meets where the field force is able to let
their hair down along with their senior managers.

This acts as a tremendous motivational pill for these young salesmen. At these meets the targets
for the subsequent period are also set.

Local ad Budgets

Some companies delegate advertising budgets to their sales staff. they have authority to negotiate
directly with their trade and local ad agencies and release ads for their territory. They also get budgets
for local trad4e fairs, sampling, merchandising etc.

Promotional Aids

Most companies provide their field staff with promotional aids. Pharmaceutical companies
provide their representatives with attractive leather bags and ties, FMCG companies provide them with
T-shirts, caps etc.

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Advantages and Drawback of Sales Promotion

Advantages

Sales promotion has a significant effect on the behavior of consumers and resellers. Such
promotion can bring in more profits for the manufacturer because they permit price discrimination.

1. Price discrimination: Producers can introduce price discrimination through sales

promotion. They can charge different prices to different consumer and trade
segments varying in their price sensitivity. Coupons, special sales events, clearance
sales and discount are examples of it.

2. Effect on consumer behavior: As sales promotion are mostly announced for a short
period, customers may feel a sense of urgency and stop comparing the alternatives. They
are persuaded to act now rather than later. For many customers, who feel time-
pressured, buying on deal is a simple decision rule and many consumers may also
consider buying on deal as smart move. In our over communicated society and because of
selective attention, it is not uncommon to ignore many advertisements. Sales promotional
deals, such as discounts, rebates, coupons, or premiums etc. also increase the attention –
getting power of advertisement using promotions, marketers can reach the deal prone
customers and encourage brand switching. Consumers, who buy on promotional deals,
consider themselves as intelligent and smart shoppers.
3. Effect on Trade Behaviour: Short-term promotions present an opportunity and
encourage dealers to forward-buy. This forward buying ensures that retailers won’t go out
of stocks. As dealers have more than normal stocks, they think it advisable to advertise
in local media, arrange display and offer attractive promotional deals to consumers.
These actions help in increasing the store traffic. The aim is to speed-up the consumer
purchasing from their outlet. Point of Purchase (POP) display attract customers, serve as
reminders and lead to impulses or unplanned purchases. More customers get exposed
faster to new product introductions and retailers perceive less risk in stocking the new
products. Some customers buy new brands and if satisfied, may become loyal users and
repeat purchaser.

Drawbacks
There are certain limitations of sales promotion and they may also produce negative effects.\ While sales

promotion is a powerful and effective method to produce immediate,

short-term positive results, it is not cure for a bad product, or bad advertising. In fact, a

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promotion may speed-up the killing of a bad product. A consumer may be motivated to try a new product
because of the incentive, but after this the product itself must take over.

1. Decrease in brand loyalty: The major objective of many sales promotions is to

encourage brand switching. This is especially true in case of low-involvement
category products, or where there is little or no significance differentiation among brands
and the unit value is low. Sales promotion announced by marketers thus counter the
brand-image building efforts of competitor’s brands, for which they develop expensive
advertising campaigns. There is agreement among most managers that sales promotion
expenditure have decreasing effect on brand-image and this lead to decreasing brand
loyalty

2. Increased price sensitivity: Frequently promoted brands in a product category,

especially on the basis of price, make consumers and traders more price sensitive, not
only for the promoted brand but for the brands as well in the same product category.
Consumers wait for the promotional deals to be announced and then purchase the
product. This is true even for the brands where brand loyalty exists.

3. Quality image may become tarnished: If the promotions in a product category have
been rare, or the product happens to be of high-involvement category, the promotions
could have a negative effect about its quality image. Consumers may start suspecting
that perhaps the product has not being selling well, the quality of the product is low
compared to the price, or the product is likely to be discontinued because it has
become out dated.

4. Merchandising support from dealers is doubtful: One of the trade promotion tools is to
offer promotional allowances to trade people to motivate them to provide
merchandising support and to pass on some benefit to consumers. This is generally the
condition attached with such promotional allowances. In many cases the dealers do not
cooperate in providing the merchandising support, nor do they pass on any benefit to
consumers and in this practice India is no exception.

5. Short-term orientation: Sales promotions are generally for a short duration. This
gives a boost to sales for a short period. This short-term orientation may sometimes have
negative effect on long-term future of the organization. Heavy use of sales
promotion, in certain product categories, may be responsible for causing brand-
quality-image dilution

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Summary

Sales promotion describes promotional methods using special short-term techniques to persuade
members of a target market to respond or undertake certain activity. It includes several communications
activities that attempt to provide added value or incentives to consumers, wholesalers, retailers, or
other organizational customers to stimulate immediate sales. Sales promotions are often confused with
advertising. The difference between sales promotion and advertising is that, advertising is a message
which promotes ideas, good or services communicated through one or more media by an identified
sponsor while sales promotion consists of short –terms incentives provided by the identified sponsors to
consumers and traders to persuade them to purchase and stock his products. Sales promotion has a
significant effect on the behavior of consumers and resellers. Such promotion can bring in more
profits for the manufacturer because they permit price discrimination. There are certain limitations of
sales promotion and they may also produce negative effects.

****

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 Sales Promotion Strategies and Practices

Learning Objectives

After reading this lesson, you should be able to:

➢ Define sales promotion strategy;

➢ Understand the objectives of sales promotion strategy
➢ appreciate sales promotion as communication tool
➢ Appreciate the methods of measuring brand equity
➢ Acquaint with the methods of sales promotion budget allocation
➢ Comprehend the evaluation of sales promotion strategies

Introduction

The sales promotion strategy is an important element in overall marketing strategy. Sales
promotion strategy involves identification of objectives, effective communication for attracting
attention, allocation of budget, determining the correct promotional mix, introduction of strategic
approach and finally evaluation. We shall study about each one of them briefly here.

Objectives

The marketer should determine his sales promotion objectives. He should determine what is to
be accomplished and what kind of buyer responses are desired. Sales promotion tasks should be
objectives oriented. These tasks are informing, persuading and reminding the customers about the
products. The sales manager should inform consumers about his product and should highlight its
special features. He has not only to inform the customers but persuade them to buy it.

Sales Promotion a Communication Tool

Sales promotion should attract the attention of the target audience. If the prices, discounts,
off season facilities etc, are not adequately and effectively communicated, the

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 effort of sales promotion would be wasted. A point to be noted here is that the audience evaluates not
only the message but also the source of the message in terms of its credibility. The purpose of
communication is to persuade potential customers to purchase the product. The sales manager
determines the message to be aimed at the target market to gain product acceptance. The overall
marketing objectives define the role of communication in sales promotion. Identifying the target
audience is the main task of a sales promotion communication. The audiences response to the
message source helps determine the effectiveness of the message.

Medium of Reach

Sales promotion may adopt different methods for approaching people. Strategic variables are
taken into account while deciding a particular method of sales promotion. Consumer promotion has
been considered a very effective mode of sales promotion; potential consumers are offered samples,
coupons, etc; to promote sales. The point of purchase display is a silent strategy to trigger off buying
decisions. Retailers rely on in-store displays to familiarize customers with their product. A showroom
display makes it easy for prospective buyers to familiarize themselves with the different features of the
product. Trade promotion through buying allowance, free goods, merchandise allowances, push money
etc; help to enhance sales by retailers and traders. Packaging is another important form of promotion,
particularly for consumer goods. It may carry selling messages and information about the product. A
good package design attracts the shopper’s attention away from other products. It is a proper of blend of
colour, design and shape.

The following chart shows major sales promotion devices, grouped by Target Audience.

Business users or Households Middlemen and their Sales Forces

Coupons Free goods
Cash rebates Advertising allowances
Premiums (Gifts) Contests for sales people
Free samples Product demonstrations
Contests Trade shows
Point of purchase displays Exhibitions
Product demonstrations Advertising specialties
Trade shows and exhibitions Point-of-purchase displays
Advertising specialties Training sales forces

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Methods of Budget Allocation

One of the most difficult marketing decisions facing companies is how much to spend on
promotion. It is not surprising that industries and companies vary considerably in how much they spend
on promotion. It is 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 achieve the promotion objective.

➢ Affordable Method

Many companies set the promotion budget at what they think the company afford. This method
of setting budgets completely ignores the role of promotion as an investment and the immediate impact
of promotion on sales volume. It leads to an uncertain annual promotion budget, which makes long
range market planning difficult.

➢ Percentage of Sales Method

Many companies set their promotion expenditures at a specified percentage of sales or of the
sales price. Automobile companies typically budget a fixed percentage for promo- tion based on the
planned can price. A number of advantages are claimed for this method.

(i) The percentage-of-sales method means that promotion expenditures are likely to vary
with what the company can afford – which satisfies the financial managers, who feel that
expenses should bear a close relation to the movement of corporate sales over the
business cycle.

(ii) This method encourages management to think in terms of the relationship between
promotion cost, selling price and profit per unit.

The major drawback of this method is that it does not provide a logical basis for choosing the
specific percentage except what has been done in the past or what competitors are doing. It also does not
encourage building up the promotion budget by determining what each product and territory
deserves.

➢ Competitive – Parity Method

Some companies set their promotion budget to achieve share-of-wice parity with their
competitors. Two arguments are advanced for this method. One is that the competitors‟

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 expenditures represent the collective wisdom of the industry. The other is that maintaining a competitive
parity helps prevent promotion wars.

There are no grounds for believing that the competition knows better than the company itself
what it should be spending on promotion. Company reputations, resources, opportunities, and objectives
differ so much that their promotion budgets are hardly a guide. Further more, there is no evidence that
budgets based on competitive parity discourage promotional wars from breaking out.

➢ Objective-and-Task-Method

The objective-and-task method calls upon marketers to develop their promotion budgets by
defining their specific objectives, determining the tasks that must be performed to achieve these
objectives and estimating the costs of performing these tasks. This method has the advantage of
requiring management to spell out its assumptions about the relationship between rupees spent,
exposure levels, trial rates and regular usage.

Promotional Mix

Companies face the task of distributing the total promotion budget over the four promotion
tools of advertising, sales promotion, publicity and sales force. Within the same industry, companies can
differ considerably in how they allocate their promotional budget. Companies are always searching for
ways to gain efficiency by substituting one promotional tool for another as its economics become more
favourable. Many companies have replaced some field sales activity with ads, direct mail and
telemarketing. Other companies have increased their sales promotion expenditures in relation to
advertising, to gain quicker sales. The trial and error method, past performance and corporate policies
may influence the appropriate promotional mix. Many firms have increased their sales with the
application of appropriate combinations of the promotion media; sales promotion and personal selling are
supported with publicity. The promotion mix is a variable in the marketing strategy. It should be
clearly decided how fare a particular element should be used in combination with other promotional
methods.

Strategic Approach

The kind of promotional mix employed determines the promotional strategy. Generally
speaking a particular combination, type or amount of sales promotion, personal selling, publicity and
advertising are brought in to the promotional mix, which becomes the promotional strategy in the
course of implementation. The marketing strategy as much

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guides the determination of the promotional strategy, which may be divided into sale promotion
strategy, personal selling strategy, publicity strategy and advertising strategy. The strategies, sustaining
promotional strategy, developmental promotional strategy or promotional appropriation.

(i)Push and Pull Strategies

The push and pull promotional strategies may be used to enhance sales. The push strategy
concentrates on middlemen or retailers who push the sale of the product to the final consumers. This
strategy covers cooperative advertising, attractive terms of sale, coupons and discount facilities.

The pull strategy is directed toward the final buyers. It persuades the buyers to go to the sellers to
buy. Sales promotion, particularly customer promotion, is an important form of the pull strategy.
Customer promotion, may call for the offer of samples, money-refund offers, prices-off, premiums and
so on.

The push strategy asks the sellers or retailers to attract the layers. Trade promotion is thus the
main form of the push strategy. Trade promotions refers to buying allowances, free goods, co-
operative advertising, push money, sales contests and so on. The marketing manager has to adopt both
these strategies to promote sales.

➢ Features of Pull Strategy

Pull strategies depend upon mass communication. Products are literally pulled by buyers
through the channels on the basis of mass promotional efforts. In a pull strategy, the product is pulled
through the channel by creating end- user demand. Customers force retail shops to stock those mass-
promoted products. In turn, retailers demand the highly advertised product from wholesalers. The
firms having well- known brands can exercise control over channels through pull promotion strategies.
Personal salesmanship plays a secondary role in pull promotion. Marketer rely on intensive
distribution. Dealer margins are also lower in pull promotion.

➢ Features of Push Strategy

Industrial marketing strategies are mostly the push type strategies relying primarily on personal
selling. Also in the sale of medical products and in life insurance, marketers have to employ a lot of
salesmen to call on physicians and prospects for life insurance.

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 In push type promotion, personal selling expenses are considerable and dealer margin is also higher. In
this, after – sale service is also important and marketers rely on selective distribution. Push strategy
can be successfully used when:

1. We have a high quality product with unique selling points.

2. Where we have a high priced product.
3. We can offer adequate incentives (financial) to middlemen and their salesmen.

Push – Pull Strategy

Most consumer goods manufacturers generally employ a push- pull (combination) strategy to sell
their products. The ratio of pull to push may differ according to the requirements of market situation.
Salesmen are used to push the goods through the marketing channel, while advertising and sales
promotion will support personal selling to accelerate sales. Thus, all tools of promotion work together.

(ii) Sustaining Promotional Strategy

The main aim of this strategy is to stabilize the market share. Sales promotion becomes
necessary to sustain a market share. At a laggard stage, the markets may shrink. Unless appropriate
steps are taken, the marketer may find that the market may be slipping away for, to his product. But
this strategy can be adopted only after employing the penetrating strategy. That is, the market share
should not decline after a higher level of sale has been attained. The sustaining promotional strategy
stabilizes the market share. Sales force promotion by way of bonus and other incentives many
contain the market from slipping away. Steps are taken to prevent the sales force from going across to
the competitors. Brand loyalty of customers is fostered and reinforced.

(iii) Developmental Promotional Strategy

The introduction of new products may require expansion of the market. Innovators need to have a
developmental strategy. New products or brands are popularized by offering trade discounts, cash rebates,
premiums, money refunds, and so on. The new consumers are given effective after- sales service.
Consumer franchise building is done with development strategy. The promotional mix for a brand not
yet popular may require emphasis on both personal selling and sales promotion.

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 (iv) Promotional Appropriation

Promotional objectives determine promotional appropriation. The forms of promotion, the

costs of each component of promotion, the activities to be performed and appropriation on personal
selling, sales promotion, advertising and publicity are determined under this strategic. approach.
The marketing manager has to arrive at the optimum promotional mix of the given objectives. And
this requires proper planning and programme evaluation. Product attributes, brand differentiation,
purchase frequency, the nature of the market, the size of market and its location, the nature of
prospective buyers, their purchase frequency, distribution and price strategies are evaluated before the
formulation of an appropriate sales promotion strategy.

“Pull” promotions offered to consumers “Push” promotions offered to

trade

“Pull” promotions “Push” promotions

(Manufacturer to consumer) offered to trade offered to consumers
Sampling Discounts Price-cuts
Coupons Display allowance Free goods
Price-packs Advertising allowance Premiums
Rebates Free goods Displays
Continuity programmes Contests Feature advertising
Contests Trade coupons Quantity discount
Sweepstakes Quality discounts Clearance sale.
Tie-in promotions
Financing incentives
Special events
Premiums
Bonus packs
Exchanging offers

Evaluation of Sales Promotional Strategy

Sales promotional strategies should be evaluated twice. First at the stages of implementation
and secondly after the final performance because 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 premiums and packaging

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 materials, distribution to retailers, etc. Even though it has proved successful whenever tried, very
few firms adopt this strategy. Many manufacturers believe only in performance control. Performance is
evaluated in the light of planned objectives. Consumer surveys and consumer experiments are used to
evaluation techniques show how far the sales promotion techniques have been effective in increasing
sales through motivating consumers and sellers, and point the way to improvement in sales promotion.

Sales Promotion and Product Life Cycle

The promotional tools vary in their cost effectiveness at different stages of the product life cycle.
In the introduction stage, advertising and publicity have high cost effeteness, followed by sales
promotional to induce trial and personal selling to gain distribution coverage. In the growth stage, all
the tools can be toned down because demand has its own momentum through word-of-mouth. In the
maternity stage, sales promotion, advertising and personal selling all become more important in that
order. In the decline stage, sales promotion continues strong, advertising and publicity are reduced and
sales people give the product only minimal attention.

Cross Promotion

Under this sales promotion strategy, the manufacturer may use all the potential tools such as
advertisement, personal selling and sales promotion to hit the market simultaneously so that the buyer
will be induced to buy a product. For example when Deccan Chronicle, a daily newspaper, was
introduced in Chennai, the management had used all promotional activities, such as display, holding,
price off and media to influence the reader to buy the paper. This promotional strategy in called
cross promotion.

Surrogate Selling

Under this strategy, when the manufacturer is unable to sell his product in the market he may
handover the product to a well known organization to sell on behalf of the manufacturer. This
strategy is called surrogate selling.

For example, shampoo products are manufactured at Puducherry by a number of small and
medium manufactures. But they find it difficult in selling the product in the market.

What they have done was, handing over the finished product to Hindustan Lever, Proctor and
Gamble who have sufficient logistics in selling the product, there by relieving

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 the burden of converting the product into cash. They have in fact act as a surrogate in selling their
merchandise in the market.

Bait and Switch Advertising

Bait means something that is meant to tempt someone. Under this strategy, the marketing
manager use AIDA formula to tempt someone to look the advertisement and influence him to buy a
product. For example, Bharat Sanchar Nigam Limited has used 10 paise prominently in its
advertisement to bring the attention of its users in mind which will influence them to go for using
the BSNL service. This way of tempting the viewer to opt for BSNL is called Bait advertising.

Switch means a device that is pressed or turned to stop or start something working especially
by electricity. Switch advertising means when an advertisement is released, it should ignite the minds
of the buyer to notice the advertisement and take a decision to buy the product. For example during
festival times manufacturer may offer some discount on cash price to the buyer on some selected
products. So he has put this in the local newspaper- which would have ignited the minds of the buyers.
Buyers will certainly be influenced to buy the product. This strategy is called switch advertising
strategy.

Summary

The sales promotion strategy is an important element in overall marketing strategy. Sales
promotion strategy involves identification of objectives, effective communication for attracting
attention, allocation of budget, determining the correct promotional mix, introduction of strategic
approach and finally evaluation. Sales promotion should attract the attention of the target audience. If the
prices, discounts, off season facilities etc, are not adequately and effectively communicated, the effort of
sales promotion would be wasted.

Linking Advertising and Sales Promotion

Learning Objectives

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 After reading this lesson, you should be able to:

➢ Appreciate the role of advertising promotion and the brand

➢ Understand the role of planning in advertising and sales promotion
➢ To know Leveraging of brand equity
➢ Understand brand value for non-business organisation

Introduction

There is no doubt that linking advertising and sales promotion together offers real advantage
over using advertising or promotion alone. Nevertheless, while a brand’s marketing communication
profits from using advertising and promotion together, for most brands traditional advertising will almost
always be more important. This stems primarily from advertising’s brand attitude strength, and the fact
that brand attitude should be the central communication effect for all brands marketing
communication. This may seems surprising given the fact that traditional advertising receives only
about one-third of all marketing communication spending. Unfortunately, too often brands get caught up
in short term competitive marketing and rely too heavily upon promotion.

What makes using advertising and sales promotion together so strong in the interaction
between the long-term effects of brand attitude on building brand equity, and the tactical advantages of
promotion. Without a strong brand attitude, promotion effectiveness suffers. When advertising has been
effective in generating a strong brand attitude, all the brands uses of promotion become that much more
effective. There are two principal reasons for this:

➢ When a strong positive brand attitude is developed through advertising it means that
when a brand does use promotion the target audience will see the promotion as a
better value, and
➢ The strong positive brand attitude also means that when a brand’s competitors use

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 promotion, the brand’s target audience will be less likely to respond.

The logic here is straightforward. If consumers have a strong positive attitude towards a brand,
they will be less likely to switch simply because of a competitor’s promotion; and when a brand
consumer like does offer a promotion of its own, they will be that much more pleased. Additionally, a
promotion in that light will also tend to reinforce consumers’ already holds positive attitude.

Advertising, Promotion and the Brand

By now it is clearly understood that the role of advertising and promotion in fast moving
consumer good markets. Advertising has been seen as one of the primary tools of brand building. The
high cost and difficulties of mass advertising are seen as one of the major challenges to fast moving
consumer good brands.

Do all Brands Need Advertising?

The basic assumption is that brands need advertising but some strong brands apparently do
not. Spencer used to spend almost nothing on advertising, yet it was an enormously powerful brand.
The body focus seems to have built up a distinct brand personality without heavy advertising. The
stores themselves are – in their way – advertising, and it is difficult to think of major brands other than
retailers that have done without advertising.

It is extremely difficult to adjust brand reputations without controlled communications. It is

noticeable that in early 1990s when Spencer was in serious trouble, it started to use advertising to help
recover its reputation. There are niche brands that have built up a reputation by word of mouth, or by
making sure that they were newsworthy. Sometimes they achieve this through public relations, at other
times they achieve it just by being controversial and there are many ways in which a brand can try to
become famous.

We can safely make three statements about brand communication:

➢ Every brand must have some means of communicating with its buyers. This may not
be advertising, but it must be direct if it is to be controllable.

➢ Many other methods of communication are available, and can be used to gear up and
multiply the effects of advertising. Newsworthiness and fame can be achieved, but the
message has to be one that is really new and interesting.

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 ➢ All the means of communication and the messages transmitted must be co-
coordinated to make sense, confused consumers don’t buy.

What can Advertising do?

Huge money is being spent on advertising, by so many bright people, that it is not surprising
that theories abound as to what it does and how it does it. Sadly, most of these are based on myth and
personal experience rather than hard, scientific evidence.

Large, sophisticated companies – the Hindustan lever, Procter and Gamble – have been
working for decades on the problem. Any firm that really wishes to find out how advertising works
for them must commit itself to the same sort of long-term experimentation, data collection and model
building that the organisations have. Readymade solutions are not likely to be of more than general
help.

Advertising elasticity’s – that is the measure of how sales changes in response to a change in
advertising spend – is low. They are significant in 35 per cent of cases for established brands and 55
per cent of cases for new brands. The findings show that:

➢ In two-thirds of campaigns for existing brands and almost half those for new brands, the
advertising does not significantly affect sales and
➢ Short term advertising elasticity’s can be measured but they are likely to be very
small.

Advertising effects are weaker in unambiguous product fields and stronger where products are
new and / or ambiguous.

Long term effects may last two or three years after the initial campaign, so where advertising
does produce a sales effect, its profitability should be measured over that period. Even if advertising
produces no sales increase, it may be contributing to the maintenance of brand share or building up
brand equity.

There is a Price Paradise

The standard model of advertising and the brand suggests that a strong brand is less sensitive
to price than a weaker one. When advertising increases sales, the average sensitivity to price also
increases. In other words, a seemingly successful campaign has made buyers more sensitive to price,
where as we would expect our brand buyers to be, if anything, less sensitive.

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What can Promotion Do?

Like advertising, promotion can do more things than just affect sales. First it can induce
consumers to try a product; because trial is hugely important in producing market share, anything that
increases it is invaluable. A successful promotion that induces new tries to buy is therefore a vital
weapon. It is then up to the performance of the product itself – and the subsequent actions of the rest
of the marketing mix – to persuade that buyer to continue buying.

Promotion can also create excitement. In any crowded market place, you need to stand out. One
way of doing this apart from advertising is having occasional creative promotions. Finally promotions
can produce a trade push; if advertising produces consumer pull, the trade promotion ought to produce
channel push i.e. pushing products into the distribution chain and relying on the channel members to
sell them on.

There is a potentially much more deadly long-term effect of too much promotion
– the subconscious, message that constant promotion sends to consumers. Constant
promotion may devalue the brand, sending almost the opposite message to the one you want to
send.

Planning Advertising and Promotion

The advertising and promotion plan is only one part of the overall marketing plan and must
fit within it. In order to start the advertising plan, we need some background – which is not a very
formal restrictive planning, but for a process of thinking through what the advertising and promotion
are trying to achieve.

From the brand plan we should expect to find the following elements.

➢ A situation analysis (where we are and why)

➢ Objectives (what the brand is aiming for in sales, share and other targets)
➢ Positioning (how the brand is positioned in the consumer’s mind, and how we wish to
change this);
➢ Strategy (how the brand is going to compete in this market)
➢ Advertising strategy (what role advertising has within the overall strategy) and
➢ Budget (what moneys are available to spend on advertising promotion).

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 Advertising objectives must include long-term brand building. They may of course also include
shorter-term tasks such as announcing a new variation or promotion.

Promotions should be integrated into the overall marketing process. Irrelevant promotions
may harm the brand. Good practice sees the objectives of promotions set at the beginning and in the
context of the communications strategy, so that suitable, relevant promotions consistent with the brand’s
values can be planned. Promotions agencies are very good at coming up with ideas, as are advertising
agencies, but the ideas must contribute to, and express, the brand’s values.

Leveraging Brand Equity

Increasing brand awareness not only means that selling more products but also finding
opportunity to sell more products by leveraging brand equity. Consider Coleman, the long-time maker of
camping equipment. The company decided to expand into the home outdoor grill category. After
considering a variety of new grill designs, it decided to go with a traditional design but differentiate the
new product from other grills by colouring it in Coleman’s “signature green.” To outdoor
enthusiasts, this colour is almost as well known as the Coleman name. The use of the green
immediately communicates that a product is “a Coleman.” Because of the brand equity inherent in
the new grill, it got immediate distribution in Sears and Home Depot, among other retailers, and
captured a 5 percent share of the outdoor grill market in first year.

A variety of strategies allow marketers to take advantage of brand equity. Among them are
adding new distribution channels, extending the product line sold under the brand name, co-branding
with another brand, and licensing the brand to other manufacturers to use on their products.

Broadening Distribution

Tupperware, for years sold only at home parties, is now available at target stores. Getting
mass merchandiser and grocery chain distribution is extremely difficult and expensive for most
brands. But when a brand has developed strong customer loyalty, these types of stores are eager to carry
them.

Brand Extension

Another way to leverage brand equity is brand extension, which is the application of an
established brand name to new product offerings. Brand extension is generally most

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 successful when it involves similar products. Within the last few years, for example, premium car
manufacturer such as BMW, Lexus, and Mercedes- Benz

Co-Branding

Like multi-tier branding co-branding is a strategy that capitalizes on using two brand names
(owned by separate companies) and provides customers value from both brands. Co-branding helps
companies that sell commodity products, such as credit cards and air travel, to differentiate them. Co-
branding involves a contractual relationship between two marketing partners, such as Visa and the
United Airlines Mileage Plus program.

Brand Licensing

A strong brand can be licensed. In essence, brand licensing is renting the brand equity to another
company, which benefits from the association. The beauty of brand licensing is that the company owning
the brand can continue to use it while also collecting a fee for the brand’s use by another company.

Ingredient Branding

Another way to add value to brand is through ingredient branding, using the brand name of a
product component in the promotion of another company’s product. The “Intel Inside” message used
by various computer hardware manufacturers is good example.

Leveraging Brand Values For Business and Non-Business Contexts

The reputation of the brand is a source of demand and lasting attractiveness, the image of
superior quality and added value justifies a premium price. A dominant brand is an entry barrier to
competitors because it acts as a reference in its category. The brand can enter other markets when it
is well known, is a symbol of quality and offers a certain promise which is valued by the market. The
Palmolive brand name has become symbolic of mildness and had been extended to a number of markets
besides that of soap, for example shampoo, shaving cream and washing up liquid.

In determining the financial value of the brand, the expert must take into account the sources
of any additional revenues, which are generated by the presence of a strong brand. Additional buyers
may be attracted to a product which appears identical to another but which has a brand name with a
strong reputation. If such is the company’s strategy the brand may command a premium price in
addition to providing an added margin due

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 economies of scale and market domination. Brand extensions into new markets can result in royalties and
important gearing effects. To calculate this value it is necessary to subtract the costs involved in brand
management; the costs involved in quality control and investing in R & D, the cost of national, indeed
international sales force, adverting costs, the cost of a legal registration and the cost of capital
invested.

The financial value of the brand is the difference between the extra revenue generated by the
brand and the associated costs for the next few years, which are discounted back to today. The
number of years is determined by the business plan of the values. The discount rate used to weigh
these future cash flows is determined by the confidence or the lack of it that the investor has in his
forecasts. However, a significant fact is that the stronger the brand, the smaller the risk. Thus future
net cash flows are considered more certain the stronger the brand.

The Following are the three generations of profit of the brand;

➢ The acceptable price premium

➢ The differential of alteration and loyalty and
➢ The differential of the margin

These gearing effects work on the original market for the brand but they can be offered
subsequently in a variety of forms on other markets and for other product categories, either through direct
brand extension or through licensing from which the manufacturer benefits from royalties.

Once these generations are measured in rupees or any other currency they may serve as a base
for evaluating the marginal profit which is attributable to brand management. Now-a-days a key
element of brand equity is understanding and adapting to the logic of distributors and developing
good relations with the channels.

The value of the brand and the legitimacy of a company implementing brand policy depend on
the difference between the marginal revenues coming from the generators of profitability and the
necessary marginal costs associated with brand management.

Brand Values for Non-Business Organisations

Most of the marketing examples are generally drawn from the business sector. Starting in
1990s, there has been a broadening of marketing to cover all organisations.

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All organisations have marketing problems and need marketing skills. The non-profit and public sectors
account for more than a quarter of the Indian economy and are in great need of management and
marketing skills.

Many non-business organisations – college, hospitals, social service organisations, charities,

museums, government agencies, and trusts – are experiencing difficult times. They are losing
clients on the one hand and finding it more difficult to raise public and private funds on the other
hand many are being forced to charge fees for formerly free services to earn extra income. In certain
cases, commercial businesses are complaining about unfair competition from the non-profits.

All of this has increased the interest of non-profits in the area of marketing. Many non-
business organizations are vying with each other to promote their brand value in the market. They use
brand as a tool to mobilize finds from the public to fulfill their objectives. For example, in Chennai,
banyan, a non-profit organization which looks after the socially, economically and mentally retard
women, promotes its brand effectively in India and abroad so as to raise funds for its noble cause.
Another organization is „vuthavum karangal‟ (helping hands) which is taking care of socially and
economically deprived children in Chennai. It is also taking steps to promote its brand to get
recognition from the corporate world so that it can get funds for its social cause.

There are several dangers in the aggressive promotion of brand value. In fact, aggressive
promotion can create negative reactions especially the donor, who regards hard branding as offensive.
Also, hard promotion may turn off as many clients as it turns on. Care must be the best word to

CASE STUDY

CASE - 1

Close –Up

Close-Up ranked No.5 in A & M’s Top Brand Survey of 1997, three ranks below its arch-
rival Colgate. By 1999, Close-Up was No.15. Since its introduction in the Indian market in 1975,
Close-Up has been the closest challenge to Colgate, which is the top brand in the category. According to
Hindustan Liver Ltd, the marketers of Close-Up, the typical consumer had no qualms about not
keeping germs at bay during the night but rather cared more about fresh breath in the morning.

The advertising agency, Lintas, has played on bad breath scare and targeted a typical college
student who would be motivated by what brushing did to his social acceptance. It was hoped that once
Close-Up entered homes, older consumer would also start using it and start discard Colgate. To counter
Colgate’s famed Suraksha Chakra, Close-Up released ad asking consumers to do the “fighting bad
breath”.

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 The intimacy between couples, portrayed in Close-Up commercials, was seen as disturbing
the Indian mother’s sensibilities and hence the ads focused on the gregarious couple, as this group
oriented closeness was seen to be more acceptable to mothers, who are the actual buyers of house hold
toiletries.

Both Colgate and HLL introduced line extensions of their brand, improve packaging and did
aggressive promotions. Close-Up has been strong in the South. It has been quite weak in the East. In
West Bengal, HLL roped in popular singer Anjan Dutt to reach out to the old and young alike.

(Source: A&M magazine)

Questions

1. Analyze the case and determine which promotion strategy, ‘pull’ or ‘push’ would be
appropriate.
2. Suggest two ‘pull promotion for Close-Up to load the trade. Why do you think these
promotions would be successful?
3. Develop a sales promotion design for Close-Up.

CASE - 2

Healthy World

After introducing popcorn and Sundrop cooking oil, ITC Agrotech launched wheat flour (atta)
under the brand name Healthy world. US-based food products firm. Conagra, has 51 percent stake in
ITC Agrotech. The vice president says, “We took an Indian perspective out of the Conagra portfolio,
when relevance to the local palate … Healthy World marks out entry into mass market products.”

Priced at ` 18.50 for a 1 kg pack, Healthy World comes in packs ranging from 500 gm to 5
k.g. ITC Agrotech claims that it spent nearly one year on R&D before launching Healthy World.
bench marking it against national players in the branded atta category; players like Hindustan Lever
Limited (Annapurna) and Pillsbury. There are several regional brands too. Parameters such as softness,
taste, colour and texture preferences are said to have been looked into in detail before finalizing the
variant, “Our research revealed that the preferences in the North and South of India differ distinctly
across almost all parameters

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 of atta. While creamish to white colour and finer size is preferred in the South, the North consumer is
more discerning as far as taste goes,” informs this marketing manager.

Consumer in the South are more receptive to branded atta, but the North leads in
consumption, where average monthly household consumption is 27 kg. as against just 3 kg. in South.

Conagra claims to be the largest miller in the US. ITC Agro took over the atta
manufacturing portion of a partner in Chennai to streamline it in line with its parent company’s
manufacturing process. What will also help ITC Agro is the fact that it has established itself as a
health conscious manufacturer with Sundrop. The distribution network is already in place. In fact, the
Healthy World packs too leverage this with the image of the boy somersaulting (The Sundrop
trademark) with the proclamation – “from the maker of Sundrop”.

The branded atta market is estimated to be in excess of ` 350 crore, with category
advertising spend of about ` 20-25 crore. The theme line of Healthy World says, “ More health
More Energy.”

(Source: A&M, March 31, 2000)

Questions

1. Develop a sales promotion plan to encourage continued consumption of Healthy World

in North India.
2. How would you make your sales promotion competition proof?
3. How would you evaluate the result of this promotion?

****

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