Do You Know the Importance Of Sales Promotion And How It Can Be Game Changer In Your Competitive Market.
So In This Blog, I Will Cover Up Each & Every Point Related To Sales Promotion Which Is Important For You.
What’s in it for me?
- WHAT IS SALES PROMOTION? TYPES OF SALES PROMOTION.
- WHAT ARE CONSUMER OFFERS?
- WHAT IS TRADE SCHEMES?
- FREQUENTLY ASKED QUESTIONS.
SALES PROMOTION :
Let’s discuss what it means and how many types of sales promotions are there.
It is the process of persuading a potential customer to buy the product. It is designed to be used as a short-term tactic to boost sales – it is rarely suitable as a method of building long-term customer loyalty. Some sales promotions are aimed at consumers.
Basically there are 2 types of sales promotion-
A). Consumer offers- which are generally for consumers.
B). Trade scheme- which are for traders or retailers.
CONSUMER OFFERS :
Today we will talk about consumer offers.
Companies give consumer offers to increase their rapid sale of products in a limited time period. This increase may be because of certain seasons or festivals and in general, also companies provide various offers for consumers.
So let us understand how many types of consumers there are ;
Basically there are 7 of consumer offers.
1. CROSS-PROMOTION –
Cross-promotion is a form of marketing promotion where customers of one product or service are targeted with the promotion of a related product.
A typical example is the cross-media marketing of a brand. It is a trial method for the brand so that everyone could use it, like it and buy it.
For example; *Chawanprash* promotion with *Honey*.
2. FREE STUFF –
It means When a company wants to promote their brand or products they start giving a free item with any one product to encourage attendees to visit their booth.
For example – A *Maggie bowl with Maggie*, *Tattoos with Biscuits*, etc.
Which is only for a limited time offer, like for 7 days; 10days; 1 month, etc. By seeing their benefits, customers start purchasing these products firstly.
3. EXTRA VOLUME –
In this offer, a particular grammage is increased that is the weight of the product increased to increase More consumption of consumers.
For example Gillette foam cream giving 33% extra volume, Daawat basmati rice giving 25% extra volume.
They believe that if the consumers use that product more they will get fond of using it and then they will buy the same product again and again.
4. BUY ONE GET ONE FREE –
It is somewhat the same as extra volume but in this offer the same product is given in more quantity with one product. Such as buy 1 get 1, buy 2 get 1, etc.
These offers are given for products that are sold in pieces. For example, toothbrush giving offers buy 2 get 1, in soap offers are buy 3 get 1, etc.
You can get these offers in products such as ice creams. When there is the end of the season to sell the full stock, the company gives these types of offers.
5. DISCOUNT –
There is a direct discount given on a product.
They put a tag on that particular pack on which it may indicate ₹20/- off, ₹30/- off. Whether you buy one or more products you will get a particular discount.
They give these prices off because companies think that the competition who sell almost similar products have low prices that is why consumers prefer their products more.
So the company doesn’t lower the price, they just give a discount on their product. They bring the price parity and then they notice how much sales go up after giving discounts.
There may be various other reasons such as to compete with other companies so that new consumers come and buy their products.
For example on the pack of surf excel they give ₹65/- off, on-pack of clinics plus they give ₹10/- off and so on.
6. VALUE PACKS –
In this offer if a customer buys more quantity of product then they will get a particular discount.
You can notice on the tag it will be written save such as save ₹10 on twin packs of good night active, save ₹15/- on the 6 pieces of kiwi dranex, save ₹17/- on more volume packs of Colgate, etc.
It is only valid for bulk purchases or higher quantity purchases.
7. CONTESTS –
Companies engage the consumer in a contest for a certain period to win different prizes.
For example “Britannia Khao world cup jao” win a trip contest, contest on kurkure with make my trip, etc.
All these contests are given so that the consumer purchases the product repeatedly to win the contest and the company’s sales will increase through it.
TRADE SCHEMES :
What is a trade scheme?
See, the trade scheme is that for the shopkeepers, the company provides this scheme to increase stock pressure in the outlet. It is also an important part of sales promotion
Why do companies provide trade schemes?
1st Reason –
Because of the trade scheme, if the shopkeeper were buying that product in higher volume and more quantity then his stock inside the shop increases.
Meaning that the shopkeeper will take less of the stock of the competitor to finish the stock because we have made stock pressure on the shopkeeper.
2nd Reason –
Launching of a new product;
In this, the company makes some incentive announcements to the shopkeeper that you keep and sell this product of ours, and then you will be given some profit/benefit/share due to which the shopkeeper gets ready to sell the new product of the company.
The company also gives trade schemes to increase visibility in its local market.
In this, it is that the company asks the shopkeeper for such a window/shelves in his shop where the customer gets more attention, this thing is very helpful to promote the product of the company.
How Many Types Of Trade Schemes?
Different types of trade schemes are Scheme on pieces, quantity purchase schemes, free products, display payout, target incentive, loyalty programs.
1. A Scheme On Pieces –
It means that if a company wants to sell a product in the shop, then it has made such a scheme that if you buy 40 pieces of this particular product then you will get a 2% flat discount and if you buy 100 pieces then you will get a 3% discount.
This is how the company makes the scheme. Let the retailer know that he will have to take this quantity at once, meaning that the retailer cannot buy 100 pieces for a month or 5 times the bill.
The shopkeeper has to purchase these 100 pieces of quantity in a one bill payment.
This is the fundamental requirement in this scheme.
2. Quantity Purchase Schemes –
This is slightly different from the “scheme of pieces” as we give the shopkeeper a fixed time in it.
Just like you have to take 100 pieces of this product in 1 month, only then you will get the scheme.
In this scheme, the shopkeeper can buy the products in many bills or in any number of times, he does not have restrictions on this scheme.
For example, if the shopkeeper takes (20 cases to 50 cases) in 1 month, then he will get a discount of 2%, if (60 cases to 100 cases) will get a discount of 3%, and if he takes (100 cases to 500 cases) in the entire month then he will get a 5% discount.
3. Free Products –
In this scheme, the company offers the retailer such that if he takes a box of 100 cases, then the shopkeeper is given 2 cases of the same product on it for free.
In which the product with free may be a different product. It is often given when the company wants to market that product or test the product.
4. Display Payout –
To increase the display of the product in the stores, the company hires some windows in stores or take any shelves space to display their particular products.
And may put Products on the cash counter. For this the retailer gets a particular amount.
As you can see in example 2 windows are taken for Rs. 300 per window/ month, countertop taken for Rs. 200/ month. So these types of offers are given to them which may also be part of the scheme.
5. Target Incentive –
The FMCG companies give various targets to the retailers for a particular period of time.
They are given the targets slab wise and on the basis of their achievement they will get an extra payout on the overall purchase retailer had done.
For example, if they achieved their target 100% or above they will get an extra payout of 2% if the target achieved is between 95 to 100% the payout received will be 1.5% and if their target achievement is 90 to 95% then they will get the payout of 1%.
6. Loyalty Programs –
If the retailer wants to be connected with the company for a long term such as 3 months, 6 months, 1 year. The retailer will get extra benefits such as payout, foreign trips because of loyalty programs.
For this they enroll selective retailers. The visibility or incentives are also given to them. These all come under the loyalty program itself. This works for the long term giving them the maximum benefits for joining the company.
If You Read And Understand All The Above Mention Points Then Apply It In Your Current Business Or Startup, This Will Definitely Give You Better Results In Your Field.
FREQUENTLY ASKED QUESTIONS
Sales Promotion Is A Quick Way To Promote Their Product Or To Test Their Product In The Market.
Sales Promotion Is Basically For Consumers And Retailers.
Mostly Companies Uses Sales Promotion To Compete With Their Competitor In The Market.
Scheme On Pieces, Quantity Purchase Schemes, Free Products, Display Payout, Target Incentive, Loyalty Programs Are The Various Types Of Sales Promotion.
HEALTH & FITNESS CONSCIOUS
FROM- GWALIOR, M.P