Question

State two methods or techniques of sales promotion.

Explain in brief various methods of sales promotion used at the level of consumers.

Explain any five techniques used in sales promotion.

Answer 1

1. Distribution of Free samples: Many a time free samples of low-priced and repeat sales items are distributed to selected people to gain consumer acceptance and to popularise the product. The sample may be distributed in the shop or door-to-door. Pharmaceutical firms distribute free samples of medicines among doctors and publishers distribute samples of books among professors so that they may recommend the products to ultimate users. This is an effective device of sales promotion as consumers can test the product before buying it. It is particularly useful in the introduction of new products and frequently purchased convenience goods such as tea, coffee, detergent, ketchup, etc. 
2. Coupons: : Some firms issue coupons to prospective buyers through newspapers, direct mail, dealers, package and door-to-door salesmen. A coupon is a certificate that entitles its holder to a specified saving or discount or gift on the purchase of a particular product. The holders of coupons present their coupons to retailers and get the product at a reduced price. The manufacturer reimburses the retailers for the value of coupon redeemed by them in addition to some commission to cover handling costs. Coupons are used to introduce new products and to increase sales of established products. Coupons are often used for consumer products of daily use to increase sales during the slack period. For example, Reliance Industries and Raymonds issue discount coupons.
3. Premiums or Bonus Offers: A sales premium or bonus offer is the offer of an article free of cost or at a nominal price on the purchase of a specified product. For instance, one 'Lux' toilet soap may be given free on the purchase of an economy pack of 'Surf detergent powder. A premium is also known as a combination offer. It is a practical persuasion to buy that helps to increase immediate sales and to clear accumulated stock. Premiums are used in case of convenience goods like detergents, toothpaste, toilet preparations which are bought frequently. Success of the premium offer depends upon judicious choice of the bonus item which should be useful and in good taste.
   1. With pack premium: In which the bonus item is included either inside or outside the package, e.g., one spoon free in the packet of Horlicks.
   2. Price off premium: Which implies a reduction in price on the purchase of a large or economy pack. e.g. save ₹ 5 on purchase of family pack.
   3. Money refund premium: Wherein the cost of the article is fully or partially refunded on the presentation of the proof of purchase, e.g., wrapper, cash memo, etc.
   4. Extra quantity premium: Under which a customer can get one unit of the product free on the purchase of specified units, e.g., one tooth brush free on the purchase of six tooth brushes.
4. Trading Stamps: Trading or bonus stamps are issued by retailers to customers who buy goods from them. The number of stamps given to a buyer depends upon the amount of purchases made by him. For instance, in India Ramon Bonus Stamps are issued at the rate of 2 ½ per cent of the purchase amount. These stamps are given free of charge and the customer can redeem them to obtain products out of the specified list. This technique induces customers to buy their requirements from the retailers who offer such stamps. The purpose is to increase customer loyalty.
5. Prize Contests: Under this device, consumers are given rewards for analytical or creative thinking about the product in the form of slogan writing, sentence completion, problem solving quiz, etc. Rewards are given to successful participants in the form of cash prizes, merchandise, or free travel. Such contests help to create consumers' interest in the product, provide new ideas for advertising and may reveal buying motives. Contests are generally held through newspapers, magazines and radio. The date, time and period of the contest should be such that all people have equal opportunity. Entries should be judged by competent people in a fair manner and rewards should be given promptly.
6. Free Offer: In order to promote sales, some firms offer a free gift with the purchase of an expensive product. For example, a cordless phone is offered free on the purchase of a refrigerator or colour TV.
7. Fairs and Exhibitions: Trade shows, fashion shows or parades, fairs and exhibitions are an important technique of sales promotion. They provide a forum for the exhibition or demonstration of the product. Free literature can be distributed to introduce the firm and its products to the public. Fairs and exhibitions are organised usually by big firms or trade associations. At these fairs and exhibitions, business firms are allotted stalls wherein they display their products. Fairs and exhibitions have wide appeal as several people visit them.
8. Merchandising Aids : These refer to the services provided to induce commercial buyers to purchase goods in large quantity. Such aids include training in stores layout and inventory control, advertising, product demonstrations, etc.
9. Clearance Sale: Sales at reduced prices may be organised at important festivals or other occasions. Such sales attract a large number of customers and help to clear accumulated stocks. For instance, the Khadi Gramodyog Bhavan in New Delhi offers special discount on Khadi goods on Gandhi Jayanti.
10. Exchange Offer: In this method, customers are offered the facility of exchanging old products with new. For example, BPL Ltd. offered to buyers of refrigerators that they could exchange their old refrigerator and thereby pay less upto ₹ 3,000 on the new one.