Our world today is characterized by promotion wars. Every Day when we open the newspaper or view any TV channel, we are bombarded with advertisements. Just look at the prizes sponsored by several firms at the end of some of the well-known television programs like â€œDeal or No Dealâ€?, â€œIndian Idolâ€? etc., on Sony channel and â€œThe Great Indian Laughterâ€? on Star One are some examples. It isnâ€™t just the prizes on television that attract the consumer, it is the discount coupons, gifts and several similar incentive programs creatively designed by the marketer that draws the customer to the brand and the organization. All these are the vehicles used in sales promotion.
Sales promotion collectively comprises of the tools used to promote sales in a given territory and time. These are primarily short term in nature and are designed to quickly stimulate sales. While advertising creates awareness and provides to the target consumer the rationale to buy a product, sales promotion induces him / her to try / buy the product. In this sense, sales promotion is an incentive to buy. While discount coupons, price offs, free trials, etc. are directed at the final consumer, there are several promotions like merchandise allowance, incentive for shelf space, shelf display contests, joint promotions, etc. which are directed at the trade. In todayâ€™s environment both these promotions are required. Broadly, consumer promotionsâ€™ objective is to create consumer pull for the brand and trade promotionsâ€™ objective is to push the brand in the market place.
Growing Significance of Sales Promotion:
There has been an increase in the sales promotion budgets of all organizations during the last 10 to 15 years. Even smaller firms and retail outlets have had sales promotion campaigns. The growing significance of sales promotion can be attributed to :
1. Growing consumerism in India and an upwardly mobile Indian Market.
2. Heightened inter-firm rivalry within the industry; in fact, in all sectors of the economy.
3. Tradeâ€™s resistance to invest additional resources in the product mix of different companies. This resistance is mainly because of most consumer companies enlarging their product mix to preempt competition and also to satisfy different consumer needs. The trade has limited resources and they find it difficult to invest in all companiesâ€™ products. Therefore the trade also demands more incentive for any additional investment.
4. Fragmentation of viewers and readers arising out of multiple television channels and newspaper and magazines.
5. The mass media cost has been on the rise and most companies find sales promotion as a more cost effective alternative.
6. With technologies and products getting standardized, differentiation between firms and got blunted and price wars have now become a reality in most consumer goods.
Sales promotion budgets, therefore, are getting fatter and one has yet to see the peak in it. It isnâ€™t surprising that sales promotion is growing because it:
(a) Helps in securing trial and defending shelf space against competition.
(b) Smoothens out the manufacturing capacities of firms in such a way that the peaks and the valleys are minimized,
(c) Provides opportunities to manufacturers to reach out to market segments with differing price sensitivity.
(d) Adds excitement to the in-store merchandising of consumer goods.
(e) Motivates trade to keep more and push more of those brands that are on promotion.
With increasing number of channels on the electronic media and reduction in advertisement tariffs for regular advertisers more and more products are advertised through this medium in addition to Print media. Some of the advertisement messages on TV are now used as slogans even by children, comedy shows or during party gossip. No doubt the firms are reaping the benefits of all this by increasing their gross revenues.