Readers Contribution

Sales Promotion: Wooing the Consumer

Promotional offers are becoming par for the course in several product categories. But to get your money's worth in returns, you have to set the objectives of the promo upfront - and clearly

Mr. Kharidikar is an unusually ordinary man. His day is full of the usual chores - but different. A typical day in his life begins with the sonorous ring of the alarm clock. Nothing much to that. Many people do the same. Only Kharidikar's clock is a gift that came with his subscription to a business magazine. Swinging his legs off the bed, he prepares for the day. The bed, a discount offer from a furniture brand, also flaunts a fluffy mattress that came in free. And, it just doesn't end there.

Kharidikar lumbers along to the air conditioner. It certainly has to be switched off. It came as part of a fabulous festive offer. That done, it's time for brushing. A pleasant smile flits across Kharidikar's face. Picking up the brush and toothpaste he reminisces - another bargain here. Got it under a special double offer of brush and toothpaste at just Rs. 34.

Now it's time for the newspaper. Kharidikar goes to the door to pick it up. The paper is running a great contest to increase its readership. A leaflet slips out from its pages. It is a "Shop & Win" promotion run by a neighbourhood grocery departmental store - petrol free with every purchase of Rs. 300 and above. That, too, coupled with the chance to win more than 1001 prizes. Must try it out, he mulls.

Browsing past the headlines, it�s now time to fetch his wife and kids. They have been away for a two-week holiday. He goes to the kitchen and lights the gas with a lighter. No hassle with damp matchboxes. Lucky, he feels, that this lighter came free with last month's purchase of a tea pack. He puts milk (price-off scheme) in the pan to prepare coffee, and smiles again. The coffee pack came with an attractive offer of a free soap. He adds the sugar (offer of 25 sachets free with a 5 kg. pack) and is all set for his morning cuppa.

A relaxed coffee over, Kharidikar is now in fast-forward mode. A quick shave (great twin-blade cum cream offer) and bath later, he is ready for breakfast : bread and jam. The bread company is running a contest that could get him a toaster. Must look at that closely later, he mumbles to himself, and readies himself for leaving home to pick up the spouse and kids.

But the car's tank needs to be filled. Kharidikar drives to a petrol pump and uses his credit card (no surcharge levied and bonus points awarded with additional offer on accumulation). The pump, too, is running a promotion scheme for loyal customers. Even the credit card has its own story. He got because it was offered free of cost - no entry - admission free for one year, along with a free card for his spouse. Kharidikar reminisces about the last time he used the card - and the smiles yet again. He had gone to the mall to make his usual household purchases, and the red carpet was laid out for him. After loading up his shopping cart with the usual monthly provisions, he reached for a large bottle of Pepsi and found that he would get a free movie ticket with it. He bought a few more bottles, and got more free tickets. "Weekend mein family ke sath picture ka mazza kuch aur hi hai". he told himself.

As he trundled up to the billing counter, he was asked to pick up some lucky draw coupons which may earn him discounts or more free-beis over the weekend. The only fly in the ointment was the thought of having to lug all the monthly purchases to the car. But helps was at hand. The counter staff politely reminded him of the free home delivery service they offered. Satisfied with his shopping experience. Kharidikar turned towards the door. To his surprise, the manager of the store approached him and offered congratulations. Pointing out that he was the 1000the valued customer at their store that day, they presents him with a free gift hamper. The perfect icing to an already delicious cake. Kharidikar left the shop feeling like a king.

Kharidikar may be an ordinary man, but he is also an emperor in the consumer market place. Every brand is trying to tempt him with an enticing sales promotion offer. From cars to soap, from gold coins with tea to diamond pendants in cosmetic cream tubes, Kharidikar has seen them all. He is now more choosy. As the quality differences between competing products narrow. Kharidikar's final purchase decisions often depend on who is making the more enticing offer.

Marketers everywhere know that this is the era of value-adds. From being just an optional extra, sales promotion has moved up the marketer's list of priorities. Reason: this type of marketing activity adds to the basic value of a product or service for a limited period of time and directly stimulates purchases by the Kharidikars of the world. To work effectively, promotional offers have to be structured well

Figure 1 shows promotions fir into the overall marketing mix. Promos are usually of two types; trade promotion and consumer promotion. Trade promotion is directed towards a sales promotion effort in trade channels, including distributors and dealers. Consumer promotion is directed towards the consumer and is strongly prevalent in the FMCG category.

To succeed in their objectives, consumer promotions require substantial media budgets over and above the freebies as compared to trade promotions. This is because one needs to communicate to consumer through ads (electronic and print) that deliver impact, along with displays of point-of-purchase (POP) material at the retail level. However, in trade promotions, one can easily manage to communicate a scheme's details with the help of mailers/circulars, one-to-one presentations and direct explanations to distributors and dealers through the direct sales force.
There are many types of consumer promoting schemes one can deploy. Some of them are exchange offers, price discounts, free products / services, lucky draws, free sampling, co-branding offers, charity/cause-related offers, etc

Why promos

Companies tend to use promotional offers for various reasons. These reasons include:

Competition: If a competitive brand is talking away a major share of your market, you may be forced to provide a consumer promo. In such cases, the trade channel and the sales team will keep pointing to the sales promotions schemes used by competitors and conclude that this is the reason for your low sales figures.

Reduction in raw material prices: If your product margin varies frequently because of changes in raw material price (as in edible oil brands), it is advisable to provide a free product or any other scheme because it does not make sense to keep hiking or reducing prices frequently. It is very difficult for a consumer to accept sudden increases in prices once they have been cut.

Quick market penetration: Companies may sometimes desire to penetrate the market with a high-perception scheme. Here, profitability is not the prime objective.

Inducing trials: When a product needs a trial before purchase - as in tea or newspaper brands, where the existing brands has become a habit and is difficult to shift brand loyalty - it sometimes pays to induce trials. Here, it is important that the sampling may also be provided with a non-competing category's brand to ease distribution costs and see that it reaches the right target audience. Including trials may also be an objective for generating awareness about a new brand.

Generating loyalty: Promos are done with the motive of achieving repeat sales. Consumers are provided discount coupons for their next purchase and so are motivated to collect a series of items like coffee mugs or plastic containers, which they get along with the product being sold.

Stock clearance: A promo can be started to liquidate stock before new stock or season arrives. This type of consumer promo is quite often seen in garment brands.

Figure 2 shows the essentials that need to be taken into consideration before floating a consumer promotion drive. Planning effective sales promotions involves setting the key objectives of the promo - whether it is to generate loyalty or to quickly penetrate the market - and all allocating a budget for it, among other things.

The budget is not only for financing the cost of the freebie, but also the servicing cost, if any, and the cost of communicating the scheme to customers or dealers or both. Appropriate data has to be evaluated regarding the market and the brand to be promoted. Perceptions among consumers about the brand to be promoted and the ancillary brand have to be properly checked. It is also vital to know the existing stocks available in the market. Huge available stock will not give the desired results in a consumer scheme.

Besides identifying the right type of scheme for the promo - which is critical in order to ensure that the objectives are met - marketers also have to be clear about its timing and duration. A seasonal product like cold cream as a free gift will be appreciated only when the weather is cold. However, some refrigerator brands run huge off-season offers in comparison to in-season offers because sales peak during the summer.

Universal branding

Branding of any scheme should be done in an appealing fashion. It should be understood by the target audience across all cultures and accepted in the same meaning as desired by the brand. Branding should not mean different things to different people. Also, the brand personality has to be taken care of prior to the scheme. Necessary advertising support needs to be provided to achieve desired results. Further, the legal validity of the scheme should be checked before it is floated. A free product scheme is of doubtful validity if the consumer is paying some kind of price for it but the same is being advertised as free. Similarly, if a scheme has lucky draws or scratch cards and there are expensive gifts, it may be a good idea to appoint an external auditors to check the scheme and give it credibility.

All told, the success of any promotional scheme depends on the seriousness with which it has been planned. The purpose of any promo is to impact the customer favourably, and legal or other controversies are the last thing one needs.