SALES PROMOTION METHODS

Automotive Parts Management

Name: Ahmad Amir bin AzriProgramme: Diploma in Procurement Management (DPV)Group: 2AStudent ID: 106130911Instructor: Kamaruzaman bin KamarudinIntroductionSales promotion is the process of persuading a potential customer to buy a product. It is also described as any initiative undertaken by an organization to promote an increase in sales, usage or trial of a product or services. Sales promotion for companies is all about the ways the company is able to market the product or services it is offering in order to make money. Marketing is also involved in testing some parts of the business to determine which combination of methods works best for its products or services and allows the company to generate the most profit. Sales promotion is mainly designed for use as a short-term tactic to boost sales and is rarely suitable as a method of building a long-term customer loyalty. Some sales promotions are targeted at consumers while others are targeted at intermediaries and at the firms sales force. Sales promotions targeted at the customers are called consumer sales promotions. Sales promotions aimed at intermediaries and internal sales force are called trade sales promotions. Some sale promotions, particularly ones with unusual methods, are considered gimmicks by the general public. Sales promotion includes several communication activities that attempts to provide added value or incentives to customers to stimulate immediate sales. These efforts can attempt to stimulate product interest, trials or purchase. Sales promotion is needed by many companies to attract new customers, retain present customers, counteract competitions, and to take advantage of the opportunities revealed by market research. Sales promotion is made up of inside and outside activities to enhance company sales. Inside sales promotion activities includes window displays, product and promotional material display and promotional programs such as premium awards and contests while outside sales promotion activities include advertising, publicity, public relations activities and special sales event.When undertaking a sales promotion, there are several factors that a business must take into account, the promotion cost, is the sales promotion consistent with brand image and will the sales promotion attracts loyal customers. The advantages of sales promotion are it is effective at achieving a quick boost of sales and encourages customers to try a product or switch brands whereas the disadvantages are that the sales effect may only be short-term, customers may come to expect or anticipate further promotions or it may damage the brand image.

ContentsThere are many methods of sales promotions used in the market today. The main methods of sales promotions that falls under the consumer sales promotions are primarily sampling, money off coupons, money-back offer, competitions, discount vouchers, free gifts, point of sales materials, loyalty cards, price incentives, premiums and joint sales promotion.Sampling consists of offering a small quantity of the product free of charge, or at a very low cost in order to encourage trial. It is commonly used by large firms which produce packaged foods, health and beauty items. Samples may be distributed door-to-door, through the mail, with magazines and newspapers in the store, or anywhere where customers is likely to be. A sample can stimulate a higher rate of trial than any other promotional methods. Sampling however is a costly way of introducing or encouraging trial of a new product. Sampling will only be successful if it leads into repurchase.

Money off coupons or discount vouchers is a ticket or document that can be exchanged for a discount or rebate when buying a product. Customarily, coupons are issued by manufacturers of packaged goods or by retailers to be used in retail stores which are often widely distributed through mail, magazines, newspapers, the Internet, directly from the retailer and through mobile phones. Since only price conscious customers are likely to spend the time to claim the savings, coupons function as a form of price discrimination which enables retailers to offer a lower price only to those customers who would otherwise go elsewhere. In addition, coupons can also be targeted selectively to regional markets which price competition is great. Money back offer, money back guarantee or also known as satisfaction guarantee is essentially a guarantee that marketers offer to return a certain amount of money to the customer if he or she is not satisfied with the product. This may take the form of a full or partial refund, after the product has been returned. Money back offers help to reduce the risk involved in trying out new products where they also help to reward existing customers, encourage multiple purchases, and persuade customers to buy now rather than later. The use of money back guarantees has grown significantly over the last few years and has become standard practice in direct marketing across all media.

Competition or contests are promotional schemes in which no fees are charged for participating which are often included after the purchase of a product where it is based purely on the participants skills and abilities. It requires that the participants apply a skill in creating an idea, a concept or an end product. Contests are usually based on coining a name or a slogan for a new or existing product or answering questions related to a product. A sweepstakes on the other hand is purely based on chance. Each participants has an equal chance of winning a prize from lucky draws or lotteries. Both competitions and sweepstakes are powerful sales promotion methods as they have the ability to involve the customers and build excitement around the product.

Free gifts are free products that are given when buying another product. This promotional offer appears to be inundating the marketplace whether they are in any market category. Oftentimes the free gifts given is inexpensive but compliments the product itself and attracts customers.

Point of sales materials or point of sales display is a specialized form of sale promotion that are intended to draw customers attention to the products which may be new products, or on special offer, and are also used to promote special events. Point of sales materials can attractive include posters, display stands, banners and special merchandise racks which encourage customers to try new products, switch brands or make an unplanned purchase.

Loyalty cards or loyalty program are structured marketing efforts that rewards, and therefore encourage, loyal buying behaviour which is potentially beneficial to the firm. In retailing and marketing, a loyalty card, which is visually similar to credit card, is used to identify the card holder as a member in a loyalty program. These cards typically have a barcode or magnetic strip that can be easily scanned and some cards even implement the use of microchip. By presenting the card, the purchaser is typically entitled to either a discount on the current purchase or an allotment of loyalty points which can be used for further purchase. Where a customer has provided sufficient identifying information, the loyalty card may also be used to obtain membership privileges such as access to club lounge in airports.

Price incentive is the use of short term reduction in price to stimulate demand for an established product which sales are declining. Such price incentives may take the form of price promotions or price packs.

Premiums are offer of some type of merchandise or service either free or at a greatly reduced price to induce purchase of another product or service. The specific purpose of a premium is to induce present customers to increase their use of brands or to purchase it in larger sized packets. It can also help to switch customers from using their current brand to that of the promoters brand in order to gain trial use with hopes of repurchase. Premium may also be classified in terms of whether they are offered free or at a reduced price. Premiums offered at reduced price are known as self-liquidating premiums. The purpose of such a premium is to cover the manufacturers out of pocket costs. Premiums are also an expensive technique and unless tremendous volumes are generated, most companies could not afford to use this method.

Joint sales promotion are promotions which are collaborations between brands owned by a company, or with another companys brands. For example, fast food restaurants often run sales promotions where toys relating to a specific movie release are given away with promoted meals.

ConclusionIn conclusion, the methods of sales promotion must be assessed before undertaken by any firm for strategic use within a specific time for it to have a positive return of investment to the company. Although it is a short term tactic for sales promotion, it can be used to create new markets and improve ones company in the market stands.