35 Sales Promotion Techniques

Vinti Davar

1. Introduction

The nature of food service product is such that it demands more immediate selling. For this purpose, sales promotion is very important strategy for any food service organisation to make and increase sales. In this talk we will elaborate various sales promotion techniques and their usage.

2. Objectives

o   The main objectives of this module are to:

o   Understand the concept of Sales promotion

o   Explore the reasons for promotion of sales

o   Be familiar with various Sales Promotion Techniques

3.  Defining Sales Promotion

Sales promotion is a direct and instant inducement aimed at an immediate increase in sales. It is also a handy tool for the marketer for unloading accumulated inventory and overcoming seasonal slumps. It is also used to generate trials for new products. In short, it is a direct and immediate incentive for purchase. It involves temporary encouragements to increase the sale of a product/service. It depends on a number of promotional tools intended to motivate a prior customer response. Sales promotion comprises of customer promotion (i.e. samples, coupons, rebates, price-off, premiums, contests, demonstrations), trade promotion-buying allowances (free goods, cooperative advertising, and push money), and sales force promotion (bonuses and contests). A well-planned sales promotion can result in publicity.

3.1  Aims of Sales Promotion

Sales promotions are orientated towards changing the customer’s short-run purchasing behaviour through:

•        Increasing average spend and therefore sales revenue.

•        Invigorating slow-moving product(s).

•        Promoting a new menu, product or product range.

•        Influencing impulse purchasing in a certain fashion.

•        Amalgamating items for sale.

•        Attracting attention to the business in slower months.

•        The celebration of special events.

•        Increasing customer visits.

•        Adding variety and interest to bars, restaurants and so on.

•        Establishing or enhancing awareness in potential customers’ minds of the business and its products.

•        Stimulating purchasing by facilitating communication of product/business features and benefits.

•        Positively altering customers’ opinions and attitudes.

•        Informing in order to entice business.

•        Increasing product/service profile.

This is achieved through offering additional value, financial inducement to purchase and try, advertising campaigns and so on. Sales promotions can also be linked to public relations and sponsorship strategies.

4.  Reasons for using Sales Promotion Techniques

Sales promotion is used by operations for a number of reasons including the following:

1.To increase the average spends by customers and thereby increase the sales revenue.

2.To promote a new product or range of products being featured by the operation, for example offering a new flavoured milk shake in a take-away facility at a reduced price.

3.To influence impulse purchasers towards a certain product or range of products, for example featuring Australian wine at a special discount price.

4.To aid as a reminder during a long-term advertising campaign, for example on long established main menu items.

5.To help ‘level’ peak activities of business, for example offering a free glass of wine to customers ordering their meal before 18.30 hours.

6.To celebrate a special event, for example the New Year, Thanksgiving Day Dinner, etc.

7.To ‘package’ together menu items at an attractive price, for example steak and strawberries. Such ‘packages’ are seasonal in nature but aid in directing a high proportion of customers’ choices towards items of a low preparation labour content.

8.To clear slow moving stock, for example pricing specific cocktails at two for the price of one.

5.  The sales promotion techniques:

5.1 Customers: The consumers are always the main target of every sales promotion technique.

Main objectives and tools of consumer promotion are as follows:

5.1.1 Objectives

• Encourage and induce trial and purchase of a product
• Generate consumer interest, which should lead to trial
• Build traffic for a brand at the retail point
• Increase the rate of purchase
• Coupons, Gifts, Free offers, Price-offs, Discounts, Instalment-offers, Exchange offers
• Free samples; Demonstrations
• Trade Fairs and Exhibitions
• Consumer contests/Sweepstakes
• Rewards for patronage/loyalty
• Merchandising/Display
• Product exchange offers/Attractive financing schemes

5.1.3 Distribution Channels: Promotional techniques aimed at incentivating third party agents include free restaurant meals, free gifts, competitions and the use of the hotel’s leisure facilities.

   5.1.4 Sales Employees: Sales promotion incentives are similar to those listed above and include commission related sales, competitions, token and points systems occurring over an extended period to encourage an ongoing sales commitment by the sales force.

Sales promotion is a marketing tool in its own right and should be planned, monitored and evaluated as such. It can be initiated either by the operation itself or by an external organization, and as with all other aspects of the marketing mix must be in line with the marketing objectives of the organization.

6. Sales Promotion Differs from Advertising

Sales promotion differs from advertising in the following ways:

a. Whereas advertisin

b.g is an indirect and subtle approach to create brand awareness and brand loyalty among consumers, sales promotion is a direct and open inducement/incentive to consumers to buy the product instantly.

c. The impact of advertising lasts longer, while that of sales promotion is limited to a shorter period.

d.While advertising amounts to powerful communication of the value the product carries, sales promotion alters the price-value equation of the product in favour of the consumer.

e. Advertising builds brand loyalty; sales promotion is unlikely to accomplish it.

6.  Sales Promotion Tools

1. Samples
2. Coupons
3. Premiums
4. Patronage rewards
5. Point-of-purchase displays
6. Contests, sweepstakes, and games
7. Product packages
8. Seasonal specials
9. Free meal night
10. Live music
11. Themed entertainment
12. Up-sell
13. Take-away
14. Bulk order rewards
15. Guests’ Views
16. Charity
17. Customise service
18. Provide assurance or guarantee
19. Partner up
20. Make it easy or convenient

7.1 Samples: These are offers of a trial amount of a product. Samples may or may not be free. Sampling by the staff who are employed by a hospitality firm such as a hotel, restaurant, or ski resort can be a very useful educational and promotional device. For staff, thorough knowledge of the

product is particularly beneficial to up selling which can be achieved by:

a.    Provide continuous training programs.

b.    Offer sales and performance incentives that include prizes on the property such as a five-course meal, a month’s use of the health club, or a weekend in the deluxe suite.

c.    Create an employee’s day in which the staffs have full use of the facility.

d.    Share product information with employees through newsletters or product brochures.

e.    Talk continuously about the company’s products and services in a positive and upbeat manner.

7.2 Coupons: They are certificates that offer buyers savings when they purchase specified products. These can be mailed, included with other products, or placed in ads. These are most popular in the restaurant industry; however, hotel, rental car companies, tourists’ attractions, and cruise lines also use coupons. Over couponing should be avoided otherwise it will not offer any advantage.

7.3 Premiums: Premiums are goods offered either free or at low cost as an incentive to buy a product. Promotional items such as caps, T-shirts, and sweatshirts can be sold at a good profit, thus creating another profit centre for the company. Others offer a premium-priced drink or dessert that is served with a special glass or plate. Guests actually pay for the glass or plate in the price of the product, take the “gift” home with them, and are reminded of a pleasant restaurant experience each time it is later seen.

7.4 Patronage rewards: These are cash or other awards for regular use of a company’s products or services. Most airlines and hotels offer frequent-flyer plans that award points for miles travelled. Most of the hotel chains have a frequent-stay program and many restaurants have frequent-diner programs. These programs reward local customers, gather guest information, and ideally create a positive change in the consumer behaviour of the member. This change could be more frequent purchases, larger purchases, or spreading positive word-of-mouth. Hotels or restaurants can also create events to show their appreciation of loyal customers.

7.5 Point-of-purchase (POP) promotions: It includes displays and demonstrations that take place at the point of purchase or sale. The value of POP has long been recognized by the industry and is making rapid inroads in restaurants, hotels, and foodservice firms. Hospitality firms have discovered that POP may be used (1) to disseminate information about the company’s products or services and (2) to sell additional products and services, thus adding to gross revenue.

7.6 Contests, sweepstakes, and games: These provide consumers a chance to win something, such as cash or a trip. A contest calls for consumers to submit an entry-a jingle, guess, or suggestion-to be judged by a panel. A sweepstakes calls for consumers to submit their names for a drawing. A game presents consumers with something every time they buy bingo numbers or missing letters that may or may not help them win a prize. A sales contest urges dealers or the sales force to increase their efforts, with prizes going to the top performers. Promotions can involve contests for employees along with guests.

7.7 Product packages: A product may be packed to the theme of the foodservice outlet.

7.8 Seasonal specials: Seasonal food dishes may be offered to the guests

7.9 Free meal night: Once in a while pick a random guest who gets an entire meal for free. People will come for the chance at a free meal, and for the cost of one free meal, you increase sales on a slow night.

7.10 Live music: Live music can also draw crowds to your foodservice outlet.

7.11 Themed entertainment: Different types of entertainment based on a theme may be organised to attract the clients.

 7.12 Up-sell: Trained staff can be a major driving force to up-sell your products

7.13 Take-away: This option can be a good option to increase the sales as per the choice of the guests

7.14 Bulk order rewards: These are for guests may be offered in any form.

7.15 Guests’ Views: Gather positive customer reviews and put them beside the product or service being offered. Testimonials are powerful.

7.16 Charity: Donations can be very helpful in marketing of a foodservice outlet.

7.17 Customised service: You can train your staff to offer customised services to your guests.

7.18 Provide assurance or guarantee: Providing assurance to your guests about the products and services offered by your organisation. By removing risk you can increase the sales.

7.19 Partner up with another related product or service provider to put together packages that include your and their service and products. This will not only increase profits but also decrease costs

7.20 Make it easy or convenient: Make it simple for your guests, people often find it difficult to get things done. So offer products and services at their convenience

7.21 Add-ons: Offer add-ons with your products and services in a smooth and quick fashion.

8. Process of Sales Promotion

Sales promotion for a foodservice may include following steps:

• Setting Sales Promotion Objectives
• Selecting Sales Promotion Tools
• Finding Creative Ideas
• Developing the Sales Promotion Program
• Pretesting and Implementing the Plan
• Evaluating the Results

8.1 Setting Sales Promotion Objectives

First step is to select sales promotion objectives. These may differ from organisation to organisation. For example: to increase short-term sales; to help build long-term market share; to entice consumers to try a new product, lure consumers away from competitors; to hold and reward loyal customers. However, these should include product’s positioning and a sales message. The objective should be to build long-run consumer demand rather than to prompt temporary brand switching. If properly designed, every sales promotion tool has consumer franchise building potential.

8.2 Selecting Sales Promotion Tools

Any one or a combination of tools can be used to accomplish sales promotion objectives. The promotion planner should consider the type of market, the sales promotion objectives, the competition, and the costs and effectiveness of each tool.

8.3 Finding Creative Ideas

Creative ideas should be incorporated while considering the sales promotion activities of competitors. Internet can be of great help.

8.4 Developing the Sales Promotion Program

The fourth step in developing a sales promotion is to define the full sales promotion program. This step calls for marketers to make other decisions. First, they must decide on the size of the incentive. A certain minimum incentive is necessary if the promotion is to succeed. A larger incentive produces more sales response. The marketer must also set conditions for participation. Incentives might be offered to everyone or only to select groups. Sweepstakes might not be offered in certain states, to families of company personnel, or to persons under a certain age. The marketer must then decide how to promote and distribute the promotion program. A restaurateur can distribute coupons at the restaurant, by mail, or in an advertisement. Each distribution method involves a different level of reach and cost. The length of the promotion is also important. If the sales-promotion period is too short, prospects who would not buy during that time will be unable to take advantage of it. If the promotion runs too long, the deal will lose some of its” act now” force.

Marketing managers need to set promotion dates that will be used by production, sales, and distribution. Some unplanned promotions may also be needed, requiring cooperation on short notice.

The marketer has to decide on the sales-promotion budget. It can be developed in two ways. The marketer can choose the promotions and estimate total cost. However, the more common way is to use a percentage of the total budget for sales promotion.

8.5 Pretesting and Implementing the Plan

Whenever possible, sales promotion tools should be pretested to determine if they are appropriate and of the right incentive size. Consumer sales promotions can be pretested quickly and inexpensively, yet few promotions are ever tested ahead of time. Seventy percent of companies do not test sales promotions before initiating them. To test sales promotions, researchers can ask consumers to rate or rank different promotions. Promotions can also be tried on a limited basis in selected geographic test areas.

Organisations should prepare implementation plans for each promotion, covering lead time and sell-off time. Lead time is the time necessary to prepare the program before launching it. Sell-off time begins with the launch and ends when the promotion ends.

8.6 Evaluating the Results

An honest evaluation of results is very important; many companies fail to evaluate their sales promotion programs. Others do so only superficially. Many evaluation methods are available, the most common of which is sales comparisons before, during, and after a promotion. The results of consumer research demonstrate the kinds of people who responded to the promotion and their post promotion buying behaviour. Surveys can provide information on how many consumers recall the promotion, what they thought of it, how many accepted it, and how it affected their buying patterns. Sales promotions can also be evaluated through experiments that include variables such as incentive value, length, and distribution method.

Clearly, sales promotion plays an important role in the total promotion mix .to use it well, the marketer must define sales promotion objectives, select the best tools, design the sales promotion program, and pre-test, implement, and evaluate; the results.

9. Why is Sales Promotion so important?

The recent times are witnessing major changes in the nature of promos: big nationwide contests with wide publicity and big prize money have become common; the medium of the Internet is also being extensively used. The extent to which the sales promotion scene has transformed can be grasped from the innumerable buying lures we see every day in the marketplace. The flood of free tag-ones is a clear pointer to the fierce competition building up in the market. Marketers resort to sales promotion, when they find that extra incentives are required to generate the required sales. They have to push sales. This is a natural response to the developments of the times. In every category, competition is rampant.

However, it has its downsides, also. While sales promotion can no doubts support the selling effort by providing an extra incentive to consumer to purchase the product. In the first place, it can be used only for short-term sales achievement. When the incentive is withdrawn, consumers may hesitate to buy the brand. More important, if sales promotional devices like price-offs, free offers and incentives are frequently resorted to, and the image of the brand may suffer. Excessive use of sales promotional measures by all the players in an industry will only hasten the commoditisation of the brands in that category. Consumers will only look at price deals; they will not wait to see the value of any given brand. At the same time, when used with discretion and as a part of a well thought out communication strategy, sales promotion can be a positive tool and can add to the overall promotion efforts. Sales promotion in right measure is certainly an essential part of effective marketing.

Web links

• http://beta.tutor2u.net/business/reference/sales-promotion
• http://economictimes.indiatimes.com/definition/sales-promotion
• http://www.marketingdonut.co.uk/marketing/sales/sales-techniques- and-negotiations/sales-promotion
• http://www.knowthis.com/types-of-sales-promotion
• http://catalog.flatworldknowledge.com/bookhub/reader/5229?e=e613.fwk-133234-ch11_s98