Description
The term FMCG (fast moving consumer goods), although popular and frequently used does not have a standard definition and is generally used in India to refer to products of everyday use.
Role of sales promotions in FMCG sector
A
GRAND PROJECT REPORT
ON
“Role of Sales Promotion on FMCG”
A grand Project report submitted in Partial Fulfillment of award of
MBA Degree
PROJECT GUIDE:
PROF. SHARIF MEMON
PROF. BHARGA MO!I
SUBMITTED BY:
ISHA" PA#E" $%&%''(
)I#EN!RA RA)AI $%&%&%(
SUBMITTED TO:
N.R.INS#I#*#E OF B*SINESS MANAGEMEN#
AHME!ABA!
Role of sales promotions in FMCG sector
This is to certify that Mr. is+al Patel and Mr. )iten,ra Ra-ai the students of MB !
nd
year of "#R# Institute of Business Mana$e%ent& h%eda'ad ha(e co%)*eted their Grand
Pro+ect “Role of sales promotions in FMCG” in the year !,,-.!,/, in )artia*
fu*fi**%ent of Gu+arat Uni(ersity re0uire%ents for the a1ard of the de$ree of Master of
Business d%inistration#
!irector Gran, Pro-ect G.i,e
Prof# Dr# 2itesh Ru)are* Prof Sharif Me%on
Prof Bhar$a( Modi
!ate/
Role of sales promotions in FMCG sector
PREFACE
In this a$e of $*o'a*i3ation hy)er co%)etition has 'eco%e a re$u*ar feature# Today
the %ar4ets are no *ess then 'att*e$rounds and one has to stri(e (ery hard for sur(i(a* and
$ro1th#
Due to (ery ra)id industria*i3ation a** o(er the 1or*d the de%and for the
%ana$eria* )ersonne* and the ad%inistrati(e )ersonne* has increased# The )erfect study
of Mana$e%ent in(o*(es 'oth the theoretica* as 1e** as )ractica* as)ects# To sur(i(e in
this hi$h*y co%)etiti(e %ar4et 5Practica* 6no1*ed$e7 is as re*e(ant as the Theoretica*#
The si$nificance of MB De$ree is that the Theoretica* as)ects& 1hich a student
*earns throu$hout the year in the c*ass sessions& can 'e )ractica**y a))*ied throu$h
different )ro+ects& 1hich one underta4es# 6ee)in$ in tune 1ith this doctrine& 1e ha(e
tried to a))*y theoretica* as)ects throu$h out the )ro+ect& 1hich 1e *earned under the
course of %ana$e%ent#
In this )ro+ect %ore e%)hasi3e $i(en to the (arious too*s of sa*es )ro%otion and
its i%)act on consu%ers 'uyin$ decisions# ctua**y in recent trend to so%e e8tent this
techni0ue a*so 'eco%e (icti% of c*utter& e(en thou$h it can 'e e*i%inated 'y $eneratin$
inno(ati(e and %ore attracti(e too*s to *ure the custo%ers#
"o1 a day %ost of the 9MCG co%)anies considerin$ sa*es )ro%otion as an
i%)ortant )art of their %ar4etin$ strate$y# 9ro% the ana*ysis of sur(ey it 'eco%es c*ear
that consu%ers do res)onse to the sa*es )ro%otion ca%)ai$n& 'ut there are custo%ers
1ho stron$*y )refer to stic4 to 'rand na%e#
G:S "RIBM Jitendra Ra+ai
Gu+arat Uni(ersity ;isha* Pate*
h%eda'ad
#
Role of sales promotions in FMCG sector
AC0NO1"E!GEMEN#
E(ery study re0uires a $uidance of so%eone 1ho is 1or4in$ in that fie*d#
9irst*y 1e 1ou*d *i4e to than4 Director Sir Dr# !r Hites+ R.parel for )ro(idin$ an
o))ortunity of )re)arin$ a Grand Pro+ect Re)ort and a**o1in$ us to use the
resources of the institution durin$ this )ro+ect#
s she*(es# The
%oot 0uestion therefore& is 1hat industry turnaround thresho*d shou*d 'e for the ite% to
0ua*ify as an 9MCG# Shou*d the turnaround ha))en dai*y& 1ee4*y& or %onth*yG
One of the factors on 1hich the turnaround de)ends is the )urchase cyc*e#
2o1e(er& the )urchase cyc*e for the sa%e )roduct tend to (ary across )o)u*ation
se$%ents# Many *o1.inco%e househo*ds are forced to 'uy certain )roducts %ore
fre0uent*y 'ecause of *ac4 of *i0uidity and stora$e s)ace 1hi*e re*ati(e*y hi$h.inco%e
househo*ds 'uy the sa%e )roducts %ore infre0uent*y# Si%i*ar*y& the )urchase cyc*e a*so
tends to (ary 'ecause of cu*tura* factors# Most Indians& ty)ica**y& )refer fresh food artic*es
and therefore to 'uy re*ati(e*y s%a** 0uantities %ore fre0uent*y# This is in shar) contrast
1ith 1hat ha))ens in %ost 1estern countries& 1here the )ractice of 'uyin$ and soc4in$
foods for re*ati(e*y *on$er )eriod is %ore )re(a*ent# Thus& shou*d the in(entory
turnaround thresho*d 'e uni(ersa*& or shou*d it a**o1 for inco%e& cu*tura* and 'eha(iora*
nuancesG
Role of sales promotions in FMCG sector
C+aracteristics of FMCG Pro,.cts/
• Indi(idua* ite%s are of s%a** (a*ue# But a** 9MCG )roducts )ut to$ether account
for a si$nificant )art of the consu%erHs 'ud$et#
• The consu%er 4ee)s *i%ited in(entory of these )roducts and )refers to )urchase
the% fre0uent*y& as and 1hen re0uired# Many of these )roducts are )erisha'*e#
• The consu%er s)ends *itt*e ti%e on the )urchase decision# Rare*y does heIshe
*oo4 for technica* s)ecifications Ein contrast to industria* $oodsF# Brand *oya*ties
or reco%%endations of re*ia'*e retai*erIdea*er dri(e )urchase decisions#
• Tria* of a ne1 )roduct i#e# 'rand s1itchin$ is often induced 'y hea(y
ad(ertise%ent& reco%%endation of the retai*er or nei$h'orsIfriends#
• These )roducts cater to necessities& co%forts as 1e** as *u8uries# They %eet the
de%ands of the entire cross section of )o)u*ation# Price and inco%e e*asticity of
de%and (aries across )roducts and consu%ers#
Role of sales promotions in FMCG sector
Intro,.ction to t+e topic
Intro,.ction/
The i%)ortance of consu%er sa*es )ro%otion in the %ar4etin$ %i8 of the fast
%o(in$ consu%er $oods E9MCGF cate$ory throu$hout the 1or*d has increased#
Co%)anies s)end considera'*e ti%e in )*annin$ such acti(ities# 2o1e(er& in order to
enhance the effecti(eness of these acti(ities& %anufacturers shou*d understand consu%er
and retai*er inter)retations of their )ro%otiona* acti(ities# The study here )ertains to
consu%er>s )erce)tions re$ardin$ sa*es )ro%otion# So%e )ast researches ha(e su$$ested
that )ro%otion itse*f has an effect on the )ercei(ed (a*ue of the 'rand# This is 'ecause
)ro%otions )ro(ide uti*itarian 'enefits such as %onetary sa(in$s& added (a*ue& increased
0ua*ity and con(enience as 1e** as hedonic 'enefits such as entertain%ent& e8)*oration
and se*f.e8)ression#
Broad*y s)ea4in$ %ost of the co%)anies usin$ Mar4etin$ Mi8 1hich inc*udesJ
Price
P*ace EChanne* of Distri'utionF
Product
Promotion
These are the four 'asic )i**ar of %ar4etin$ %i8# Most of the %ar4etin$ strate$ies
are 'ui*t on the 'asis of these criteria#
Pro%otion is one of the i%)ortant e*e%ents of %ar4etin$ %i8# There are so %any
e*e%ents of )ro%otion such as J
d(ertisin$
Direct Mar4etin$
Pu'*ic Re*ations
Sales Promotion
Role of sales promotions in FMCG sector
Traditiona**y& sa*es Pro%otions ha(e 'een used 'y %ar4eter to increase sa*es in
the short ter%# 2o1e(er& in the *ast fe1 decades this co%%unication too* has e(o*(ed and
no1 is considered fro% a strate$ic )oint of (ie1# 9or this reason& it is necessary to rea*i3e
ne1 studies in this area and study ho1 consu%ers e(a*uate sa*es )ro%otions#
Sa*es )ro%otions ha(e $ro1n in 'oth i%)ortance and fre0uency o(er the )ast fe1
decades# *thou$h an accurate esti%ate for tota* sa*es )ro%otions e8)enditures does not
e8ist& 1e can 'e sure that the trend is u)#
Sa*es )ro%otion ser(es three essentia* ro*es: It infor%s& )ersuades and re%inds
)ros)ecti(e custo%ers a'out a co%)any and its )roducts# E(en the %ost usefu* )roduct or
'rand 1i** 'e a fai*ure if no one 4no1s that it is a(ai*a'*e# s 1e 4no1& channe*s of
distri'ution ta4e %ore ti%e in creatin$ a1areness 'ecause a )roduct has to )ass throu$h
%any hands 'et1een a )roducer and consu%ers#
Therefore& a )roducer has to infor% channe* %e%'ers as 1e** as u*ti%ate
consu%ers a'out the attri'utes and a(ai*a'i*ity of his )roducts# The second )ur)ose of
)ro%otion is )ersuasion# The cut throat co%)etition a%on$ different )roducts )uts
tre%endous )ressure on their %anufacturers and they are co%)e**ed to underta4e sa*es
)ro%otion acti(ities# The third )ur)ose of )ro%otion is re%indin$ consu%ers a'out
)roducts a(ai*a'i*ity and its )otentia* to satisfy their needs#
9ro% these e*e%ents Sa*es Pro%otion is the e*e%ent 1hich is in the focus of this
)ro+ect# 9urther Sa*es Pro%otion is 0uite 'road ter% it inc*udes J
Cons.mer Oriente, Sales Promotion
#ra,e Oriente, Sales Promotion
Role of sales promotions in FMCG sector
Cons.mer Oriente, Sales Promotion
Consu%er Oriented Sa*es Pro%otion is the %ain to)ic of this )ro+ect# 2ere
e%)hasi3e is $i(en to %oti(ate consu%er to increase sa*es# Consu%er Oriented Sa*es
Pro%otion inc*udes Sa%)*in$& Cou)onin$& Pre%iu%s& Contest& Refunds& Re'ates& Bonus
Pac4>s& Price.off& E(ent %ar4etin$ etc#
!efinition/
9or the )ur)ose of this study& fo**o1in$ definitions of sa*es )ro%otion 1ere 4e)t in %ind#
6ot*er defines sa*es )ro%otion as: 5Sa*es )ro%otion consists of a di(erse co**ection of
incenti(e too*s& %ost*y short.ter% desi$ned to sti%u*ate 0uic4er andIor $reater )urchase
of )articu*ar )roductsIser(ices 'y consu%ers or the trade#7
Ro$er Stran$ has $i(en a %ore si%)*istic definition i#e# 5sa*es )ro%otions are short.ter%
incenti(es to encoura$e )urchase or sa*es of a )roduct or ser(ice#7
2ence& any for%s of incenti(es E)rice cut or (a*ue added natureF offered for short )eriod
either to trade or consu%ers are considered as sa*es )ro%otion acti(ities#
MarAeterBs .ses cons.mer oriente, sales promotion tools for t+e folloCin2 reasons/
• To increase short ter% sa*es
• To induce tria*
• To reduce in(entory
• To esta'*ish a 'rand na%e
• To %a4e cross se**in$
• To co)e u) 1ith co%)etition
• To a(oid ad(ertisin$ c*utter
Role of sales promotions in FMCG sector
#ools of Cons.mer Oriente, Sales Promotion/
There are so %any too*s or techni0ue a(ai*a'*e to the %ar4eters for achie(in$ o'+ecti(e of
sa*es )ro%otion# These too*s shou*d 'e used considerin$ a** other factors affectin$ such
as cost& ti%e& co%)etitors& a(ai*a'i*ity of $oods etc# These too*s are as underJ
/# Cou)ons
!# Price.Off
B# 9ree'ies
@# Scratch Cards
C# :uc4y Dra1s
?# Bund*in$ Offer
D# E8tra Kuantity
:et>s ha(e *oo4 at each too*J
7. Co.pons/
Cou)on is the o*dest and %ost 1ide*y used 1ay of sa*es )ro%otion# Cou)ons ha(e
'een used since /-AC# It is %ost*y used 'y )ac4a$ed $oods# It is 1orth1hi*e to use
cou)on as a )ro%otion too* 'ecause data sho1s that %ar4et for )ac4a$ed $oods increased
fro% /? 'i**ion in /A?- to B/, 'i**ion in /AA@# To 'oost u) the sa*es not on*y
%anufacturer 'ut retai*ers )ersona**y can a*so used# cou)on *eads to )rice reductions so
as to encoura$e )rice sensiti(e custo%ers# "on users can try a )roduct 1hich %ay *eads
to re$u*ar sa*es#
8. PriceDoff/
)rice.off is si%)*y a reduction in the )rice of the )roduct to increase sa*es and is
(ery often used 1hen introduction a ne1 )roduct# reduction in )rice a*1ays increases
sa*es 'ut the use of this techni0ue shou*d 'e carefu**y considered in the current %ar4et
situation#
Role of sales promotions in FMCG sector
Price.off is the %ost )referred sa*es )ro%otion techni0ue 'ecause consu%ers
res)onse (ery )ositi(e*y to this sche%e# "ot on*y that 'ut it a*so cause *ar$e increase in
sa*es (o*u%e# Price.off reductions are ty)ica**y offered ti$ht on the )ac4a$e throu$h
s)ecia**y %ar4ed )rice )ac4s# E#$# 6rac4 Jac4 offers B,L Price.off#
9. Free>ies
9ree'ies are a )o)u*ar for% of %odern %ar4etin$ and are so%e of the 'est thin$s
a'out the internet# The definition of free'ies is )roducts or ser(ices $i(en a1ay for free at
no cost to the consu%er# s the definition 1e ca%e u) 1ith# I a% a 'ar$ain
free'ie sho))er& )retty %uch $oin$ for any free )roduct and infor%in$ e(eryone a'out it#
t different ti%es& 'i$ and s%a** co%)anies often $i(e a1ay )ri3es and %oney
1hich is too $ood to 'e true# Often it>s in the )ursuit of %ore custo%ers or a *ar$er fan
'ase and it often 1or4s#
:. Scratc+ Car,s
scratch card Ea*so ca**ed a scratch off& scratch tic4et& scratcher& scratchie&
scratch.it& scratch $a%e& scratch.and.1in or instant $a%eF is a s%a** to4en& usua**y %ade
of card'oard& 1here one or %ore areas contain concea*ed infor%ation: they are co(ered
'y a su'stance that cannot 'e seen throu$h& 'ut can 'e scratched off#
;. B.n,lin2 Offers
Product 'und*in$ is a %ar4etin$ strate$y that in(o*(es offerin$ se(era* )roducts
for sa*e as one co%'ined )roduct# This strate$y is (ery co%%on in the soft1are 'usiness
Efor e8a%)*e: 'und*e a 1ord )rocessor& a s)readsheet& and a data'ase into a sin$*e office
suiteF& in the ca'*e te*e(ision industry Efor e8a%)*e& 'asic ca'*e in the United States
$enera**y offers %any channe*s at one )riceF& and in the fast food industry in 1hich
%u*ti)*e ite%s are co%'ined into a co%)*ete %ea*# 'und*e of )roducts is so%eti%es
referred to as a )ac4a$e dea* or a co%)i*ation or an antho*o$y#
Role of sales promotions in FMCG sector
Factors Infl.encin2 Cons.mer Oriente, sales promotion/
Main*y four factors shou*d 'e ta4en into account 1hi*e deter%inin$ the sa*es
)ro%otion )ro$ra%#
M Tar$et %ar4et
M "ature of )roduct
M Sta$e of )roduct *ife cyc*e
M Bud$et a(ai*a'*e for )ro%otion
7. #ar2et MarAet/
.5 on sales promotion offer
Si8ty )er cent of the sa%)*e did not sho1 1i**in$ness to 'uy a 'rand due to
)ro%otion 1hi*e B,L sho1ed 1i**in$ness and /,L 1ere not sure# This indicates that
1hen B,L sho1ed 1i**in$ness and /,L consu%ers 1ho 1ere not sure& these $rou)s
%i$ht 'e *ured throu$h inno(ati(e and *ucrati(e sa*es )ro%otion offer#
A>ilit5 to in,.ce trial
9orty )er cent of the res)ondents had said that sa*es )ro%otion had the a'i*ity to
induce tria* 1hich reinforces the a'o(e inference#
"on2Dterm impact
In order to understand a'i*ity of the )ro%otions to increase *on$.ter% sa*es&
res)ondents 1ere as4ed a'out continuity of )urchase of a 'rand after the 1ithdra1a* of
)ro%otion# Ei$hty )er cent of the res)ondents indicated that they 1ou*d not continue# But
!,L said they 1ou*d# Thus& it cou*d 'e inferred that )ro%otions in this cate$ory E*o1
in(o*(e%ent )roductsF %i$ht encoura$e tria* and 'rand s1itchin$ 'ut not *on$ ter%
*oya*ty#
Preference of Sc+emes:
Price off 1as the %ost )referred ty)e of sche%e# Ma8i%u% custo%ers> ran4ed
)rice.offs as nu%'er one or t1o#
Percei3e, ?.alit5:
Ma+ority of res)ondents had a )erce)tion that the 0ua*ity of the )ro%oted 'rands
re%ained the sa%e durin$ )ro%otion& 1hi*e so%e of the% fe*t that it 1as inferior than
'efore# It can 'e inferred that )ro%otions 1ere not *eadin$ to ne$ati(e 'rand 0ua*ity
Role of sales promotions in FMCG sector
)erce)tions# It is found that so%e custo%er stron$*y )referred to 'uy their re$u*ar 'rand
and said that sa*es )ro%otion 1ou*d not 1ea4en their *oya*ty to1ards the 'rand#
Perceptions re2ar,in2 .n,erl5in2 compan5 moti3ations
On ta))in$ )erce)tions> re$ardin$ under*yin$ co%)any %oti(ations for sa*es
)ro%otion& 5to increase sa*es7 1as ran4ed hi$hest fo**o1ed 'y 5to attract s1itchers7 and
5to se** e8cess stoc4s7# )erce)tions a'out consu%er
)referencesF# Since retai*ers o'ser(e consu%ers in store 'eha(ior 1ere fre0uent*y and
direct*y& their )erce)tions re$ardin$ )ro(idin$ consu%er 'eha(ior are *i4e*y to 'e
accurate# Such in)uts fro% the retai*ers 1ou*d 'e usefu* to co%)anies#
The retai*ers had the )erce)tion that those sche%es 1hich 1ere announced throu$h %ass
%edia had 'etter res)onse# This 1as reinforced 'y the consu%er sur(ey 1hich sho1ed
that reca** in case of hea(i*y )ro%oted sche%es on T; 1as found to 'e (ery hi$h#
Retai*ers> )rediction of co%)anies> %oti(ation for offerin$ sa*es )ro%otion 1ere
%atchin$ 1ith the consu%er )erce)tion re$ardin$ the sa%e# Thus 'oth (ie1ed that
co%)anies 1ere usin$ sa*es )ro%otion acti(ities %ain*y to increase short ter% sa*es or
encoura$e s1itchin$ or se**in$ e8cess stoc4 and not rea**y to $i(e (a*ue 'enefit or
enhanceIreinforce 'randIco%)any i%a$e#
Role of sales promotions in FMCG sector
#ra,e Oriente, Sales Promotion
Trade Oriented Sa*es Pro%otion ai%ed to %oti(ate channe* %e%'er of the
co%)any and to encoura$e the% to )ush co%)any>s )roduct# Trade Oriented Sa*es
Pro%otion inc*udes dea*er contest and incenti(es& trade a**o1ances# Point.of.)urchase
dis)*ays& sa*es trainin$ )ro$ra%s& trade sho1s& coo)erati(e ad(ertisin$& and other
)ro$ra%s desi$ned to %oti(ate distri'utors and retai*ers to carry a )roduct and %a4e an
e8tra effort to )ush it to their custo%ers
Sales promotion from t+e retailerBs point of 3ieC/
Perceptions on Sc+eme Preference
It 1as found that retai*er )ercei(ed )rice offs as a 'etter for% of sa*es )ro%otion
acti(ity# Price offs in their o)inion had re*ati(e*y a $reater i%)act co%)ared to any other
for% of sa*es )ro%otion acti(ity *i4e Bonus )ac4s& Pre%iu%& Contests etc# Retai*ers
)referred )rice offs the %ost& then 'onus )ac4& )re%iu%& contests& in order of i%)ortance#
Perceptions a>o.t B.5in2 Roles
Retai*ers (ie1ed that the )erson 1ho ca%e to the sho) E1ho %ay 'e a %aid& son&
dau$hter& dau$hter.in.*a1 and chi*dF 1as the decider of a toi*et soa) 'rand and not the
Inco%e )ro(ider Ee#$# head of the fa%i*yF# It cou*d 'e inferred that (isi'i*ity of
infor%ation a'out the sa*es )ro%otion acti(ity at the )oint of )urchase cou*d resu*t into
the )urchase of a )ro%oted 'rand#
Perceptions a>o.t t+eir role in ,ecisionDmaAin2
Retai*er had re*ati(e*y (ery *o1 inf*uence in affectin$ choice# It cou*d 'e inferred
that (isi'i*ity and a1areness a'out the sche%e 1ere the critica* success factors so that
)u** cou*d 'e created#
Role of sales promotions in FMCG sector
Perceptions a>o.t Response to Sales Promotion Offers
They 'e*ie(ed that youn$er a$e.$rou)s 1ere %ore e8)eri%enta* in nature&
a%ena'*e to tryin$ ne1 'rands& and sou$htI*oo4ed for or as4ed 1hether there 1ere anyF
sa*es )ro%otion sche%es runnin$ on any toi*et soa) at the ti%e of )urchase#
Perceptions a>o.t Comm.nications of Sales Promotion Sc+emes
Retai*ers )ercei(ed that ro*e of 1ord of %outh and te*e(ision ad(ertisin$ )*ayed
an i%)ortant )art in )ro(idin$ infor%ation in)uts to consu%ers re$ardin$ sa*es )ro%otion
acti(ities#
ariations in Information FloC
S%a**er Enon.su)er%ar4et& s%a** for%at storeF retai*ers recei(ed re*ati(e*y *ess
su))ort co%)ared to su)er%ar4ets in ter%s of ser(icin$& %ar$ins& infor%ation a'out sa*es
)ro%otion acti(ities fro% the dea*ers# Many a ti%es s%a** retai*ers 1ere on*y infor%ed
(er'a**y a'out sa*es )ro%otion sche%es 'y the dea*er sa*es%en durin$ the schedu*ed
1ee4*y (isits#
!ealerDRetailer !5namics
t the ti%e of sa*es )ro%otion acti(ities& dea*ers had tendency to )ush un1anted
stoc4s onto the s%a**er retai*ers# In fact these retai*ers )referred to stoc4 (ariety of 'rands
and 1anted )ay%ent for she*f and 1indo1 dis)*ay to increase traffic into their store#
2o1e(er& su)er%ar4ets and 'i$ retai*ers 1ere )a%)ered and $i(en s)ecia* ser(ices and
$i(en 'etter %ar$ins and 'etter a**o1ances#
Role of sales promotions in FMCG sector
Mar2ins
It 1as found that in sa*es )ro%otion sche%es %ar$ins (aried fro% ? to/CL
de)endin$ of the si3e of the retai* out*et& 'ar$ainin$ )o1er of a retai*er& 0uantity ordered
'y hi% etc# Most*y %ar$ins 1ere *in4ed to si3e of the (o*u%es that 1ere ordered#
Perceptions a>o.t terms an, con,itions
Retai*ers 1ere not found to 'e ha))y 1ith sa*es )ro%otion sche%es 1here their
%ar$ins 1ere cut on the )rete8t of +ust fast %o(e%ent of in(entory of the 'rand 'ein$
)ro%oted# *so if additiona* incenti(e 1as offered it 1as su'+ect to %ini%u%
)erfor%ance re0uire%ent#
Nat.re of POP
Retai*ers indicated that %ost of the POP EPoint of PurchaseF %ateria*s 1ere %eant
for 'rand ad(ertise%ent and not for $i(in$ infor%ation re$ardin$ the sche%es# Thus it
cou*d 'e inferred that co%)any>s fo**o1 u) 1as not ade0uate#
Ser3icin2 ,.rin2 ,.ration of Sc+eme
In stoc4.out situation durin$ the runnin$ of the sa*es )ro%otion sche%es& s%a**er
retai*ers had to 1ait for re)*enish%ent of stoc4s ti** the ne8t schedu*ed 1ee4*y (isit 'y the
dea*er sa*es%an 'ut 'i$ retai*ers 1ere ser(iced on te*e)honic re0uest for re)*enish%ent of
stoc4s# This c*ear*y indicated the dis)arity in treat%ent#
Pro>lem of leftDo3er
*efto(er stoc4 at the end of any sche%e 1as re0uired to 'e so*d 'y the retai*ers
'efore they ordered fresh stoc4s# In case of 'onus )ac4s sche%e& *efto(er stoc4 1as often
dis%ant*ed Ecut o)en 'uy one $et one freeF and so*d the% indi(idua**y as a re$u*ar soa)#
This a))roach of the co%)any *eads to %isa))ro)riation 1hich in turn cou*d resu*t in
ad(erse 'rand i%a$e#
Role of sales promotions in FMCG sector
Gifts for Retailer moti3ation
Co%)anies at ti%es 1ere re1ardin$ retai*ers 'y $i(in$ free $ifts *i4e ther%os
f*as4s or c*oc4s if they so*d %ore than certain 0uantity in a $i(en )eriod# Co%)anies 1ere
%a4in$ a ha*f.hearted effort to %oti(ate retai*ers#
Perceptions a>o.t mass me,ia anno.ncements
Retai*ers (ie1ed that 1hene(er sa*es )ro%otion sche%e 1as announced on T;& it
created )u** and they 1ere %ore than 1i**in$ to stoc4 such 'rands# 9or e8a%)*e Medi%i8
and Detto* contest 1as not ad(ertised on T;& hence there 1as (ery *itt*e a1areness
*eadin$ to unso*d stoc4 ti** ? %onths# s sa*es 'y )redictin$ and %odifyin$ your tar$et custo%er>s
)urchasin$ 'eha(ior and )atterns#
Sa*es )ro%otion is (ery i%)ortant as it not on*y he*)s to 'oost sa*es 'ut it a*so
he*)s a 'usiness to dra1 ne1 custo%ers 1hi*e at the sa%e ti%e retainin$ o*der ones#
There are a (ariety of sa*es )ro%otiona* strate$ies that a 'usiness can use to increase their
sa*es& ho1e(er it is i%)ortant that 1e first understand 1hat a sa*es )ro%otion strate$y
actua**y is and 1hy it is so i%)ortant#
sa*es )ro%otion strate$y is an acti(ity that is desi$ned to he*) 'oost the sa*es of
a )roduct or ser(ice# This can 'e done throu$h an ad(ertisin$ ca%)ai$n& )u'*ic re*ation
acti(ities& a free sa%)*in$ ca%)ai$n& a free $ift ca%)ai$n& a tradin$ sta%)s ca%)ai$n&
throu$h de%onstrations and e8hi'itions& throu$h )ri3e $i(in$ co%)etitions& throu$h
te%)orary )rice cuts& and throu$h door.to.door sa*es& te*e%ar4etin$& )ersona* sa*es
*etters& and e%ai*s#
The i%)ortance of a sa*es )ro%otion strate$y cannot 'e underesti%ated# This is
'ecause a sa*es )ro%otion strate$y is i%)ortant to a 'usiness 'oostin$ its sa*es#
it for1ard to the consu%er# Ty)ica* )ush sa*es )ro%otion strate$ies
inc*ude= 'uy.'ac4 $uarantees& free tria*s& contests& discounts& and s)ecia*ty ad(ertisin$
ite%s#
A P.ll Strate25/
N)u**> sa*es )ro%otion strate$y focuses %ore on the consu%er instead of the
rese**er or distri'utor# This strate$y in(o*(es $ettin$ the consu%er to N)u**> or )urchase
the )roductIser(ices direct*y fro% the co%)any itse*f# This strate$y tar$ets its %ar4etin$
efforts direct*y on the consu%ers 1ith the ho)e that it 1i** sti%u*ate interest and de%and
for the )roduct# This )u** strate$y is often used 1hen distri'utors are re*uctant to carry or
distri'ute a )roduct# Ty)ica* )u** sa*es )ro%otion strate$ies inc*ude= sa%)*es& cou)ons&
cash refunds or re'ates& *oya*ty )ro$ra%s and re1ards& contests& s1ee)sta4es& $a%es& and
)oint.of.)urchase dis)*ays#
A Com>ination of #Co Strate2ies/
Nco%'ination> sa*es )ro%otion strate$y is +ust that= it is a co%'ination of a )ush
and a )u** strate$y# It focuses 'oth on the distri'utor as 1e** as the consu%ers& tar$etin$
'oth )arties direct*y# It offers consu%er incenti(es side 'y side 1ith dea*er discounts#
Role of sales promotions in FMCG sector
#+e S+ort term Impact of Promotions/
:et>s ha(e *oo4 at the i%)act of )ro%otions on )urchase 'eha(ior durin$ the )ro%otiona*
)eriod i#e# the 1ee4 or the %onth 1hen the )ro%otion 1as 'ein$ run# The %a+ority of the
e%)irica* studies ha(e focused on the i%)act of )ro%otions in the short ter%# The 4ey
findin$s across the studies are discussed 'e*o1#
#emporar5 price re,.ctions $price off( s.>stantiall5 increase sales/
There is a%)*e e(idence to sho1 that )ro%otions *ead to dra%atic increases in sa*es of
)ro%oted 'rand in the short ter%# Studies ha(e consistent*y re)orted hi$h sa*es effects
and hi$h )rice e*asticity of 'rands 1hich are on )ro%otion# The econo%ic rationa*e for
the )ro%otiona* res)onse is c*ear O te%)orary )rice cuts increase the (a*ue of the )roduct
to the consu%er and it *eads to i%%ediate action# Sa*es 'oost can 'e 0uantified on the
'asis of 'rand s1itchin$& )ri%ary de%and e8)ansion and consu%er stoc4)i*in$ durin$ a
)ro%otion#
Sales Promotion lea,s to >ran, s.>stit.tion Cit+ t+e pro,.ct cate2or5/
The sa*es N'u%)> durin$ the )ro%otiona* )eriod into sa*es due to 'rand s1itchin$&
)urchase ti%e acce*eration and stoc4)i*in$# Studies on 'rand s1itchin$ ha(e sho1n that
'rand s1itchin$ effects 1ithin a cate$ory are asy%%etric such that )ro%otions on hi$her
0ua*ity 'rands i%)acts 1ea4er 'rands dis)ro)ortionate*y# Durin$ a )ro%otion& hi$her
0ua*ity 'rands induce a *ar$e nu%'er of consu%ers to s1itch to the% as co%)ared to
*o1er 0ua*ity 'rands# One e8)*anation ad(anced for this findin$ 'y researchers is that
*ar$e share 'rands ha(e hi$her 'rand e0uity and attract s1itchers %ore than *o1 share
'rands#
Role of sales promotions in FMCG sector
Sales Promotion lea,s to p.rc+ase accelerationGstocApilin2 effects/
In res)onse to a )ro%otion& consu%ers %ay 'uy %ore 0uantity of the )roduct
cate$ory or 'uy at an ear*ier ti%e than usua* E)urchase acce*eration effectF# If consu%ers
'uy e8tra 0uantity durin$ a )ro%otion or ear*ier than nor%a*& then they are not in the
%ar4et to 'uy )roducts once the )ro%otion is o(er# Thus )urchase acce*eration is
de%onstrated throu$h
*en$thenin$ of inter )urchase ti%es after a )ro%otion# Purchase acce*eration 1as %ore
*i4e*y to 'e e8hi'ited in increased )urchase 0uantity than in shortened inter )urchase
ti%es# Resu*ts sho1ed that consu%ers %ost*y %ade u) for the *ar$e 0uantity )urchased
'y 1aitin$ *on$er unti* )urchasin$ a$ain# Resu*ts indicated that hea(y users tended to
acce*erate )urchases %ore than *i$ht users# There 1as ne$*i$i'*e difference in the
acce*eration )ro)ensities of hi$h (ersus *o1 inco%e $rou)s#
Sales Promotion lea,s to primar5 ,eman, e4pansion for a cate2or5/
s sa*es or re)eat 'uyin$ *oya*ty# The e8tra sa*es
of a 'rand 1hi*e )ro%oted ca%e (irtua**y a** fro% the 'rand>s e8istin$ *on$.ter%
custo%er 'ase for 1hich the e8)erience of 'uyin$ the )ro%oted 'rand 1as nothin$ ne1#
It is found that a*thou$h the short ter% effects of )ro%otions are stron$= these )ro%otions
rare*y e8hi'it *on$ ter% effects# It is o'ser(ed that each sa*es co%)onent $enera**y *ac4ed
a )er%anent effect and the effect of )ro%otion 1as short *i(ed and increase in )ro%otions
affected consu%ers> stoc4)i*in$ decisions in the *on$ run# They found that the co%'ined
short and *on$.ter% e*asticity of )ro%otions 1as 3ero# The stoc4)i*in$ induced 'y a
)ro%otion 1as essentia**y offset 'y reduced de%and in the *on$ ter%# Thus increased
sa*es 1ere %ore a resu*t of sa*es 'orro1ed fro% the future than increased consu%)tion
Role of sales promotions in FMCG sector
S1O# Anal5sis of FMCG Sector
Strengths:
• > )roducts#
Opportuntes:
• :ar$e do%estic %ar4et#
• E8)ort )otentia*#
• Increasin$ inco%e *e(e*s 1i** resu*t in faster re(enue $ro1th##
Threats:
• I%)orts#
• Ta8 and re$u*atory structure#
• S*o1do1n in rura* de%and#
Role of sales promotions in FMCG sector
DT ":YSIS
Role of sales promotions in FMCG sector
Cons.mers
Role of sales promotions in FMCG sector
?7. 1+ic+ >ran, of Soap G !eter2ent ,o 5o. .seE
Bat+in2 Hsoaps Respon,ents
:u8 @/
2a%% B
:ife'uoy /@
"i%a -
Others B@
Interpretation/
The a'o(e 0uestion has 'een for%ed to 4no1 the soa)s and deter$ents at the to)
of the %ind of the custo%ers# It sho1s those consu%ers> )urchase and use of that
)articu*ar 'rand# It 1i** he*) to the co%)any to 4no1 the %ar4et scenario and the %a+or
'rands in the %ar4et#
9or% the a'o(e resu*t it is c*ear that out of /,, custo%ers %ore than @, are consu%ers
are ha(in$ the sa%e 'rand as the i%a$e in their %ind& 1hereas others cate$ory is a*so
sho1in$ the hi$her $ra)h than these B %a+or )*ayersE2a%a%& :ife'uoy& "i%aF#
Bat+in2 soaps
0
10
20
30
40
50
Respondents 41 3 14 8 34
Lux Hamam Lifebuoy Nima Others
Role of sales promotions in FMCG sector
!eter2ent poC,er Respon,ents
"ir%a su))er /A
ran, of Soap G !eter2entsE
Factors
Bat+in2
soap !et.poC,er
9ra$rance /A /-
Kua*ity BB B?
Co%)any i%a$e /? /B
Price !B /A
Pac4a$in$ ? //
Others B B
Interpretation/
The o'+ecti(e 'ehind this 0uestion is to 4no1 the effect of inf*uencin$ factors in
the )urchase decision of the soa)s and deter$ent )o1ders# It %ain*y contains the factors
*i4e& 0ua*ity 1hich )*ayers an i%)ortant ro*e in the )urchase decision of the soa)s and
deter$ents 'oth#
If 1e *oo4 at the $ra)h of the soa)s and deter$ent it sho1s 0ua*ity as the %ost
inf*uencin$ factors in the )urchase decision 1hi*e )rice is a*so an i%)ortant for )urchase
decision#
Factors affectin2 p.rc+ase >e+a3ior
0
10
20
30
40
&athin' soap 19 33 1$ 23 $ 3
(et)po*der 18 3$ 13 19 11 3
+ra'ran,e -ua!ity
.ompany
ima'e
/ri,e /a,0a'in' Others
Role of sales promotions in FMCG sector
?:. !o 5o. consi,er promotional sc+emes C+ile p.rc+asin2 a partic.lar
>ran, of Soap G !eter2entE
Partic.lars Respon,ents
Yes D-
"o !!
H%/ Promotional sc+emes +a3e a si2nificant effect on t+e p.rc+ase of >ran,.
H7/ Promotional sc+emes ,o not +a3e an effect on t+e p.rc+ase of >ran,.
Interpretation/
ns1er of this 0uestion 1i** $i(e idea a'out the effect of )ro%otiona* sche%es in
the )urchase decisions# Such ty)es of sche%es a*1ays attract %ore and %ore consu%ers
to1ards )articu*ar 'rand# Si%u*taneous*y it $i(es idea a'out the factors 1hich consu%ers
*oo4 %ost in the )roduct 'efore they %a4e fina* decision#
2ere H% is acce)ted as the $ra)h sho1s that D- out of /,, consu%ers are *oo4in$
for such sche%es 'efore they %a4e )urchase#
?;. 1+ic+ of t+e folloCin2 promotional sc+emes 5o. +a3e come across
so farE
Effect of sc+emes p.rc+ase >e+a3ior
0
20
40
$0
80
100
Respondents 18 22
%es No
Role of sales promotions in FMCG sector
Promotional sc+emes Respon,ents
Cou)ons /?
)rice off -@
9ree'ies !@
scratch cards /!
*uc4y dra1 A
Bund*in$ B/
e8tra 0ty# @@
Interpretation/
The a'o(e stated 0uestion c*ear*y states the a1areness of )ro%otiona* sche%es
offered in the %ar4et 'y the %ar4eters to attract %ore and %ore consu%ers#
The resu*ts sho1 that )rice off and e8tra 0uantity is the t1o %ain offersIsche%es
1hich consu%ers ha(e ca%e across at the ti%e of )urchase# It 1i** he*) the %anufacturers
and %ar4eters too ho1 too *aunch their ne1 )roducts in the %ar4et 1ith 1hich sche%es#
?le to promote t+e 3ario.s
promotional sc+emesE
Familiarit5 of promotional Sc+emes
0
20
40
$0
80
100
Respondents 1$ 84 24 12 9 31 44
.oupons pri,e off +reebies
s,rat,h
,ards
!u,0y dra* &und!in' extra 2ty)
Role of sales promotions in FMCG sector
So.rce Respon,ents
Radio //
T; ?A
"e1s)a)er @B
2oardin$ /C
Others /!
Interpretation:
This 0uestion $i(es stress on the %edia ha'it of the )eo)*e and throu$h 1hich the
)roduct shou*d 'e *aunch or they thin4 it 1ou*d 'e 'etter than other Medias#
The a'o(e resu*t sho1s T; as the 'est %edia to %ar4et the )roduct 1hich 1i**
co(er %a+ority of the (ie1er shi)# On the second )*ace it sho1s ne1s )a)ers as the %edia
to )ro%ote the )roduct in the %ar4et#
?'. Is t+ere an5 e4istin2 sc+eme on t+e Soap G !eter2ent 5o. are
c.rrentl5 .sin2E
Me,i.ms to promote t+e promotional sc+emes
0
20
40
$0
80
Respondents 11 $9 43 15 12
Radio 34 Ne*s)ppr Hoardin' Others
Role of sales promotions in FMCG sector
Partic.lars Respon,ents
Yes C-
"o @!
Interpretation/
The ans1er of the res)ondents $i(e idea a'out the a1areness of the )ro%otiona*
sche%es offered in the %ar4et on their e8istin$ soa)s and deter$ents#
In this situation %ore then @,L of the )eo)*e are not a1are or ha(in$ (a$ue idea
a'out the )ro%otiona* sche%es runnin$ into the %ar4et#
It sho1s that )eo)*e are not %uch a1are of the sche%es 1hich continue in the
%ar4et it %ay 'e 'ecause of the )resent stoc4 of the )roduct at their )*ace#
?&. If 5esF please specif5E
Partic.lars Respon,ents
BQ/IOther B?
E4istin2 sc+eme on t+e Soap G !eter2ent
0
10
20
30
40
50
$0
10
Respondents 58 42
%es No
Role of sales promotions in FMCG sector
9ree
Discount !!
"o idea ?
"o ans1er B?
Interpretation/
This 0uestion su))orts the a'o(e 0uestion# It en*ists the ans1ers of those
custo%ers 1ho are a1are of the )resent sche%es offered in the %ar4et and a*so those
sche%es 1hich are %ore de%anded in the %ar4et#
The resu*t sho1s that /Q/ or !Q/ or other free sche%es are %ore de%anded and
%ore a1are sche%es in the %ar4et#
So %anufacturers %ay $o for the sa%e at the ti%e of *aunchin$ their )roduct#
?=. If 5o. 2et an attracti3e promotional offer in t+e pro,.ct ot+er t+en
of 5o.r c+oice Cill 5o. sCitc+ o3erE
Partic.lars Respon,ents
Role of sales promotions in FMCG sector
Yes DB
"o !D
Interpretation/
It sho1s the *e(e* of 'rand *oya*ty a%on$ the consu%ers# The resu*t c*ear*y sho1s
that out of /,,& DB )eo)*e are ready to s1itch o(er to another 'rand if they find 'etter
)ro%otiona* sche%es 1hich suits their 'ud$et %eans %ore 0yt Q *ess cost Q 0ua*ity#
Co%'ination of a** these sche%es 1i** run 'etter in the %ar4et#
?7%. Gi3e reason for t+e sameE
Partic.lars Respon,ents
CostQ0ty /?
Kua*ity /D
Satisfaction !
Brand *oya* C
More 'enefitI'ud$et !!
Season chan$e !
SCitc+in2 >e+a3ior
0
10
20
30
40
50
$0
10
80
Respondents 13 21
%es No
Role of sales promotions in FMCG sector
"o ans1er B?
Interpretation/
'o(e 0uestion it $i(es s)ecific reasons for s1itchin$ too other )roducts# It
sho1s that e8tra 0uantity 1ith *ess or sa%e )rice& %ore satisfaction& 0ua*ity and other
factors inf*uence consu%ers to s1itch o(er too other 'rands#
Reason
0
10
20
30
40
Respondents 1$ 11 2 5 22 2 3$
.ost52ty -ua!ity Satisfaction &rand !oya!
6ore
&enefit7bud
"eason
,han'e
No ans*er
Role of sales promotions in FMCG sector
?77. Gi3e s.22estions a>o.t f.t.ristic promotional sc+emesE
#his sho1 the consu%ers> future e8)ectations fro% the 1hether co%)any to co%e
1ith ne1 sche%es or continue 1ith )resent one# It sho1s consu%ers de%and 1hich the
%anufacturers ha(e to %eet#
Role of sales promotions in FMCG sector
Retailers
Role of sales promotions in FMCG sector
?7. Since +oC lon2 are 5o. in t+is >.sinessE
Partic.lars Respon,ents
/.C Years !@
C./, Years !D
More than /, years @A
Interpretation/
#his 0uestion $i(es idea a'out the 'enefit to the retai*ers 1ho are on the %ar4et
fro% *on$ )eriod of ti%e and the 'enefits they are $ettin$ %ore as co%)are to others# It
a*so sho1s their e8)erience in the fie*d and the ser(ices they are )ro(idin$ too their ne1
and re$u*ar custo%ers# It a*so $i(es idea a'out the 'enefits they are $ainin$ for
1ho*esa*ers and direct fro% the co%)any#
Role of sales promotions in FMCG sector
?8. Name t+e Soap G !eter2ent $Compan5( 5o. stocA for.
Companies Respon,ents
"ir%a A?
2U: /,,
PRG A,
Godre+ A@
Others ?-
Interpretation/
It $i(es idea a'out the ca)acity of the retai*ers to stoc4 the $oods and a*so the
(ariety of the )roducts they are stoc4in$# It 1i** a*so %a4e c*ear the de%and of the $oods
in their stores and the se**in$ of the )roduct in %ar4et# Most of the retai*er stoc4s a** ty)es
of soa) and deter$ent#
Soap G !eter2ent in stocA
0
20
40
$0
80
100
120
"eries1 9$ 100 90 94 $8
Nirma H8L /9:
dre; Others
Role of sales promotions in FMCG sector
?9. RanA t+e folloCin2 factors t+at c.stomers looA for in t+e p.rc+ase
of Soap G !eter2ent. $RanA from 7 to ran,s is similar.
H7/ Effect of tra,e promotions for all fo.r >ran,s is not similar.
Interpretation/
9ro% the a'o(e $ra)h sho1s the trade )ro%otions offered 'y the "IRM :td to
the retai*ers to attract the% to1ards stoc4in$ their $oods and a*so sto) the% s1itchin$
the% too other %a+or )*ayers in the %ar4et#
"IRM is %ain*y offerin$ credit faci*ity 1hich is offered 'y a** %a+or )*ayers it
%ay differ in the ti%e *i%it of the credit# It is a*so )ro(idin$ e8tra %ar$in& and units 1ith
occasiona* $ift 1ith their sche%es#
#ra,e Promotions >5 Nirma
0
10
20
30
40
50
$0
"eries1 4$ 34 55 24 8
=xtra 6ar'in =xtra 8nits ,redit fa,i!ity 'ifts promo) =xp)
Role of sales promotions in FMCG sector
H*"
Promotions Respon,ents
E8tra Mar$in @D
E8tra Units B@
Credit faci*ity C-
Gifts !C
Pro%o# E8)# !!
Interpretation/
The ad(anta$e of 2:: o(er "IRM is that it 'are )ro%otiona* e8)enses 1hich
"IRM is not doin$# It attracts %ore consu%ers throu$h such )ro%otions& such as
dis)*ay of the )roduct& 'anners etc#
So this %ay he*) it to attract %ore retai*ers# It %ay 'ecause of its *ess cost of
)roduction in other se$%ents in 1hich nir%a is not o)eratin$#
#ra,e Promotions >5 H*"
0
10
20
30
40
50
$0
10
"eries1 41 34 58 25 22
=xtra 6ar'in =xtra 8nits .redit fa,i!ity :ifts /romo) =xp)
Role of sales promotions in FMCG sector
P I G
Promotions Respon,ents
E8tra Mar$in @,
E8tra Units BB
Credit faci*ity CC
Gifts !,
Pro%o# E8)# /!
Interpretation/
PRG is a*so a 'i$ )*ayer in the 9MCG %ar4et# It is a*so )ro(idin$ a** the faci*ities
1hich others are )ro(idin$ to retai*ers#
#ra,e Promotions >5 PIG
0
10
20
30
40
50
$0
"eries1 40 33 55 20 12
=xtra 6ar'in =xtra 8nits .redit fa,i!ity :ifts /romo) =xp)
Role of sales promotions in FMCG sector
GO!RE)
Promotions Respon,ents
E8tra Mar$in @?
E8tra Units B!
Credit faci*ity CD
Gifts /A
Pro%o# E8)# /-
Interpretation/
Godre+ is a 'i$ )*ayer in the 9MCG %ar4et# It is a*so )ro(idin$ a** the faci*ities
1hich others are )ro(idin$ to retai*ers# But it is *ac4in$ in 'earin$ e8)enses 1hich 2U:
is )ro(idin$ to %a8i%u% nu%'er of retai*ers#
#ra,e Promotions >5 Go,re-
0
10
20
30
40
50
$0
"eries1 4$ 32 51 19 18
=xtra 6ar'in =xtra 8nits .redit fa,i!ity :ifts /romo) =xp)
Role of sales promotions in FMCG sector
O#HERS
Promotions Respon,ents
E8tra Mar$in B,
E8tra Units /-
Credit faci*ity B-
Gifts /C
Pro%o# E8)# D
Interpretation/
Others inc*ude *oca* )*ayers& as 1e** as 1e esta'*ished )*ayers *i4e& 1i)ro 'ut
their )roducts are not in de%and *i4e other )*ayers 'ut sti** they are )ro(idin$ a** the
faci*ities to retai*ers to attract to1ards stoc4in$ their )roducts#
#ra,e Promotions >5 Ot+ers
0
5
10
15
20
25
30
35
40
"eries1 30 18 38 15 1
=xtra 6ar'in =xtra 8nits .redit fa,i!ity :ifts /romo) =xp)
Role of sales promotions in FMCG sector
GODREJ
NIRM
A !U" P#G
Extra
Margin 46 46 47 40
Extra
Units 32 34 34 33
Credit
facility 57 55 58 55
Gifts 19 24 25 20
Pr!"
Ex#" 18 8 22 12
$%&% $$&% $'&( $(
Ano)a: Sng*e +a,tor
SUMMAR-
Grou)s Count Su% (era$e ;ariance
Co*u%n / C /D! B@#@ !-A#B
Co*u%n ! C /?D BB#@ BBA#-
Co*u%n B C /-? BD#! !!A#D
Co*u%n @ C /?, B! !-@#C
ANOA
Source of
;ariation
SS df MS 9 P.(a*ue 9 crit
Bet1een
Grou)s
D!#CC B !@#/-BBB ,#,-@?,A ,#A?D@CD B#!B--D!
ran,.
Retai*er stoc4s a** ty)es of soa) and deter$ent 'ecause of co%)etition#
Role of sales promotions in FMCG sector
?7% An5 S.22estions.
Retai*er su$$ested that )ac4a$in$ shou*d 'e further i%)ro(ed and used as
)ro%otiona* too*& to encoura$e sa*es durin$ certain )eriods the co%)any shou*d )ro(ide
)riceoff or e8tra 0uantity 'ecause that inf*uences direct*y to the consu%er#
Role of sales promotions in FMCG sector
Fin,in2s of t+e report/
Sa*es Pro%otion& a short.ter% induce%ent& offered to a consu%er or trade has
$ained %o%entu% as a )ro%otiona* too* 1or*d o(er# It re)resents near*y three fourth of
the %ar4etin$ 'ud$et at %ost consu%er )roduct co%)anies# Sa*es )ro%otions can
enhance consu%ers> se*f.)erce)tion of 'ein$ 5s%art7 or a 5$ood7 sho))er
• 9MCG are such a %ar4et 1here the *e(e* of *oya*ty re%ains *o1 and this is
'ecause of %any reasons#
• Kua*ity as the %ost inf*uencin$ factors in the )urchase decision 1hi*e )rice is a*so
an i%)ortant for )urchase decision#
• Sche%es a*1ays attract %ore and %ore consu%ers to1ards )articu*ar 'rand#
Si%u*taneous*y it $i(es idea a'out the factors 1hich consu%ers *oo4 %ost in the
)roduct 'efore they %a4e fina* decision
• Price off and e8tra 0uantity is the t1o %ain offersIsche%es 1hich consu%ers ha(e
ca%e across at the ti%e of )urchase
• T; as the 'est %edia to %ar4et the )roduct 1hich 1i** co(er %a+ority of the
(ie1er shi)# On the second )*ace it sho1s ne1s )a)ers as the %edia to )ro%ote
the )roduct in the %ar4et
• Peo)*e are not %uch a1are of the sche%es 1hich continue in the %ar4et it %ay 'e
'ecause of the )resent stoc4 of the )roduct at their )*ace#
• /Q/ or !Q/ or other free sche%es are %ore de%anded and %ore a1are sche%es in
the %ar4et#
• Peo)*e are ready to s1itch o(er to another 'rand if they find 'etter )ro%otiona*
sche%es 1hich suits their 'ud$et %eans %ore 0yt Q *ess cost Q 0ua*ity#
• E8tra 0uantity 1ith *ess or sa%e )rice& %ore satisfaction& 0ua*ity and other factors
inf*uence consu%ers to s1itch o(er too other 'rands#
• Retai*er stoc4s a** ty)es of soa) and deter$ent 'ecause of co%)etition#
• Peo)*e are %ore 0ua*ity and )rice oriented#
• Consu%er re%e%'er that na%e of the )roduct 'y the co%)any na%e and a*so
fro% the )ast )erfor%ance of that co%)any
• Consu%er re%e%'ers that na%e of the )roduct 'y the co%)any na%e and a*so
fro% the )ast )erfor%ance of that co%)any
Role of sales promotions in FMCG sector
• Retai*ers are not su$$est to )urchase )articu*ar 'rand 'ecause of )ersona* re*ation
or that custo%er are 'rand *oya*
• Mar$in and of 'etter re*ations 1ith consu%ers and too )ro(ide 0ua*ity )roduct to
consu%ers they su$$est consu%ers too 'ye )articu*ar 'rand#
• Custo%ers are *oo4in$ for any ty)e of the )ro%otions on the )roduct 'efore the%
$oin$ to )urchase#
• Price off& )roduct 'und*in$ and e8tra 0uantity are %ore de%anded 'y the
consu%ers o(er others sche%es#
• "IRM is %ain*y offerin$ credit faci*ity 1hich is offered 'y a** %a+or )*ayers it
%ay differ in the ti%e *i%it of the credit#
• 2U: attracts %ore consu%ers throu$h such )ro%otions& such as dis)*ay of the
)roduct& 'anners etc#
Role of sales promotions in FMCG sector
Recommen,ation/
The findin$s of the e%)irica* study indicate that un*ess the 'rand to 'e )ro%oted
is in the consideration set of the consu%er& sa*es )ro%otion 'y itse*f is un*i4e*y to ha(e
any %a+or i%)act# C*ear*y this sho1s that %ana$ers need to in(est into 'rand 'ui*din$
e8ercise so that hisIher 'rand a))ears in the consideration set of the tar$et consu%ers#
On*y after this shou*d he s)end ti%e& %oney and ener$y on sa*es )ro%otion acti(ities#
Sa*es )ro%otion shou*d not 'e used in iso*ation 'ut need to 'e inte$rated 1ith
other too*s and in *ine 1ith the o(era** )ositionin$ of the 'rand# *so the i%)ortance of
the ro*e of %ass %edia ca%e out c*ear*y in the study#
Co%)anies need to create sufficient a1areness a'out sa*es )ro%otion sche%es
throu$h %ass %edia in order to create a1areness# 9MCG )roducts are *o1 in(o*(e%ent
)roducts characteri3ed 'y s1itchin$ 'eha(ior# *so the )erson $oin$ to the sho) for the
)urchase of soa) is the fina* decision %a4er of the 'rand# 2ence it is essentia* that
co%)anies need to desi$n attracti(e& stri4in$& (isi'*e POPs for sche%e announce%ents#
The term FMCG (fast moving consumer goods), although popular and frequently used does not have a standard definition and is generally used in India to refer to products of everyday use.
Role of sales promotions in FMCG sector
A
GRAND PROJECT REPORT
ON
“Role of Sales Promotion on FMCG”
A grand Project report submitted in Partial Fulfillment of award of
MBA Degree
PROJECT GUIDE:
PROF. SHARIF MEMON
PROF. BHARGA MO!I
SUBMITTED BY:
ISHA" PA#E" $%&%''(
)I#EN!RA RA)AI $%&%&%(
SUBMITTED TO:
N.R.INS#I#*#E OF B*SINESS MANAGEMEN#
AHME!ABA!
Role of sales promotions in FMCG sector
This is to certify that Mr. is+al Patel and Mr. )iten,ra Ra-ai the students of MB !
nd
year of "#R# Institute of Business Mana$e%ent& h%eda'ad ha(e co%)*eted their Grand
Pro+ect “Role of sales promotions in FMCG” in the year !,,-.!,/, in )artia*
fu*fi**%ent of Gu+arat Uni(ersity re0uire%ents for the a1ard of the de$ree of Master of
Business d%inistration#
!irector Gran, Pro-ect G.i,e
Prof# Dr# 2itesh Ru)are* Prof Sharif Me%on
Prof Bhar$a( Modi
!ate/
Role of sales promotions in FMCG sector
PREFACE
In this a$e of $*o'a*i3ation hy)er co%)etition has 'eco%e a re$u*ar feature# Today
the %ar4ets are no *ess then 'att*e$rounds and one has to stri(e (ery hard for sur(i(a* and
$ro1th#
Due to (ery ra)id industria*i3ation a** o(er the 1or*d the de%and for the
%ana$eria* )ersonne* and the ad%inistrati(e )ersonne* has increased# The )erfect study
of Mana$e%ent in(o*(es 'oth the theoretica* as 1e** as )ractica* as)ects# To sur(i(e in
this hi$h*y co%)etiti(e %ar4et 5Practica* 6no1*ed$e7 is as re*e(ant as the Theoretica*#
The si$nificance of MB De$ree is that the Theoretica* as)ects& 1hich a student
*earns throu$hout the year in the c*ass sessions& can 'e )ractica**y a))*ied throu$h
different )ro+ects& 1hich one underta4es# 6ee)in$ in tune 1ith this doctrine& 1e ha(e
tried to a))*y theoretica* as)ects throu$h out the )ro+ect& 1hich 1e *earned under the
course of %ana$e%ent#
In this )ro+ect %ore e%)hasi3e $i(en to the (arious too*s of sa*es )ro%otion and
its i%)act on consu%ers 'uyin$ decisions# ctua**y in recent trend to so%e e8tent this
techni0ue a*so 'eco%e (icti% of c*utter& e(en thou$h it can 'e e*i%inated 'y $eneratin$
inno(ati(e and %ore attracti(e too*s to *ure the custo%ers#
"o1 a day %ost of the 9MCG co%)anies considerin$ sa*es )ro%otion as an
i%)ortant )art of their %ar4etin$ strate$y# 9ro% the ana*ysis of sur(ey it 'eco%es c*ear
that consu%ers do res)onse to the sa*es )ro%otion ca%)ai$n& 'ut there are custo%ers
1ho stron$*y )refer to stic4 to 'rand na%e#
G:S "RIBM Jitendra Ra+ai
Gu+arat Uni(ersity ;isha* Pate*
h%eda'ad
#
Role of sales promotions in FMCG sector
AC0NO1"E!GEMEN#
E(ery study re0uires a $uidance of so%eone 1ho is 1or4in$ in that fie*d#
9irst*y 1e 1ou*d *i4e to than4 Director Sir Dr# !r Hites+ R.parel for )ro(idin$ an
o))ortunity of )re)arin$ a Grand Pro+ect Re)ort and a**o1in$ us to use the
resources of the institution durin$ this )ro+ect#
s she*(es# The
%oot 0uestion therefore& is 1hat industry turnaround thresho*d shou*d 'e for the ite% to
0ua*ify as an 9MCG# Shou*d the turnaround ha))en dai*y& 1ee4*y& or %onth*yG
One of the factors on 1hich the turnaround de)ends is the )urchase cyc*e#
2o1e(er& the )urchase cyc*e for the sa%e )roduct tend to (ary across )o)u*ation
se$%ents# Many *o1.inco%e househo*ds are forced to 'uy certain )roducts %ore
fre0uent*y 'ecause of *ac4 of *i0uidity and stora$e s)ace 1hi*e re*ati(e*y hi$h.inco%e
househo*ds 'uy the sa%e )roducts %ore infre0uent*y# Si%i*ar*y& the )urchase cyc*e a*so
tends to (ary 'ecause of cu*tura* factors# Most Indians& ty)ica**y& )refer fresh food artic*es
and therefore to 'uy re*ati(e*y s%a** 0uantities %ore fre0uent*y# This is in shar) contrast
1ith 1hat ha))ens in %ost 1estern countries& 1here the )ractice of 'uyin$ and soc4in$
foods for re*ati(e*y *on$er )eriod is %ore )re(a*ent# Thus& shou*d the in(entory
turnaround thresho*d 'e uni(ersa*& or shou*d it a**o1 for inco%e& cu*tura* and 'eha(iora*
nuancesG
Role of sales promotions in FMCG sector
C+aracteristics of FMCG Pro,.cts/
• Indi(idua* ite%s are of s%a** (a*ue# But a** 9MCG )roducts )ut to$ether account
for a si$nificant )art of the consu%erHs 'ud$et#
• The consu%er 4ee)s *i%ited in(entory of these )roducts and )refers to )urchase
the% fre0uent*y& as and 1hen re0uired# Many of these )roducts are )erisha'*e#
• The consu%er s)ends *itt*e ti%e on the )urchase decision# Rare*y does heIshe
*oo4 for technica* s)ecifications Ein contrast to industria* $oodsF# Brand *oya*ties
or reco%%endations of re*ia'*e retai*erIdea*er dri(e )urchase decisions#
• Tria* of a ne1 )roduct i#e# 'rand s1itchin$ is often induced 'y hea(y
ad(ertise%ent& reco%%endation of the retai*er or nei$h'orsIfriends#
• These )roducts cater to necessities& co%forts as 1e** as *u8uries# They %eet the
de%ands of the entire cross section of )o)u*ation# Price and inco%e e*asticity of
de%and (aries across )roducts and consu%ers#
Role of sales promotions in FMCG sector
Intro,.ction to t+e topic
Intro,.ction/
The i%)ortance of consu%er sa*es )ro%otion in the %ar4etin$ %i8 of the fast
%o(in$ consu%er $oods E9MCGF cate$ory throu$hout the 1or*d has increased#
Co%)anies s)end considera'*e ti%e in )*annin$ such acti(ities# 2o1e(er& in order to
enhance the effecti(eness of these acti(ities& %anufacturers shou*d understand consu%er
and retai*er inter)retations of their )ro%otiona* acti(ities# The study here )ertains to
consu%er>s )erce)tions re$ardin$ sa*es )ro%otion# So%e )ast researches ha(e su$$ested
that )ro%otion itse*f has an effect on the )ercei(ed (a*ue of the 'rand# This is 'ecause
)ro%otions )ro(ide uti*itarian 'enefits such as %onetary sa(in$s& added (a*ue& increased
0ua*ity and con(enience as 1e** as hedonic 'enefits such as entertain%ent& e8)*oration
and se*f.e8)ression#
Broad*y s)ea4in$ %ost of the co%)anies usin$ Mar4etin$ Mi8 1hich inc*udesJ
Price
P*ace EChanne* of Distri'utionF
Product
Promotion
These are the four 'asic )i**ar of %ar4etin$ %i8# Most of the %ar4etin$ strate$ies
are 'ui*t on the 'asis of these criteria#
Pro%otion is one of the i%)ortant e*e%ents of %ar4etin$ %i8# There are so %any
e*e%ents of )ro%otion such as J
d(ertisin$
Direct Mar4etin$
Pu'*ic Re*ations
Sales Promotion
Role of sales promotions in FMCG sector
Traditiona**y& sa*es Pro%otions ha(e 'een used 'y %ar4eter to increase sa*es in
the short ter%# 2o1e(er& in the *ast fe1 decades this co%%unication too* has e(o*(ed and
no1 is considered fro% a strate$ic )oint of (ie1# 9or this reason& it is necessary to rea*i3e
ne1 studies in this area and study ho1 consu%ers e(a*uate sa*es )ro%otions#
Sa*es )ro%otions ha(e $ro1n in 'oth i%)ortance and fre0uency o(er the )ast fe1
decades# *thou$h an accurate esti%ate for tota* sa*es )ro%otions e8)enditures does not
e8ist& 1e can 'e sure that the trend is u)#
Sa*es )ro%otion ser(es three essentia* ro*es: It infor%s& )ersuades and re%inds
)ros)ecti(e custo%ers a'out a co%)any and its )roducts# E(en the %ost usefu* )roduct or
'rand 1i** 'e a fai*ure if no one 4no1s that it is a(ai*a'*e# s 1e 4no1& channe*s of
distri'ution ta4e %ore ti%e in creatin$ a1areness 'ecause a )roduct has to )ass throu$h
%any hands 'et1een a )roducer and consu%ers#
Therefore& a )roducer has to infor% channe* %e%'ers as 1e** as u*ti%ate
consu%ers a'out the attri'utes and a(ai*a'i*ity of his )roducts# The second )ur)ose of
)ro%otion is )ersuasion# The cut throat co%)etition a%on$ different )roducts )uts
tre%endous )ressure on their %anufacturers and they are co%)e**ed to underta4e sa*es
)ro%otion acti(ities# The third )ur)ose of )ro%otion is re%indin$ consu%ers a'out
)roducts a(ai*a'i*ity and its )otentia* to satisfy their needs#
9ro% these e*e%ents Sa*es Pro%otion is the e*e%ent 1hich is in the focus of this
)ro+ect# 9urther Sa*es Pro%otion is 0uite 'road ter% it inc*udes J
Cons.mer Oriente, Sales Promotion
#ra,e Oriente, Sales Promotion
Role of sales promotions in FMCG sector
Cons.mer Oriente, Sales Promotion
Consu%er Oriented Sa*es Pro%otion is the %ain to)ic of this )ro+ect# 2ere
e%)hasi3e is $i(en to %oti(ate consu%er to increase sa*es# Consu%er Oriented Sa*es
Pro%otion inc*udes Sa%)*in$& Cou)onin$& Pre%iu%s& Contest& Refunds& Re'ates& Bonus
Pac4>s& Price.off& E(ent %ar4etin$ etc#
!efinition/
9or the )ur)ose of this study& fo**o1in$ definitions of sa*es )ro%otion 1ere 4e)t in %ind#
6ot*er defines sa*es )ro%otion as: 5Sa*es )ro%otion consists of a di(erse co**ection of
incenti(e too*s& %ost*y short.ter% desi$ned to sti%u*ate 0uic4er andIor $reater )urchase
of )articu*ar )roductsIser(ices 'y consu%ers or the trade#7
Ro$er Stran$ has $i(en a %ore si%)*istic definition i#e# 5sa*es )ro%otions are short.ter%
incenti(es to encoura$e )urchase or sa*es of a )roduct or ser(ice#7
2ence& any for%s of incenti(es E)rice cut or (a*ue added natureF offered for short )eriod
either to trade or consu%ers are considered as sa*es )ro%otion acti(ities#
MarAeterBs .ses cons.mer oriente, sales promotion tools for t+e folloCin2 reasons/
• To increase short ter% sa*es
• To induce tria*
• To reduce in(entory
• To esta'*ish a 'rand na%e
• To %a4e cross se**in$
• To co)e u) 1ith co%)etition
• To a(oid ad(ertisin$ c*utter
Role of sales promotions in FMCG sector
#ools of Cons.mer Oriente, Sales Promotion/
There are so %any too*s or techni0ue a(ai*a'*e to the %ar4eters for achie(in$ o'+ecti(e of
sa*es )ro%otion# These too*s shou*d 'e used considerin$ a** other factors affectin$ such
as cost& ti%e& co%)etitors& a(ai*a'i*ity of $oods etc# These too*s are as underJ
/# Cou)ons
!# Price.Off
B# 9ree'ies
@# Scratch Cards
C# :uc4y Dra1s
?# Bund*in$ Offer
D# E8tra Kuantity
:et>s ha(e *oo4 at each too*J
7. Co.pons/
Cou)on is the o*dest and %ost 1ide*y used 1ay of sa*es )ro%otion# Cou)ons ha(e
'een used since /-AC# It is %ost*y used 'y )ac4a$ed $oods# It is 1orth1hi*e to use
cou)on as a )ro%otion too* 'ecause data sho1s that %ar4et for )ac4a$ed $oods increased
fro% /? 'i**ion in /A?- to B/, 'i**ion in /AA@# To 'oost u) the sa*es not on*y
%anufacturer 'ut retai*ers )ersona**y can a*so used# cou)on *eads to )rice reductions so
as to encoura$e )rice sensiti(e custo%ers# "on users can try a )roduct 1hich %ay *eads
to re$u*ar sa*es#
8. PriceDoff/
)rice.off is si%)*y a reduction in the )rice of the )roduct to increase sa*es and is
(ery often used 1hen introduction a ne1 )roduct# reduction in )rice a*1ays increases
sa*es 'ut the use of this techni0ue shou*d 'e carefu**y considered in the current %ar4et
situation#
Role of sales promotions in FMCG sector
Price.off is the %ost )referred sa*es )ro%otion techni0ue 'ecause consu%ers
res)onse (ery )ositi(e*y to this sche%e# "ot on*y that 'ut it a*so cause *ar$e increase in
sa*es (o*u%e# Price.off reductions are ty)ica**y offered ti$ht on the )ac4a$e throu$h
s)ecia**y %ar4ed )rice )ac4s# E#$# 6rac4 Jac4 offers B,L Price.off#
9. Free>ies
9ree'ies are a )o)u*ar for% of %odern %ar4etin$ and are so%e of the 'est thin$s
a'out the internet# The definition of free'ies is )roducts or ser(ices $i(en a1ay for free at
no cost to the consu%er# s the definition 1e ca%e u) 1ith# I a% a 'ar$ain
free'ie sho))er& )retty %uch $oin$ for any free )roduct and infor%in$ e(eryone a'out it#
t different ti%es& 'i$ and s%a** co%)anies often $i(e a1ay )ri3es and %oney
1hich is too $ood to 'e true# Often it>s in the )ursuit of %ore custo%ers or a *ar$er fan
'ase and it often 1or4s#
:. Scratc+ Car,s
scratch card Ea*so ca**ed a scratch off& scratch tic4et& scratcher& scratchie&
scratch.it& scratch $a%e& scratch.and.1in or instant $a%eF is a s%a** to4en& usua**y %ade
of card'oard& 1here one or %ore areas contain concea*ed infor%ation: they are co(ered
'y a su'stance that cannot 'e seen throu$h& 'ut can 'e scratched off#
;. B.n,lin2 Offers
Product 'und*in$ is a %ar4etin$ strate$y that in(o*(es offerin$ se(era* )roducts
for sa*e as one co%'ined )roduct# This strate$y is (ery co%%on in the soft1are 'usiness
Efor e8a%)*e: 'und*e a 1ord )rocessor& a s)readsheet& and a data'ase into a sin$*e office
suiteF& in the ca'*e te*e(ision industry Efor e8a%)*e& 'asic ca'*e in the United States
$enera**y offers %any channe*s at one )riceF& and in the fast food industry in 1hich
%u*ti)*e ite%s are co%'ined into a co%)*ete %ea*# 'und*e of )roducts is so%eti%es
referred to as a )ac4a$e dea* or a co%)i*ation or an antho*o$y#
Role of sales promotions in FMCG sector
Factors Infl.encin2 Cons.mer Oriente, sales promotion/
Main*y four factors shou*d 'e ta4en into account 1hi*e deter%inin$ the sa*es
)ro%otion )ro$ra%#
M Tar$et %ar4et
M "ature of )roduct
M Sta$e of )roduct *ife cyc*e
M Bud$et a(ai*a'*e for )ro%otion
7. #ar2et MarAet/
.5 on sales promotion offer
Si8ty )er cent of the sa%)*e did not sho1 1i**in$ness to 'uy a 'rand due to
)ro%otion 1hi*e B,L sho1ed 1i**in$ness and /,L 1ere not sure# This indicates that
1hen B,L sho1ed 1i**in$ness and /,L consu%ers 1ho 1ere not sure& these $rou)s
%i$ht 'e *ured throu$h inno(ati(e and *ucrati(e sa*es )ro%otion offer#
A>ilit5 to in,.ce trial
9orty )er cent of the res)ondents had said that sa*es )ro%otion had the a'i*ity to
induce tria* 1hich reinforces the a'o(e inference#
"on2Dterm impact
In order to understand a'i*ity of the )ro%otions to increase *on$.ter% sa*es&
res)ondents 1ere as4ed a'out continuity of )urchase of a 'rand after the 1ithdra1a* of
)ro%otion# Ei$hty )er cent of the res)ondents indicated that they 1ou*d not continue# But
!,L said they 1ou*d# Thus& it cou*d 'e inferred that )ro%otions in this cate$ory E*o1
in(o*(e%ent )roductsF %i$ht encoura$e tria* and 'rand s1itchin$ 'ut not *on$ ter%
*oya*ty#
Preference of Sc+emes:
Price off 1as the %ost )referred ty)e of sche%e# Ma8i%u% custo%ers> ran4ed
)rice.offs as nu%'er one or t1o#
Percei3e, ?.alit5:
Ma+ority of res)ondents had a )erce)tion that the 0ua*ity of the )ro%oted 'rands
re%ained the sa%e durin$ )ro%otion& 1hi*e so%e of the% fe*t that it 1as inferior than
'efore# It can 'e inferred that )ro%otions 1ere not *eadin$ to ne$ati(e 'rand 0ua*ity
Role of sales promotions in FMCG sector
)erce)tions# It is found that so%e custo%er stron$*y )referred to 'uy their re$u*ar 'rand
and said that sa*es )ro%otion 1ou*d not 1ea4en their *oya*ty to1ards the 'rand#
Perceptions re2ar,in2 .n,erl5in2 compan5 moti3ations
On ta))in$ )erce)tions> re$ardin$ under*yin$ co%)any %oti(ations for sa*es
)ro%otion& 5to increase sa*es7 1as ran4ed hi$hest fo**o1ed 'y 5to attract s1itchers7 and
5to se** e8cess stoc4s7# )erce)tions a'out consu%er
)referencesF# Since retai*ers o'ser(e consu%ers in store 'eha(ior 1ere fre0uent*y and
direct*y& their )erce)tions re$ardin$ )ro(idin$ consu%er 'eha(ior are *i4e*y to 'e
accurate# Such in)uts fro% the retai*ers 1ou*d 'e usefu* to co%)anies#
The retai*ers had the )erce)tion that those sche%es 1hich 1ere announced throu$h %ass
%edia had 'etter res)onse# This 1as reinforced 'y the consu%er sur(ey 1hich sho1ed
that reca** in case of hea(i*y )ro%oted sche%es on T; 1as found to 'e (ery hi$h#
Retai*ers> )rediction of co%)anies> %oti(ation for offerin$ sa*es )ro%otion 1ere
%atchin$ 1ith the consu%er )erce)tion re$ardin$ the sa%e# Thus 'oth (ie1ed that
co%)anies 1ere usin$ sa*es )ro%otion acti(ities %ain*y to increase short ter% sa*es or
encoura$e s1itchin$ or se**in$ e8cess stoc4 and not rea**y to $i(e (a*ue 'enefit or
enhanceIreinforce 'randIco%)any i%a$e#
Role of sales promotions in FMCG sector
#ra,e Oriente, Sales Promotion
Trade Oriented Sa*es Pro%otion ai%ed to %oti(ate channe* %e%'er of the
co%)any and to encoura$e the% to )ush co%)any>s )roduct# Trade Oriented Sa*es
Pro%otion inc*udes dea*er contest and incenti(es& trade a**o1ances# Point.of.)urchase
dis)*ays& sa*es trainin$ )ro$ra%s& trade sho1s& coo)erati(e ad(ertisin$& and other
)ro$ra%s desi$ned to %oti(ate distri'utors and retai*ers to carry a )roduct and %a4e an
e8tra effort to )ush it to their custo%ers
Sales promotion from t+e retailerBs point of 3ieC/
Perceptions on Sc+eme Preference
It 1as found that retai*er )ercei(ed )rice offs as a 'etter for% of sa*es )ro%otion
acti(ity# Price offs in their o)inion had re*ati(e*y a $reater i%)act co%)ared to any other
for% of sa*es )ro%otion acti(ity *i4e Bonus )ac4s& Pre%iu%& Contests etc# Retai*ers
)referred )rice offs the %ost& then 'onus )ac4& )re%iu%& contests& in order of i%)ortance#
Perceptions a>o.t B.5in2 Roles
Retai*ers (ie1ed that the )erson 1ho ca%e to the sho) E1ho %ay 'e a %aid& son&
dau$hter& dau$hter.in.*a1 and chi*dF 1as the decider of a toi*et soa) 'rand and not the
Inco%e )ro(ider Ee#$# head of the fa%i*yF# It cou*d 'e inferred that (isi'i*ity of
infor%ation a'out the sa*es )ro%otion acti(ity at the )oint of )urchase cou*d resu*t into
the )urchase of a )ro%oted 'rand#
Perceptions a>o.t t+eir role in ,ecisionDmaAin2
Retai*er had re*ati(e*y (ery *o1 inf*uence in affectin$ choice# It cou*d 'e inferred
that (isi'i*ity and a1areness a'out the sche%e 1ere the critica* success factors so that
)u** cou*d 'e created#
Role of sales promotions in FMCG sector
Perceptions a>o.t Response to Sales Promotion Offers
They 'e*ie(ed that youn$er a$e.$rou)s 1ere %ore e8)eri%enta* in nature&
a%ena'*e to tryin$ ne1 'rands& and sou$htI*oo4ed for or as4ed 1hether there 1ere anyF
sa*es )ro%otion sche%es runnin$ on any toi*et soa) at the ti%e of )urchase#
Perceptions a>o.t Comm.nications of Sales Promotion Sc+emes
Retai*ers )ercei(ed that ro*e of 1ord of %outh and te*e(ision ad(ertisin$ )*ayed
an i%)ortant )art in )ro(idin$ infor%ation in)uts to consu%ers re$ardin$ sa*es )ro%otion
acti(ities#
ariations in Information FloC
S%a**er Enon.su)er%ar4et& s%a** for%at storeF retai*ers recei(ed re*ati(e*y *ess
su))ort co%)ared to su)er%ar4ets in ter%s of ser(icin$& %ar$ins& infor%ation a'out sa*es
)ro%otion acti(ities fro% the dea*ers# Many a ti%es s%a** retai*ers 1ere on*y infor%ed
(er'a**y a'out sa*es )ro%otion sche%es 'y the dea*er sa*es%en durin$ the schedu*ed
1ee4*y (isits#
!ealerDRetailer !5namics
t the ti%e of sa*es )ro%otion acti(ities& dea*ers had tendency to )ush un1anted
stoc4s onto the s%a**er retai*ers# In fact these retai*ers )referred to stoc4 (ariety of 'rands
and 1anted )ay%ent for she*f and 1indo1 dis)*ay to increase traffic into their store#
2o1e(er& su)er%ar4ets and 'i$ retai*ers 1ere )a%)ered and $i(en s)ecia* ser(ices and
$i(en 'etter %ar$ins and 'etter a**o1ances#
Role of sales promotions in FMCG sector
Mar2ins
It 1as found that in sa*es )ro%otion sche%es %ar$ins (aried fro% ? to/CL
de)endin$ of the si3e of the retai* out*et& 'ar$ainin$ )o1er of a retai*er& 0uantity ordered
'y hi% etc# Most*y %ar$ins 1ere *in4ed to si3e of the (o*u%es that 1ere ordered#
Perceptions a>o.t terms an, con,itions
Retai*ers 1ere not found to 'e ha))y 1ith sa*es )ro%otion sche%es 1here their
%ar$ins 1ere cut on the )rete8t of +ust fast %o(e%ent of in(entory of the 'rand 'ein$
)ro%oted# *so if additiona* incenti(e 1as offered it 1as su'+ect to %ini%u%
)erfor%ance re0uire%ent#
Nat.re of POP
Retai*ers indicated that %ost of the POP EPoint of PurchaseF %ateria*s 1ere %eant
for 'rand ad(ertise%ent and not for $i(in$ infor%ation re$ardin$ the sche%es# Thus it
cou*d 'e inferred that co%)any>s fo**o1 u) 1as not ade0uate#
Ser3icin2 ,.rin2 ,.ration of Sc+eme
In stoc4.out situation durin$ the runnin$ of the sa*es )ro%otion sche%es& s%a**er
retai*ers had to 1ait for re)*enish%ent of stoc4s ti** the ne8t schedu*ed 1ee4*y (isit 'y the
dea*er sa*es%an 'ut 'i$ retai*ers 1ere ser(iced on te*e)honic re0uest for re)*enish%ent of
stoc4s# This c*ear*y indicated the dis)arity in treat%ent#
Pro>lem of leftDo3er
*efto(er stoc4 at the end of any sche%e 1as re0uired to 'e so*d 'y the retai*ers
'efore they ordered fresh stoc4s# In case of 'onus )ac4s sche%e& *efto(er stoc4 1as often
dis%ant*ed Ecut o)en 'uy one $et one freeF and so*d the% indi(idua**y as a re$u*ar soa)#
This a))roach of the co%)any *eads to %isa))ro)riation 1hich in turn cou*d resu*t in
ad(erse 'rand i%a$e#
Role of sales promotions in FMCG sector
Gifts for Retailer moti3ation
Co%)anies at ti%es 1ere re1ardin$ retai*ers 'y $i(in$ free $ifts *i4e ther%os
f*as4s or c*oc4s if they so*d %ore than certain 0uantity in a $i(en )eriod# Co%)anies 1ere
%a4in$ a ha*f.hearted effort to %oti(ate retai*ers#
Perceptions a>o.t mass me,ia anno.ncements
Retai*ers (ie1ed that 1hene(er sa*es )ro%otion sche%e 1as announced on T;& it
created )u** and they 1ere %ore than 1i**in$ to stoc4 such 'rands# 9or e8a%)*e Medi%i8
and Detto* contest 1as not ad(ertised on T;& hence there 1as (ery *itt*e a1areness
*eadin$ to unso*d stoc4 ti** ? %onths# s sa*es 'y )redictin$ and %odifyin$ your tar$et custo%er>s
)urchasin$ 'eha(ior and )atterns#
Sa*es )ro%otion is (ery i%)ortant as it not on*y he*)s to 'oost sa*es 'ut it a*so
he*)s a 'usiness to dra1 ne1 custo%ers 1hi*e at the sa%e ti%e retainin$ o*der ones#
There are a (ariety of sa*es )ro%otiona* strate$ies that a 'usiness can use to increase their
sa*es& ho1e(er it is i%)ortant that 1e first understand 1hat a sa*es )ro%otion strate$y
actua**y is and 1hy it is so i%)ortant#
sa*es )ro%otion strate$y is an acti(ity that is desi$ned to he*) 'oost the sa*es of
a )roduct or ser(ice# This can 'e done throu$h an ad(ertisin$ ca%)ai$n& )u'*ic re*ation
acti(ities& a free sa%)*in$ ca%)ai$n& a free $ift ca%)ai$n& a tradin$ sta%)s ca%)ai$n&
throu$h de%onstrations and e8hi'itions& throu$h )ri3e $i(in$ co%)etitions& throu$h
te%)orary )rice cuts& and throu$h door.to.door sa*es& te*e%ar4etin$& )ersona* sa*es
*etters& and e%ai*s#
The i%)ortance of a sa*es )ro%otion strate$y cannot 'e underesti%ated# This is
'ecause a sa*es )ro%otion strate$y is i%)ortant to a 'usiness 'oostin$ its sa*es#
it for1ard to the consu%er# Ty)ica* )ush sa*es )ro%otion strate$ies
inc*ude= 'uy.'ac4 $uarantees& free tria*s& contests& discounts& and s)ecia*ty ad(ertisin$
ite%s#
A P.ll Strate25/
N)u**> sa*es )ro%otion strate$y focuses %ore on the consu%er instead of the
rese**er or distri'utor# This strate$y in(o*(es $ettin$ the consu%er to N)u**> or )urchase
the )roductIser(ices direct*y fro% the co%)any itse*f# This strate$y tar$ets its %ar4etin$
efforts direct*y on the consu%ers 1ith the ho)e that it 1i** sti%u*ate interest and de%and
for the )roduct# This )u** strate$y is often used 1hen distri'utors are re*uctant to carry or
distri'ute a )roduct# Ty)ica* )u** sa*es )ro%otion strate$ies inc*ude= sa%)*es& cou)ons&
cash refunds or re'ates& *oya*ty )ro$ra%s and re1ards& contests& s1ee)sta4es& $a%es& and
)oint.of.)urchase dis)*ays#
A Com>ination of #Co Strate2ies/
Nco%'ination> sa*es )ro%otion strate$y is +ust that= it is a co%'ination of a )ush
and a )u** strate$y# It focuses 'oth on the distri'utor as 1e** as the consu%ers& tar$etin$
'oth )arties direct*y# It offers consu%er incenti(es side 'y side 1ith dea*er discounts#
Role of sales promotions in FMCG sector
#+e S+ort term Impact of Promotions/
:et>s ha(e *oo4 at the i%)act of )ro%otions on )urchase 'eha(ior durin$ the )ro%otiona*
)eriod i#e# the 1ee4 or the %onth 1hen the )ro%otion 1as 'ein$ run# The %a+ority of the
e%)irica* studies ha(e focused on the i%)act of )ro%otions in the short ter%# The 4ey
findin$s across the studies are discussed 'e*o1#
#emporar5 price re,.ctions $price off( s.>stantiall5 increase sales/
There is a%)*e e(idence to sho1 that )ro%otions *ead to dra%atic increases in sa*es of
)ro%oted 'rand in the short ter%# Studies ha(e consistent*y re)orted hi$h sa*es effects
and hi$h )rice e*asticity of 'rands 1hich are on )ro%otion# The econo%ic rationa*e for
the )ro%otiona* res)onse is c*ear O te%)orary )rice cuts increase the (a*ue of the )roduct
to the consu%er and it *eads to i%%ediate action# Sa*es 'oost can 'e 0uantified on the
'asis of 'rand s1itchin$& )ri%ary de%and e8)ansion and consu%er stoc4)i*in$ durin$ a
)ro%otion#
Sales Promotion lea,s to >ran, s.>stit.tion Cit+ t+e pro,.ct cate2or5/
The sa*es N'u%)> durin$ the )ro%otiona* )eriod into sa*es due to 'rand s1itchin$&
)urchase ti%e acce*eration and stoc4)i*in$# Studies on 'rand s1itchin$ ha(e sho1n that
'rand s1itchin$ effects 1ithin a cate$ory are asy%%etric such that )ro%otions on hi$her
0ua*ity 'rands i%)acts 1ea4er 'rands dis)ro)ortionate*y# Durin$ a )ro%otion& hi$her
0ua*ity 'rands induce a *ar$e nu%'er of consu%ers to s1itch to the% as co%)ared to
*o1er 0ua*ity 'rands# One e8)*anation ad(anced for this findin$ 'y researchers is that
*ar$e share 'rands ha(e hi$her 'rand e0uity and attract s1itchers %ore than *o1 share
'rands#
Role of sales promotions in FMCG sector
Sales Promotion lea,s to p.rc+ase accelerationGstocApilin2 effects/
In res)onse to a )ro%otion& consu%ers %ay 'uy %ore 0uantity of the )roduct
cate$ory or 'uy at an ear*ier ti%e than usua* E)urchase acce*eration effectF# If consu%ers
'uy e8tra 0uantity durin$ a )ro%otion or ear*ier than nor%a*& then they are not in the
%ar4et to 'uy )roducts once the )ro%otion is o(er# Thus )urchase acce*eration is
de%onstrated throu$h
*en$thenin$ of inter )urchase ti%es after a )ro%otion# Purchase acce*eration 1as %ore
*i4e*y to 'e e8hi'ited in increased )urchase 0uantity than in shortened inter )urchase
ti%es# Resu*ts sho1ed that consu%ers %ost*y %ade u) for the *ar$e 0uantity )urchased
'y 1aitin$ *on$er unti* )urchasin$ a$ain# Resu*ts indicated that hea(y users tended to
acce*erate )urchases %ore than *i$ht users# There 1as ne$*i$i'*e difference in the
acce*eration )ro)ensities of hi$h (ersus *o1 inco%e $rou)s#
Sales Promotion lea,s to primar5 ,eman, e4pansion for a cate2or5/
s sa*es or re)eat 'uyin$ *oya*ty# The e8tra sa*es
of a 'rand 1hi*e )ro%oted ca%e (irtua**y a** fro% the 'rand>s e8istin$ *on$.ter%
custo%er 'ase for 1hich the e8)erience of 'uyin$ the )ro%oted 'rand 1as nothin$ ne1#
It is found that a*thou$h the short ter% effects of )ro%otions are stron$= these )ro%otions
rare*y e8hi'it *on$ ter% effects# It is o'ser(ed that each sa*es co%)onent $enera**y *ac4ed
a )er%anent effect and the effect of )ro%otion 1as short *i(ed and increase in )ro%otions
affected consu%ers> stoc4)i*in$ decisions in the *on$ run# They found that the co%'ined
short and *on$.ter% e*asticity of )ro%otions 1as 3ero# The stoc4)i*in$ induced 'y a
)ro%otion 1as essentia**y offset 'y reduced de%and in the *on$ ter%# Thus increased
sa*es 1ere %ore a resu*t of sa*es 'orro1ed fro% the future than increased consu%)tion
Role of sales promotions in FMCG sector
S1O# Anal5sis of FMCG Sector
Strengths:
• > )roducts#
Opportuntes:
• :ar$e do%estic %ar4et#
• E8)ort )otentia*#
• Increasin$ inco%e *e(e*s 1i** resu*t in faster re(enue $ro1th##
Threats:
• I%)orts#
• Ta8 and re$u*atory structure#
• S*o1do1n in rura* de%and#
Role of sales promotions in FMCG sector
DT ":YSIS
Role of sales promotions in FMCG sector
Cons.mers
Role of sales promotions in FMCG sector
?7. 1+ic+ >ran, of Soap G !eter2ent ,o 5o. .seE
Bat+in2 Hsoaps Respon,ents
:u8 @/
2a%% B
:ife'uoy /@
"i%a -
Others B@
Interpretation/
The a'o(e 0uestion has 'een for%ed to 4no1 the soa)s and deter$ents at the to)
of the %ind of the custo%ers# It sho1s those consu%ers> )urchase and use of that
)articu*ar 'rand# It 1i** he*) to the co%)any to 4no1 the %ar4et scenario and the %a+or
'rands in the %ar4et#
9or% the a'o(e resu*t it is c*ear that out of /,, custo%ers %ore than @, are consu%ers
are ha(in$ the sa%e 'rand as the i%a$e in their %ind& 1hereas others cate$ory is a*so
sho1in$ the hi$her $ra)h than these B %a+or )*ayersE2a%a%& :ife'uoy& "i%aF#
Bat+in2 soaps
0
10
20
30
40
50
Respondents 41 3 14 8 34
Lux Hamam Lifebuoy Nima Others
Role of sales promotions in FMCG sector
!eter2ent poC,er Respon,ents
"ir%a su))er /A
ran, of Soap G !eter2entsE
Factors
Bat+in2
soap !et.poC,er
9ra$rance /A /-
Kua*ity BB B?
Co%)any i%a$e /? /B
Price !B /A
Pac4a$in$ ? //
Others B B
Interpretation/
The o'+ecti(e 'ehind this 0uestion is to 4no1 the effect of inf*uencin$ factors in
the )urchase decision of the soa)s and deter$ent )o1ders# It %ain*y contains the factors
*i4e& 0ua*ity 1hich )*ayers an i%)ortant ro*e in the )urchase decision of the soa)s and
deter$ents 'oth#
If 1e *oo4 at the $ra)h of the soa)s and deter$ent it sho1s 0ua*ity as the %ost
inf*uencin$ factors in the )urchase decision 1hi*e )rice is a*so an i%)ortant for )urchase
decision#
Factors affectin2 p.rc+ase >e+a3ior
0
10
20
30
40
&athin' soap 19 33 1$ 23 $ 3
(et)po*der 18 3$ 13 19 11 3
+ra'ran,e -ua!ity
.ompany
ima'e
/ri,e /a,0a'in' Others
Role of sales promotions in FMCG sector
?:. !o 5o. consi,er promotional sc+emes C+ile p.rc+asin2 a partic.lar
>ran, of Soap G !eter2entE
Partic.lars Respon,ents
Yes D-
"o !!
H%/ Promotional sc+emes +a3e a si2nificant effect on t+e p.rc+ase of >ran,.
H7/ Promotional sc+emes ,o not +a3e an effect on t+e p.rc+ase of >ran,.
Interpretation/
ns1er of this 0uestion 1i** $i(e idea a'out the effect of )ro%otiona* sche%es in
the )urchase decisions# Such ty)es of sche%es a*1ays attract %ore and %ore consu%ers
to1ards )articu*ar 'rand# Si%u*taneous*y it $i(es idea a'out the factors 1hich consu%ers
*oo4 %ost in the )roduct 'efore they %a4e fina* decision#
2ere H% is acce)ted as the $ra)h sho1s that D- out of /,, consu%ers are *oo4in$
for such sche%es 'efore they %a4e )urchase#
?;. 1+ic+ of t+e folloCin2 promotional sc+emes 5o. +a3e come across
so farE
Effect of sc+emes p.rc+ase >e+a3ior
0
20
40
$0
80
100
Respondents 18 22
%es No
Role of sales promotions in FMCG sector
Promotional sc+emes Respon,ents
Cou)ons /?
)rice off -@
9ree'ies !@
scratch cards /!
*uc4y dra1 A
Bund*in$ B/
e8tra 0ty# @@
Interpretation/
The a'o(e stated 0uestion c*ear*y states the a1areness of )ro%otiona* sche%es
offered in the %ar4et 'y the %ar4eters to attract %ore and %ore consu%ers#
The resu*ts sho1 that )rice off and e8tra 0uantity is the t1o %ain offersIsche%es
1hich consu%ers ha(e ca%e across at the ti%e of )urchase# It 1i** he*) the %anufacturers
and %ar4eters too ho1 too *aunch their ne1 )roducts in the %ar4et 1ith 1hich sche%es#
?le to promote t+e 3ario.s
promotional sc+emesE
Familiarit5 of promotional Sc+emes
0
20
40
$0
80
100
Respondents 1$ 84 24 12 9 31 44
.oupons pri,e off +reebies
s,rat,h
,ards
!u,0y dra* &und!in' extra 2ty)
Role of sales promotions in FMCG sector
So.rce Respon,ents
Radio //
T; ?A
"e1s)a)er @B
2oardin$ /C
Others /!
Interpretation:
This 0uestion $i(es stress on the %edia ha'it of the )eo)*e and throu$h 1hich the
)roduct shou*d 'e *aunch or they thin4 it 1ou*d 'e 'etter than other Medias#
The a'o(e resu*t sho1s T; as the 'est %edia to %ar4et the )roduct 1hich 1i**
co(er %a+ority of the (ie1er shi)# On the second )*ace it sho1s ne1s )a)ers as the %edia
to )ro%ote the )roduct in the %ar4et#
?'. Is t+ere an5 e4istin2 sc+eme on t+e Soap G !eter2ent 5o. are
c.rrentl5 .sin2E
Me,i.ms to promote t+e promotional sc+emes
0
20
40
$0
80
Respondents 11 $9 43 15 12
Radio 34 Ne*s)ppr Hoardin' Others
Role of sales promotions in FMCG sector
Partic.lars Respon,ents
Yes C-
"o @!
Interpretation/
The ans1er of the res)ondents $i(e idea a'out the a1areness of the )ro%otiona*
sche%es offered in the %ar4et on their e8istin$ soa)s and deter$ents#
In this situation %ore then @,L of the )eo)*e are not a1are or ha(in$ (a$ue idea
a'out the )ro%otiona* sche%es runnin$ into the %ar4et#
It sho1s that )eo)*e are not %uch a1are of the sche%es 1hich continue in the
%ar4et it %ay 'e 'ecause of the )resent stoc4 of the )roduct at their )*ace#
?&. If 5esF please specif5E
Partic.lars Respon,ents
BQ/IOther B?
E4istin2 sc+eme on t+e Soap G !eter2ent
0
10
20
30
40
50
$0
10
Respondents 58 42
%es No
Role of sales promotions in FMCG sector
9ree
Discount !!
"o idea ?
"o ans1er B?
Interpretation/
This 0uestion su))orts the a'o(e 0uestion# It en*ists the ans1ers of those
custo%ers 1ho are a1are of the )resent sche%es offered in the %ar4et and a*so those
sche%es 1hich are %ore de%anded in the %ar4et#
The resu*t sho1s that /Q/ or !Q/ or other free sche%es are %ore de%anded and
%ore a1are sche%es in the %ar4et#
So %anufacturers %ay $o for the sa%e at the ti%e of *aunchin$ their )roduct#
?=. If 5o. 2et an attracti3e promotional offer in t+e pro,.ct ot+er t+en
of 5o.r c+oice Cill 5o. sCitc+ o3erE
Partic.lars Respon,ents
Role of sales promotions in FMCG sector
Yes DB
"o !D
Interpretation/
It sho1s the *e(e* of 'rand *oya*ty a%on$ the consu%ers# The resu*t c*ear*y sho1s
that out of /,,& DB )eo)*e are ready to s1itch o(er to another 'rand if they find 'etter
)ro%otiona* sche%es 1hich suits their 'ud$et %eans %ore 0yt Q *ess cost Q 0ua*ity#
Co%'ination of a** these sche%es 1i** run 'etter in the %ar4et#
?7%. Gi3e reason for t+e sameE
Partic.lars Respon,ents
CostQ0ty /?
Kua*ity /D
Satisfaction !
Brand *oya* C
More 'enefitI'ud$et !!
Season chan$e !
SCitc+in2 >e+a3ior
0
10
20
30
40
50
$0
10
80
Respondents 13 21
%es No
Role of sales promotions in FMCG sector
"o ans1er B?
Interpretation/
'o(e 0uestion it $i(es s)ecific reasons for s1itchin$ too other )roducts# It
sho1s that e8tra 0uantity 1ith *ess or sa%e )rice& %ore satisfaction& 0ua*ity and other
factors inf*uence consu%ers to s1itch o(er too other 'rands#
Reason
0
10
20
30
40
Respondents 1$ 11 2 5 22 2 3$
.ost52ty -ua!ity Satisfaction &rand !oya!
6ore
&enefit7bud
"eason
,han'e
No ans*er
Role of sales promotions in FMCG sector
?77. Gi3e s.22estions a>o.t f.t.ristic promotional sc+emesE
#his sho1 the consu%ers> future e8)ectations fro% the 1hether co%)any to co%e
1ith ne1 sche%es or continue 1ith )resent one# It sho1s consu%ers de%and 1hich the
%anufacturers ha(e to %eet#
Role of sales promotions in FMCG sector
Retailers
Role of sales promotions in FMCG sector
?7. Since +oC lon2 are 5o. in t+is >.sinessE
Partic.lars Respon,ents
/.C Years !@
C./, Years !D
More than /, years @A
Interpretation/
#his 0uestion $i(es idea a'out the 'enefit to the retai*ers 1ho are on the %ar4et
fro% *on$ )eriod of ti%e and the 'enefits they are $ettin$ %ore as co%)are to others# It
a*so sho1s their e8)erience in the fie*d and the ser(ices they are )ro(idin$ too their ne1
and re$u*ar custo%ers# It a*so $i(es idea a'out the 'enefits they are $ainin$ for
1ho*esa*ers and direct fro% the co%)any#
Role of sales promotions in FMCG sector
?8. Name t+e Soap G !eter2ent $Compan5( 5o. stocA for.
Companies Respon,ents
"ir%a A?
2U: /,,
PRG A,
Godre+ A@
Others ?-
Interpretation/
It $i(es idea a'out the ca)acity of the retai*ers to stoc4 the $oods and a*so the
(ariety of the )roducts they are stoc4in$# It 1i** a*so %a4e c*ear the de%and of the $oods
in their stores and the se**in$ of the )roduct in %ar4et# Most of the retai*er stoc4s a** ty)es
of soa) and deter$ent#
Soap G !eter2ent in stocA
0
20
40
$0
80
100
120
"eries1 9$ 100 90 94 $8
Nirma H8L /9:
dre; OthersRole of sales promotions in FMCG sector
?9. RanA t+e folloCin2 factors t+at c.stomers looA for in t+e p.rc+ase
of Soap G !eter2ent. $RanA from 7 to ran,s is similar.
H7/ Effect of tra,e promotions for all fo.r >ran,s is not similar.
Interpretation/
9ro% the a'o(e $ra)h sho1s the trade )ro%otions offered 'y the "IRM :td to
the retai*ers to attract the% to1ards stoc4in$ their $oods and a*so sto) the% s1itchin$
the% too other %a+or )*ayers in the %ar4et#
"IRM is %ain*y offerin$ credit faci*ity 1hich is offered 'y a** %a+or )*ayers it
%ay differ in the ti%e *i%it of the credit# It is a*so )ro(idin$ e8tra %ar$in& and units 1ith
occasiona* $ift 1ith their sche%es#
#ra,e Promotions >5 Nirma
0
10
20
30
40
50
$0
"eries1 4$ 34 55 24 8
=xtra 6ar'in =xtra 8nits ,redit fa,i!ity 'ifts promo) =xp)
Role of sales promotions in FMCG sector
H*"
Promotions Respon,ents
E8tra Mar$in @D
E8tra Units B@
Credit faci*ity C-
Gifts !C
Pro%o# E8)# !!
Interpretation/
The ad(anta$e of 2:: o(er "IRM is that it 'are )ro%otiona* e8)enses 1hich
"IRM is not doin$# It attracts %ore consu%ers throu$h such )ro%otions& such as
dis)*ay of the )roduct& 'anners etc#
So this %ay he*) it to attract %ore retai*ers# It %ay 'ecause of its *ess cost of
)roduction in other se$%ents in 1hich nir%a is not o)eratin$#
#ra,e Promotions >5 H*"
0
10
20
30
40
50
$0
10
"eries1 41 34 58 25 22
=xtra 6ar'in =xtra 8nits .redit fa,i!ity :ifts /romo) =xp)
Role of sales promotions in FMCG sector
P I G
Promotions Respon,ents
E8tra Mar$in @,
E8tra Units BB
Credit faci*ity CC
Gifts !,
Pro%o# E8)# /!
Interpretation/
PRG is a*so a 'i$ )*ayer in the 9MCG %ar4et# It is a*so )ro(idin$ a** the faci*ities
1hich others are )ro(idin$ to retai*ers#
#ra,e Promotions >5 PIG
0
10
20
30
40
50
$0
"eries1 40 33 55 20 12
=xtra 6ar'in =xtra 8nits .redit fa,i!ity :ifts /romo) =xp)
Role of sales promotions in FMCG sector
GO!RE)
Promotions Respon,ents
E8tra Mar$in @?
E8tra Units B!
Credit faci*ity CD
Gifts /A
Pro%o# E8)# /-
Interpretation/
Godre+ is a 'i$ )*ayer in the 9MCG %ar4et# It is a*so )ro(idin$ a** the faci*ities
1hich others are )ro(idin$ to retai*ers# But it is *ac4in$ in 'earin$ e8)enses 1hich 2U:
is )ro(idin$ to %a8i%u% nu%'er of retai*ers#
#ra,e Promotions >5 Go,re-
0
10
20
30
40
50
$0
"eries1 4$ 32 51 19 18
=xtra 6ar'in =xtra 8nits .redit fa,i!ity :ifts /romo) =xp)
Role of sales promotions in FMCG sector
O#HERS
Promotions Respon,ents
E8tra Mar$in B,
E8tra Units /-
Credit faci*ity B-
Gifts /C
Pro%o# E8)# D
Interpretation/
Others inc*ude *oca* )*ayers& as 1e** as 1e esta'*ished )*ayers *i4e& 1i)ro 'ut
their )roducts are not in de%and *i4e other )*ayers 'ut sti** they are )ro(idin$ a** the
faci*ities to retai*ers to attract to1ards stoc4in$ their )roducts#
#ra,e Promotions >5 Ot+ers
0
5
10
15
20
25
30
35
40
"eries1 30 18 38 15 1
=xtra 6ar'in =xtra 8nits .redit fa,i!ity :ifts /romo) =xp)
Role of sales promotions in FMCG sector
GODREJ
NIRM
A !U" P#G
Extra
Margin 46 46 47 40
Extra
Units 32 34 34 33
Credit
facility 57 55 58 55
Gifts 19 24 25 20
Pr!"
Ex#" 18 8 22 12
$%&% $$&% $'&( $(
Ano)a: Sng*e +a,tor
SUMMAR-
Grou)s Count Su% (era$e ;ariance
Co*u%n / C /D! B@#@ !-A#B
Co*u%n ! C /?D BB#@ BBA#-
Co*u%n B C /-? BD#! !!A#D
Co*u%n @ C /?, B! !-@#C
ANOA
Source of
;ariation
SS df MS 9 P.(a*ue 9 crit
Bet1een
Grou)s
D!#CC B !@#/-BBB ,#,-@?,A ,#A?D@CD B#!B--D!
ran,.
Retai*er stoc4s a** ty)es of soa) and deter$ent 'ecause of co%)etition#
Role of sales promotions in FMCG sector
?7% An5 S.22estions.
Retai*er su$$ested that )ac4a$in$ shou*d 'e further i%)ro(ed and used as
)ro%otiona* too*& to encoura$e sa*es durin$ certain )eriods the co%)any shou*d )ro(ide
)riceoff or e8tra 0uantity 'ecause that inf*uences direct*y to the consu%er#
Role of sales promotions in FMCG sector
Fin,in2s of t+e report/
Sa*es Pro%otion& a short.ter% induce%ent& offered to a consu%er or trade has
$ained %o%entu% as a )ro%otiona* too* 1or*d o(er# It re)resents near*y three fourth of
the %ar4etin$ 'ud$et at %ost consu%er )roduct co%)anies# Sa*es )ro%otions can
enhance consu%ers> se*f.)erce)tion of 'ein$ 5s%art7 or a 5$ood7 sho))er
• 9MCG are such a %ar4et 1here the *e(e* of *oya*ty re%ains *o1 and this is
'ecause of %any reasons#
• Kua*ity as the %ost inf*uencin$ factors in the )urchase decision 1hi*e )rice is a*so
an i%)ortant for )urchase decision#
• Sche%es a*1ays attract %ore and %ore consu%ers to1ards )articu*ar 'rand#
Si%u*taneous*y it $i(es idea a'out the factors 1hich consu%ers *oo4 %ost in the
)roduct 'efore they %a4e fina* decision
• Price off and e8tra 0uantity is the t1o %ain offersIsche%es 1hich consu%ers ha(e
ca%e across at the ti%e of )urchase
• T; as the 'est %edia to %ar4et the )roduct 1hich 1i** co(er %a+ority of the
(ie1er shi)# On the second )*ace it sho1s ne1s )a)ers as the %edia to )ro%ote
the )roduct in the %ar4et
• Peo)*e are not %uch a1are of the sche%es 1hich continue in the %ar4et it %ay 'e
'ecause of the )resent stoc4 of the )roduct at their )*ace#
• /Q/ or !Q/ or other free sche%es are %ore de%anded and %ore a1are sche%es in
the %ar4et#
• Peo)*e are ready to s1itch o(er to another 'rand if they find 'etter )ro%otiona*
sche%es 1hich suits their 'ud$et %eans %ore 0yt Q *ess cost Q 0ua*ity#
• E8tra 0uantity 1ith *ess or sa%e )rice& %ore satisfaction& 0ua*ity and other factors
inf*uence consu%ers to s1itch o(er too other 'rands#
• Retai*er stoc4s a** ty)es of soa) and deter$ent 'ecause of co%)etition#
• Peo)*e are %ore 0ua*ity and )rice oriented#
• Consu%er re%e%'er that na%e of the )roduct 'y the co%)any na%e and a*so
fro% the )ast )erfor%ance of that co%)any
• Consu%er re%e%'ers that na%e of the )roduct 'y the co%)any na%e and a*so
fro% the )ast )erfor%ance of that co%)any
Role of sales promotions in FMCG sector
• Retai*ers are not su$$est to )urchase )articu*ar 'rand 'ecause of )ersona* re*ation
or that custo%er are 'rand *oya*
• Mar$in and of 'etter re*ations 1ith consu%ers and too )ro(ide 0ua*ity )roduct to
consu%ers they su$$est consu%ers too 'ye )articu*ar 'rand#
• Custo%ers are *oo4in$ for any ty)e of the )ro%otions on the )roduct 'efore the%
$oin$ to )urchase#
• Price off& )roduct 'und*in$ and e8tra 0uantity are %ore de%anded 'y the
consu%ers o(er others sche%es#
• "IRM is %ain*y offerin$ credit faci*ity 1hich is offered 'y a** %a+or )*ayers it
%ay differ in the ti%e *i%it of the credit#
• 2U: attracts %ore consu%ers throu$h such )ro%otions& such as dis)*ay of the
)roduct& 'anners etc#
Role of sales promotions in FMCG sector
Recommen,ation/
The findin$s of the e%)irica* study indicate that un*ess the 'rand to 'e )ro%oted
is in the consideration set of the consu%er& sa*es )ro%otion 'y itse*f is un*i4e*y to ha(e
any %a+or i%)act# C*ear*y this sho1s that %ana$ers need to in(est into 'rand 'ui*din$
e8ercise so that hisIher 'rand a))ears in the consideration set of the tar$et consu%ers#
On*y after this shou*d he s)end ti%e& %oney and ener$y on sa*es )ro%otion acti(ities#
Sa*es )ro%otion shou*d not 'e used in iso*ation 'ut need to 'e inte$rated 1ith
other too*s and in *ine 1ith the o(era** )ositionin$ of the 'rand# *so the i%)ortance of
the ro*e of %ass %edia ca%e out c*ear*y in the study#
Co%)anies need to create sufficient a1areness a'out sa*es )ro%otion sche%es
throu$h %ass %edia in order to create a1areness# 9MCG )roducts are *o1 in(o*(e%ent
)roducts characteri3ed 'y s1itchin$ 'eha(ior# *so the )erson $oin$ to the sho) for the
)urchase of soa) is the fina* decision %a4er of the 'rand# 2ence it is essentia* that
co%)anies need to desi$n attracti(e& stri4in$& (isi'*e POPs for sche%e announce%ents#