Question

Six Mark Question
Explain the concept of sales promotion and any four techniques of it with an example of each.

Answer 1

Sales promotion refers to short-term incentives, which are designed to encourage the buyers to make immediate purchase of a product or service. These include all promotional efforts other than advertising, personal selling and publicity, used by a company to boost its sales. Sales promotion activities include offering cash discounts, sales contests, free gift offers, and free sample distribution. Sales promotion is usually undertaken to supplement other promotional efforts such as advertising and personal selling.

Four techniques of sales promotion are:

1. Rebate: Offering products at special prices, to clear off excess inventory. Example, a car manufacturer’s offer to sell a particular brand of car at a discount of Rs 10,000, for a limited period.

2. Discount: Offering products at less than list price. Example, a shoe company’s offer of ‘Discount Up to 50%’ or a shirt marketer’s offer of ‘50+40% Discount’.

3. Refunds: Refunding a part of price paid by customer on some proof of purchase, say on return of empty foils or wrapper. This is commonly used by food product companies, to boost their sales.

4. Product Combinations: Offering another product as gift along with the purchase of a product, say offer of a pack of ½ kg of rice with the purchase of a bag of Aata (wheat flour), or ‘Get 128 KB Memory Card Free with a Digicam’ or Buy a TV of 25+ and Get a Vacuum Cleaner Free’ or ‘100 Gm Bottle of Sauce Free With 1 kg Detergent.’