Sales Promotion Class 12 Notes | Merits and Limitations of Sales Promotion

Table of Content

Sales Promotion

Sales promotion is the method of promotion in which incentives are given to the potential buyers so that they make an immediate purchase and become the actual buyers. This method is useful for boosting up the sales of the products. These are the nonroutine incentives that are offered to attract the customers and also the dealers.

There are several sales promotion techniques that are commonly used for a long time now. These include free samples, contests, discounts, additional products, bonuses, dealer discounts, dealer competitions, special offers, etc.

Merits of sales promotion

There are various benefits of sales promotion for customers, organizations, and middlemen. They are as under:

Attention value

People are likely to get attracted to the customers because of the incentives offered. We have seen a large number of people outside the store where the sale gets started; this is because of the attraction of people towards the offer.

Useful in new product launch

People are usually afraid to try out new things and new products and to remove this constraint it becomes important to give them some incentive to try out something new. During the launch of new products or the introduction of new services, sales promotion activities give huge benefits.

Synergy in total promotional efforts

It is not necessary to only go for one promotional tool. Many organizations use a mix of various promotional techniques and sales promotion will help in boosting the effectiveness of other techniques.

Limitations of sales promotion

The limitations of sales promotion technique are as under:

1. Spoils product image: sales promotion technique means giving incentives to people so that they get attracted towards the product. This can spoil the image of the company as the customers may get the thought that products are either not of good quality or are not rightly priced and that is the reason that company is offering it for sale or giving additional products.
2. Reflects crisis: frequent use of sales promotion techniques is not good for the company as it gives an impression that the company is not in a position to manage the sale of the product or the product is not of good quality.

Some commonly used techniques or activities under sales promotion are:

1. Rebate or coupons: coupon means a voucher or a code that will allow the customer to receive the discount at the time of purchase. While the rebate is also the same but it is given after the purchase in the form of return or cashback etc. Coupons can be provided to the customers through newspapers, e-mails, etc.
2. Discounts: this is the most common method in which the products are offered at lower prices than the market price. For example, the washing machine may be listed at Rs 50,000 but after the discount of 10%, it may be sold at Rs. 45,000.
3. Refunds: refund means that a part of the prize money is returned to the customers after they have paid for the product. For example: when the customer has already purchased a washing machine and then the refund offer is given of returning 20% of the amount paid, then the money will be returned either in the form of cash or in the form of some credit points.
4. Product combinations: this is a unique method to boost sales. A gifted product is offered along with the main product. For example, the toothbrush is offered along with the toothpaste or pen is offered along with the notebook, etc.
5. Quantity gift: an extra quantity of product or service is offered to the customers so that they can make more use of the product or service. For example, extra day stay at the hotel for free, 10% extra jam in the bottle of jam, etc.
6. Instant draws and assigned gifts: this means that instantly a product or service is offered to the customers through a small activity such as scratching a card etc.
7. Lucky draws: lucky draw can be called a competition in which a person whose name gets selected will get the product or service for free or a small service charge. This creates excitement in the customers. For example, purchase a certain product and win a mobile phone or a car, etc.
8. Useable benefit: this is the method of increasing sales and also providing some useful benefits such as on the purchase of jewelry of Rs. 2,00,000 the customer will get a holiday package for free.
9. Full finance at 0% interest: there are certain financing companies that provide the finance at zero interest. This gives an easy installment option to the customers and reduces the high charge burden of customers in case of products that are expensive such as washing machines, televisions, etc.
10. Contests: contests have based the quiz, luck, etc. in this case the customer can take part in the competition and answer the question or do certain activities required by the competition rules and thus get the benefits. For example: complete the Sudoku in newspaper and send it to the newspaper office and they provide certain products at winning price.
11. Samples: Free samples can be provided which is useful at the time of introducing the new product to make people aware of the product and help them understand the use of the product. For example: providing sample products of soap, toothpaste, turmeric powder, detergent powder, etc.

BST Chapter 11 – Marketing

1. Marketing Management
2. Marketing Management Philosophies
3. Functions of marketing
4. Marketing mix
5. Products – Classification of Products
6. Branding
7. Packaging – Levels , Functions & Importance
8. Labelling
9. Pricing – Factors affecting Price of a Product or Service
10. Components of Physical Distribution
11. Channels of Distribution
12. Advertising – Benefits, Limitations, Objections
13. Personal selling
14. Sales promotion
15. Publicity – Characteristics and Objectives