2-4 Sales Promotion
Sales promotions mean achieving the effect of promoting product sales or introducing new brands within a short time through different channels. Sales promotions can attract brand switchers and generate good sales within a short span of time. They can encourage consumers to use higher-end or more upmarket products and stimulate consumers' desire to try out new products. They can also secure market share in a longer term and keep and reward existing loyal supporters.
Common Means of
Sales Promotion Targeting Customers
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Means
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Characteristics
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Gifts
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Consumers buying a particular product are encouraged to buy another product at the same time at a very low price or even free. These gifts may come with the purchase or sent by mail.
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Demonstration
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The demonstrator distributes samples to spectators and demonstrates how the product is used. This means of promotion is often used in the sale of cosmetics, clothing and small electrical appliances.
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Free samples
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The manufacturer provides the samples free of charge to cultivate the confidence of customers in the brand and achieve the purpose of selling the product through trial-use. Such samples may be delivered to people homes, sent by mail, distributed at shops or affixed to other products.
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Discounts
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Many companies offer big discounts during particular periods in a bid to make volume sales at small profits. Popular periods are New Year Eve, end of season or special festivals. Some companies would offer members special discounts when launching new products.
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Discount coupons
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Discount coupons may take the form of vouchers for payment or vouchers for price discount at the next purchase. They may be sent by mail, affixed to other products or printed on advertising handouts. Their effects are similar to those of free samples but are much lower in cost.
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Cash rebate
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The customer is normally required to send product proof (such as trademark and serial number) and the invoice to the distributor or manufacturer, and the company would then send the cash rebate to the customer. Its function is similar to that of discount coupons in offering price discounts on purchases but it cannot be used directly in retail outlets.
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Buy one get one free
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Products are sold in packs at special price. The discount label is usually stuck on the packaging direct.
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Loyalty reward
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Companies reward bulk purchase and long-term customers by offering them cash rewards, discounts, gifts and other kinds of incentives to encourage them to give continuous support.
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Enterprises give a lot of thought to the gifts they offer to customers. For example, Nescafé often offers small gifts attached to its products. These gifts are usually items related to coffee, such as coffee mugs and spoons. As for demonstration, it is a method often used in the sale of kitchen utensils. Special personnel are employed to demonstrate the use of sharp knives by cutting up all kinds of food and cook different food using a variety of kitchen utensils. The food is then served to the spectators to stimulate their desire to buy.
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Cross Marketing
Red Magic was incorporated in Hong Kong seven years ago. At first it only designed web pages for other companies. In 2002 it began designing its own trendy toys, including the popular Ciboys, which have sold 600,000 pieces so far. Red Magic retails its products in Hong Kong and has distributors in Shanghai, Singapore, Taiwan, Japan, Europe and the US. One of its marketing methods is to work with other enterprises in promoting products for both sides. For example, Red Magic cooperated with a brewery in recent years and launched Ciboys bearing the beer company's logo as free gift or through redemption.
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Marketing Combinations of Garment Enterprises
On & On is a famous Korean clothing brand. The company makes use of different means to promote its products. It started running advertisements in magazines and sponsoring TV programmes in 2004. It takes part in fashion fairs, such as the International Fashion Week, and makes use of PR media to publicise its brand. It also cooperates with other companies in promotion, such as teaming up with cosmetics companies to give free gifts of cosmetics to customers, and cooperating with banks in offering discounts to clients paying with credit cards. On & On also has its own customer incentive programme. It offers VIP cards to loyal customers and organises parties and fashion contests for its VIP customers. Winners may get free trips and skiing holidays to South Korea.
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| Source: Synovate Ltd - company interviews |
The offer of gifts and free samples is the most effective method of sales promotion, but it is also the most expensive way to promote a new brand. Its influence has declined somewhat because many new brands have been using this method in recent years. With their limited funds, SMEs should choose their sales promotion tool according to their market positioning and budget. They can also choose a combination of methods to balance and reduce cost while achieving the purpose of sales promotion. In short, although sales promotion can boost sales within a short term, it can seldom produce lasting effects and results. As far as brand image is concerned, excessive use of sales promotion may lower brand loyalty, as consumers may become price sensitive and think less of the quality of the brand. This may also prompt the enterprise to put its weight on short-term activities and effects.
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