“ROLES OF SALES PROMOTION ON FMCG”

A
PROJECT REPORT

Under the guidance of

Mr. VIJAY VERMA

Submitted by

VIJAY KUMAR CHHABLANI

In the partial fulfillment of the requirement for the award of the degree

Of
MASTER OF BUSINESS ADMINISTRATION
Specialization in

MARKETING

TO

DEC- 2010
Role of sales promotions in FMCG sector

ACKNOWLEDGEMENT

I would like to express my deep feeling to Mr. Vijay Verma, Head

of the Department of Master of Business Administration SMU ,
………………….Durg for his invaluable guidance, constant support,
cooperation, perspective supervision and deep inspiration during the
course of this work. His suggestions in visualizing the project and
sustained interest to attain the objective envisaged in the project are
gratefully acknowledged .His invaluable guidance had been
indispensable to bring about successful completion of the project
undertaken.

I profoundly express thanks to Ms. Neha , Faculty, MBA SMU,

…………..Durg, for his esteemed guidance and valuable suggestions
through out the project. I would like to thank all my other friends in
company who inspired me to show the great contribution in the
project.

In the last, but not the least, I thank my Professors, Lecturers, and all
friends and my family members who always encouraged me to face
the difficult situation of the life. It is very difficult to mention all of
them but their contribution in my learning life has great value.

Vijay Kumar Chhablani

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Role of sales promotions in FMCG sector
Registration No.-520930788

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Role of sales promotions in FMCG sector

BONAFIDE CERTIFICATE

This is to Certified that the project report entitled “

ROLES OF SALES PROMOTION ON FMCG ” is the

bonafide work of Vivek Kumar Chhablani

( Registration No. – 520930788 ) who carried out the project

work under my supervision.

SIGNATURE SIGNATURE

HEAD OF THE DEPARTMENT FACULTY IN

CHARGE

Mr. Vijay Verma Ms. Neha

HOD MBA SMU FACULTY INCHARG MBA SMU

CENTRAL COLLEGE OF IT CENTRAL COLLEGE OF
IT
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Role of sales promotions in FMCG sector
FAFADIH, DURG FAFADIH, DURG
CENTRE CODE NO.- 01522 CENTRE CODE NO.-
01522

Executive Summary

As a part of our study curriculum it is necessary to conduct a

grand project. It provides us an opportunity to understand the
particular topic in depth and which leads to through to that topic. My
topic for the grand project is titled as “Study of consumer oriented
sales promotion in FMCG sector” in which emphasis given to the
effect of sales promotion on buying habits of consumers.
To start with we will give brief information regarding FMCG
sector then moving to the main topic we will explain what is topic is
all about. Promotion is one of the pillars of marketing mix and same
way sales promotion is also one of the elements of promotion.

With respect to consumer oriented sales promotion there are

certain theories narrated as operant conditioning and projective
theory. Based on secondary source certain theoretical aspects are also
included as a part of study.
Then after concentration is given to the primary research. It
includes the analysis and results of survey which was focuses on

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Role of sales promotions in FMCG sector
consumer’s behavior towards sales promotion campaign. The survey
was conducted with the help of structured questionnaire.

At last conclusion of report, findings and suggestions was

given based on study of secondary source as well as primary research.

TABLE OF CONTENTS

Sr.No. Contents Page No.

1. Research Methodology of the study 5

2. Introduction 7

3. Introduction to the topic 10

4. Sales promotion strategies 30

5. SWOT Analysis 38

6. Data Analysis of the survey 40

7. Findings of the report 73

8. Recommendations 75

9. Limitations 78

10. Emerging Trends 79

11. Conclusion 80

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Role of sales promotions in FMCG sector

12. Bibliography 82

13. Annexure: Questionnaire 80

RESEARCH METHODOLOGY

Research Objectives:

1. To study consumer preferences with respect to sales promotion

in FMCG sector.

2. To examine tradeoffs, relative importance of different attributes

while responding to a sales promotion offer.

3. To study the effect of sales promotions in FMCG sector esp. in

soaps and detergent industry.
4. To study consumer behavior in purchase of soaps and detergent

Product categories under study

DETERGENTS: Washing Powder for Clothes

TOILETERIES Soaps
Research Design

Research design selected for this project is Descriptive.

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 Role of sales promotions in FMCG sector

Data collection Method:

(a) Primary Data Collection Method:
 Survey method was used for primary data collection.
 We used questionnaire as an instrument for survey
method.
 Structured questionnaire.
 Type of questionnaire: Open ended and closed ended.

(b)Secondary Data Collection method:

 Reference books.
 Internet.

Sampling Detail
1. Target population: The population for this research study

consists of the residence of Raipur, Durg.

2. Sampling unit: In this study the sampling unit is individual

consumer.

3. Sample size: 100 consumers 100 retailers.

4. Sampling method: The sample is selected by using

convenience-sampling method.

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Role of sales promotions in FMCG sector

INTRODUCTION

FMCG Concept and Definition:

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.
Conceptually, however, the term refers to relatively fast moving items
that are used directly by the consumer. Thus, a significant gap exists
between the general use and the conceptual meaning of the term
FMCG.

Further, difficulties crop up when attempts to devise a

definition for FMCG. The problem arises because the concept has a
retail orientation and distinguishes between consumer products on the
basis of how quickly they move at the retailer’s shelves. The moot
question therefore, is what industry turnaround threshold should be
for the item to qualify as an FMCG. Should the turnaround happen
daily, weekly, or monthly?

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Role of sales promotions in FMCG sector

One of the factors on which the turnaround depends is the

purchase cycle. However, the purchase cycle for the same product
tend to vary across population segments. Many low-income
households are forced to buy certain products more frequently
because of lack of liquidity and storage space while relatively high-
income households buy the same products more infrequently.
Similarly, the purchase cycle also tends to vary because of cultural
factors. Most Indians, typically, prefer fresh food articles and
therefore to buy relatively small quantities more frequently. This is in
sharp contrast with what happens in most western countries, where
the practice of buying and socking foods for relatively longer period
is more prevalent. Thus, should the inventory turnaround threshold be
universal, or should it allow for income, cultural and behavioral
nuances?

Characteristics of FMCG Products:

• Individual items are of small value. But all FMCG products put
together account for a significant part of the consumer's budget.

• The consumer keeps limited inventory of these products and

prefers to purchase them frequently, as and when required. Many of
these products are perishable.
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Role of sales promotions in FMCG sector
• The consumer spends little time on the purchase decision.
Rarely does he/she look for technical specifications (in contrast to
industrial goods). Brand loyalties or recommendations of reliable
retailer/dealer drive purchase decisions.

• Trial of a new product i.e. brand switching is often induced by

heavy advertisement, recommendation of the retailer or
neighbors/friends.

• These products cater to necessities, comforts as well as

luxuries. They meet the demands of the entire cross section of
population. Price and income elasticity of demand varies across
products and consumers.

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Role of sales promotions in FMCG sector
INTRODUCTION TO THE TOPIC
Introduction:

The importance of consumer sales promotion in the marketing

mix of the fast moving consumer goods (FMCG) category throughout
the world has increased. Companies spend considerable time in
planning such activities. However, in order to enhance the
effectiveness of these activities, manufacturers should understand
consumer and retailer interpretations of their promotional activities.
The study here pertains to consumer’s perceptions regarding sales
promotion. Some past researches have suggested that promotion itself
has an effect on the perceived value of the brand. This is because
promotions provide utilitarian benefits such as monetary savings,
added value, increased quality and convenience as well as hedonic
benefits such as entertainment, exploration and self-expression.

Broadly speaking most of the companies using Marketing Mix which

includes…

Price
Place (Channel of Distribution)
Product
Promotion

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Role of sales promotions in FMCG sector
These are the four basic pillar of marketing mix. Most of the
marketing strategies are built on the basis of these criteria.

Promotion is one of the important elements of marketing mix.

There are so many elements of promotion such as …

Advertising
Direct Marketing
Public Relations
Sales Promotion

Traditionally, sales Promotions have been used by marketer to

increase sales in the short term. However, in the last few decades this
communication tool has evolved and now is considered from a
strategic point of view. For this reason, it is necessary to realize new
studies in this area and study how consumers evaluate sales
promotions.

Sales promotions have grown in both importance and frequency

over the past few decades. Although an accurate estimate for total
sales promotions expenditures does not exist, we can be sure that the
trend is up.

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Role of sales promotions in FMCG sector
Sales promotion serves three essential roles: It informs,
persuades and reminds prospective customers about a company and
its products. Even the most useful product or brand will be a failure if
no one knows that it is available. As we know, channels of
distribution take more time in creating awareness because a product
has to pass through many hands between a producer and consumers.

Therefore, a producer has to inform channel members as well

as ultimate consumers about the attributes and availability of his
products. The second purpose of promotion is persuasion. The cut
throat competition among different products puts tremendous pressure
on their manufacturers and they are compelled to undertake sales
promotion activities. The third purpose of promotion is reminding
consumers about products availability and its potential to satisfy their
needs.

From these elements Sales Promotion is the element which is in

the focus of this project. Further Sales Promotion is quite broad term
it includes …

Consumer Oriented Sales Promotion

Trade Oriented Sales Promotion

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Role of sales promotions in FMCG sector

Consumer Oriented Sales Promotion

Consumer Oriented Sales Promotion is the main topic of this

project. Here emphasize is given to motivate consumer to increase
sales. Consumer Oriented Sales Promotion includes Sampling,
Couponing, Premiums, Contest, Refunds, Rebates, Bonus Pack’s,
Price-off, Event marketing etc.

Definition:

For the purpose of this study, following definitions of sales promotion

were kept in mind.
Kotler defines sales promotion as: “Sales promotion consists of a
diverse collection of incentive tools, mostly short-term designed to
stimulate quicker and/or greater purchase of particular
products/services by consumers or the trade.”

Roger Strang has given a more simplistic definition i.e. “sales

promotions are short-term incentives to encourage purchase or sales
of a product or service.”

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Role of sales promotions in FMCG sector
Hence, any forms of incentives (price cut or value added nature)
offered for short period either to trade or consumers are considered as
sales promotion activities.

Marketer’s uses consumer oriented sales promotion tools for the

following reasons:

• To increase short term sales

• To induce trial
• To reduce inventory
• To establish a brand name
• To make cross selling
• To cope up with competition
• To avoid advertising clutter

Tools of Consumer Oriented Sales Promotion:

There are so many tools or technique available to the marketers for

achieving objective of sales promotion. These tools should be used
considering all other factors affecting such as cost, time, competitors,
availability of goods etc. These tools are as under…
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Role of sales promotions in FMCG sector

1. Coupons
2. Price-Off
3. Freebies
4. Scratch Cards
5. Lucky Draws
6. Bundling Offer
7. Extra Quantity

Let’s have look at each tool…

1. Coupons:

Coupon is the oldest and most widely used way of sales

promotion. Coupons have been used since 1895. It is mostly used by
packaged goods. It is worthwhile to use coupon as a promotion tool
because data shows that market for packaged goods increased from 16
billion in 1968 to 310 billion in 1994. To boost up the sales not only
manufacturer but retailers personally can also used. A coupon leads to
price reductions so as to encourage price sensitive customers. Non
users can try a product which may leads to regular sales.

2. Price-off:

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Role of sales promotions in FMCG sector
A price-off is simply a reduction in the price of the product to
increase sales and is very often used when introduction a new
product. A reduction in price always increases sales but the use of this
technique should be carefully considered in the current market
situation.

Price-off is the most preferred sales promotion technique

because consumers response very positively to this scheme. Not only
that but it also cause large increase in sales volume. Price-off
reductions are typically offered tight on the package through specially
marked price packs. E.g. Krack Jack offers 30% Price-off.

3. Freebies

Freebies are a popular form of modern marketing and are some

of the best things about the internet. The definition of freebies is
products or services given away for free at no cost to the consumer.
Well that’s the definition we came up with. I am a bargain freebie
shopper, pretty much going for any free product and informing
everyone about it.

At different times, big and small companies often give away

prizes and money which is too good to be true. Often it’s in the
pursuit of more customers or a larger fan base and it often works.

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Role of sales promotions in FMCG sector

4. Scratch Cards

A scratch card (also called a scratch off, scratch ticket,

scratcher, scratchie, scratch-it, scratch game, scratch-and-win or
instant game) is a small token, usually made of cardboard, where one
or more areas contain concealed information: they are covered by a
substance that cannot be seen through, but can be scratched off.

5. Bundling Offers

Product bundling is a marketing strategy that involves offering

several products for sale as one combined product. This strategy is
very common in the software business (for example: bundle a word
processor, a spreadsheet, and a database into a single office suite), in
the cable television industry (for example, basic cable in the United
States generally offers many channels at one price), and in the fast
food industry in which multiple items are combined into a complete
meal. A bundle of products is sometimes referred to as a package deal
or a compilation or an anthology.

Factors Influencing Consumer Oriented sales promotion:

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Role of sales promotions in FMCG sector
Mainly four factors should be taken into account while
determining the sales promotion program.

> Target market

> Nature of product
> Stage of product life cycle
> Budget available for promotion

1. Target Market:

While doing sales promotion, marketer must know who their

target market is; otherwise there is no use of all effort because it leads
to no where. A target market can be in any of the stages of buying
hierarchy i.e. awareness, knowledge, liking, preferences, conviction
and purchase. Each stage defines a possible goal of promotion.

2. Nature of the product:

There are various product attributes which influence sales

promotional strategy. When the unit price is low the manufacturer as
well as the customer has low risk but he can get the benefit of mass
marketing. Therefore, mass marketing requires mass sales promotion

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Role of sales promotions in FMCG sector
schemes. Sales promotion scheme differ for products like its
durability, perishable goods etc.

3. Stage of product Life Cycle:

Sales promotion strategies are influenced by the life cycle of a

product. When a new product introduced, prospective buyers must be
informed about its existence and its benefits and middlemen must be
convinced to stock it. Later, if a product becomes successful,
competition intensifies and more emphasis is placed on sales
promotion to increase its sales.

4. Budget Available for Promotion:

The funds available for promotion are the ultimate determinant

of the promotional programme. A business with ample funds can
make more effective use of sales promotion programme than a firm
with limited financial resources. The budget for sales promotion can
be prepared by the following methods…

Percentage of Sales
Fixed funds available for sales promotion
Following the competition, and
Budgeting by objective.

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Role of sales promotions in FMCG sector

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Role of sales promotions in FMCG sector
Sales Promotion from the Consumers point of view

Willingness to buy on sales promotion offer

Sixty per cent of the sample did not show willingness to buy a
brand due to promotion while 30% showed willingness and 10% were
not sure. This indicates that when 30% showed willingness and 10%
consumers who were not sure, these groups might be lured through
innovative and lucrative sales promotion offer.

Ability to induce trial

Forty per cent of the respondents had said that sales promotion
had the ability to induce trial which reinforces the above inference.

Long-term impact

In order to understand ability of the promotions to increase

long-term sales, respondents were asked about continuity of purchase
of a brand after the withdrawal of promotion. Eighty per cent of the
respondents indicated that they would not continue. But 20% said
they would. Thus, it could be inferred that promotions in this category
(low involvement products) might encourage trial and brand
switching but not long term loyalty.

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Role of sales promotions in FMCG sector

Preference of Schemes:

Price off was the most preferred type of scheme. Maximum

customers’ ranked price-offs as number one or two.

Perceived Quality:

Majority of respondents had a perception that the quality of the

promoted brands remained the same during promotion, while some of
them felt that it was inferior than before. It can be inferred that
promotions were not leading to negative brand quality perceptions. It
is found that some customer strongly preferred to buy their regular
brand and said that sales promotion would not weaken their loyalty
towards the brand.

Perceptions regarding underlying company motivations

On tapping perceptions’ regarding underlying company

motivations for sales promotion, “to increase sales” was ranked
highest followed by “to attract switchers” and “to sell excess stocks”.
While providing value to customers” and

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Role of sales promotions in FMCG sector
“To reinforce company image” were ranked lowest. This indicates
that consumers believed that companies were undertaking such
activities only for their own benefit and not for the benefit of
consumers.

Findings from retailer and consumer perception studies, it is

evident that there was a matching of perceptions regarding nature of
scheme (price offs as most preferred type of scheme mentioned by
consumers and retailers’ perceptions about consumer preferences).
Since retailers observe consumers in store behavior were frequently
and directly, their perceptions regarding providing consumer behavior
are likely to be accurate. Such inputs from the retailers would be
useful to companies.

The retailers had the perception that those schemes which were
announced through mass media had better response. This was
reinforced by the consumer survey which showed that recall in case
of heavily promoted schemes on TV was found to be very high.
Retailers’ prediction of companies’ motivation for offering sales
promotion were matching with the consumer perception regarding the
same. Thus both viewed that companies were using sales promotion
activities mainly to increase short term sales or encourage switching
or selling excess stock and not really to give value benefit or
enhance/reinforce brand/company image.

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Role of sales promotions in FMCG sector
Trade Oriented Sales Promotion

Trade Oriented Sales Promotion aimed to motivate channel

member of the company and to encourage them to push company’s
product. Trade Oriented Sales Promotion includes dealer contest and
incentives, trade allowances. Point-of-purchase displays, sales
training programs, trade shows, cooperative advertising, and other
programs designed to motivate distributors and retailers to carry a
product and make an extra effort to push it to their customers

Sales promotion from the retailer’s point of view:

Perceptions on Scheme Preference

It was found that retailer perceived price offs as a better form of

sales promotion activity. Price offs in their opinion had relatively a
greater impact compared to any other form of sales promotion activity
like Bonus packs, Premium, Contests etc. Retailers preferred price
offs the most, then bonus pack, premium, contests, in order of
importance.

Perceptions about Buying Roles

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Role of sales promotions in FMCG sector
Retailers viewed that the person who came to the shop (who
may be a maid, son, daughter, daughter-in-law and child) was the
decider of a toilet soap brand and not the Income provider (e.g. head
of the family). It could be inferred that visibility of information about
the sales promotion activity at the point of purchase could result into
the purchase of a promoted brand.

Perceptions about their role in decision-making

Retailer had relatively very low influence in affecting choice. It

could be inferred that visibility and awareness about the scheme were
the critical success factors so that pull could be created.

Perceptions about Response to Sales Promotion Offers

They believed that younger age-groups were more

experimental in nature, amenable to trying new brands, and
sought/looked for or asked whether there were any) sales promotion
schemes running on any toilet soap at the time of purchase.

Perceptions about Communications of Sales Promotion Schemes

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Role of sales promotions in FMCG sector
Retailers perceived that role of word of mouth and television
advertising played an important part in providing information inputs
to consumers regarding sales promotion activities.

Variations in Information Flow

Smaller (non-supermarket, small format store) retailers

received relatively less support compared to supermarkets in terms of
servicing, margins, information about sales promotion activities from
the dealers. Many a times small retailers were only informed verbally
about sales promotion schemes by the dealer salesmen during the
scheduled weekly visits.

Dealer-Retailer Dynamics

At the time of sales promotion activities, dealers had tendency

to push unwanted stocks onto the smaller retailers. In fact these
retailers preferred to stock variety of brands and wanted payment for
shelf and window display to increase traffic into their store. However,
supermarkets and big retailers were pampered and given special
services and given better margins and better allowances.

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Role of sales promotions in FMCG sector
Margins

It was found that in sales promotion schemes margins varied

from 6 to15% depending of the size of the retail outlet, bargaining
power of a retailer, quantity ordered by him etc. Mostly margins were
linked to size of the volumes that were ordered.

Perceptions about terms and conditions

Retailers were not found to be happy with sales promotion

schemes where their margins were cut on the pretext of just fast
movement of inventory of the brand being promoted. Also if
additional incentive was offered it was subject to minimum
performance requirement.

Nature of POP

Retailers indicated that most of the POP (Point of Purchase)

materials were meant for brand advertisement and not for giving
information regarding the schemes. Thus it could be inferred that
company’s follow up was not adequate.

Servicing during duration of Scheme

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Role of sales promotions in FMCG sector
In stock-out situation during the running of the sales promotion
schemes, smaller retailers had to wait for replenishment of stocks till
the next scheduled weekly visit by the dealer salesman but big
retailers were serviced on telephonic request for replenishment of
stocks. This clearly indicated the disparity in treatment.

Problem of left-over

A leftover stock at the end of any scheme was required to be

sold by the retailers before they ordered fresh stocks. In case of bonus
packs scheme, leftover stock was often dismantled (cut open buy one
get one free) and sold them individually as a regular soap. This
approach of the company leads to misappropriation which in turn
could result in adverse brand image.

Gifts for Retailer motivation

Companies at times were rewarding retailers by giving free

gifts like thermos flasks or clocks if they sold more than certain
quantity in a given period. Companies were making a half-hearted
effort to motivate retailers.

Perceptions about mass media announcements

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Role of sales promotions in FMCG sector
Retailers viewed that whenever sales promotion scheme was
announced on TV, it created pull and they were more than willing to
stock such brands. For example Medimix and Dettol contest was not
advertised on TV, hence there was very little awareness leading to
unsold stock till 6 months. While Lux Gold Star which was heavily
promoted on T.V. is recalled even today.

Post Promotion Behavior

Retailers observed that in most cases sales promotion scheme

on a brand might encourage a buyer to switch a brand temporarily but
he would revert back to original brand after promotion.

Handling Problems

Many a time’s retailers had to handle various sales promotion offers

simultaneously in a category and also across categories and there was
no formal communication planning either from the dealer or the
company. Remembering each offer and handling was a problem
especially for a small retailer which was often an as one-man show.

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Role of sales promotions in FMCG sector
Why do Sales promotion schemes affect sales?

There are three mechanisms behind these facts. It is Purchase

quantity, Brand switching and Category expansion.

First, consumer can increase the quantity they buy just because the
product is on sale.

Second, consumers are inducing to purchase another brand different

from the one they would have purchased when there is no
promotional incentive.

Finally, consumer’s total consumption of the product category is

increased by the promotion. However, in the long term this positive
effect may be diluted because a promotional campaign has no
permanent effect in the sales of the firm

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Role of sales promotions in FMCG sector

SALES PROMOTION STRATEGY

Sales are the lifeblood of a business, without sales there would

be no business in the first place; therefore it is very important that if a
business wants to succeed, it should have a sales promotion strategy
in mind. The primary objective of a sales promotion is to improve a
company’s sales by predicting and modifying your target customer’s
purchasing behavior and patterns.

Sales promotion is very important as it not only helps to boost

sales but it also helps a business to draw new customers while at the
same time retaining older ones. There are a variety of sales
promotional strategies that a business can use to increase their sales,
however it is important that we first understand what a sales
promotion strategy actually is and why it is so important.

A sales promotion strategy is an activity that is designed to help

boost the sales of a product or service. This can be done through an
advertising campaign, public relation activities, a free sampling
campaign, a free gift campaign, a trading stamps campaign, through
demonstrations and exhibitions, through prize giving competitions,
through temporary price cuts, and through door-to-door sales,
telemarketing, personal sales letters, and emails.

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Role of sales promotions in FMCG sector
The importance of a sales promotion strategy cannot be
underestimated. This is because a sales promotion strategy is
important to a business boosting its sales.

When developing a sales promotion strategy for your business,

it is important that you keep the following points in mind.

• Consumer attitudes and buying patterns

• Your brand strategy
• Your competitive strategy
• Your advertising strategy
• Other external factors that can influence products availability
and pricing.

There are three types of sales promotion strategies:

• A push strategy
• A pull strategy or
• A combination of the two

A Push Strategy:

A ‘push’ sales promotion strategy involves ‘pushing’

distributors and retailers to sell your products and services to the
consumer by offering various kinds of promotions and personal
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Role of sales promotions in FMCG sector
selling efforts. What happens here is that a company promotes their
product/services to a reseller who in turn promotes it to another
reseller or to the consumer. The basic objective of this strategy is to
persuade retailers, wholesalers and distributors to carry your brand,
give it shelf space, promote it by advertising, and ultimately ‘push’ it
forward to the consumer. Typical push sales promotion strategies
include; buy-back guarantees, free trials, contests, discounts, and
specialty advertising items.

A Pull Strategy:

A ‘pull’ sales promotion strategy focuses more on the

consumer instead of the reseller or distributor. This strategy involves
getting the consumer to ‘pull’ or purchase the product/services
directly from the company itself. This strategy targets its marketing
efforts directly on the consumers with the hope that it will stimulate
interest and demand for the product. This pull strategy is often used
when distributors are reluctant to carry or distribute a product.
Typical pull sales promotion strategies include; samples, coupons,
cash refunds or rebates, loyalty programs and rewards, contests,
sweepstakes, games, and point-of-purchase displays.

A Combination of Two Strategies:

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Role of sales promotions in FMCG sector
A ‘combination’ sales promotion strategy is just that; it is a
combination of a push and a pull strategy. It focuses both on the
distributor as well as the consumers, targeting both parties directly. It
offers consumer incentives side by side with dealer discounts.

The Short term Impact of Promotions:

Let’s have look at the impact of promotions on purchase behavior

during the promotional period i.e. the week or the month when the
promotion was being run. The majority of the empirical studies have
focused on the impact of promotions in the short term. The key
findings across the studies are discussed below.

Temporary price reductions (price off) substantially increase

sales:

There is ample evidence to show that promotions lead to dramatic

increases in sales of promoted brand in the short term. Studies have
consistently reported high sales effects and high price elasticity of
brands which are on promotion. The economic rationale for the
promotional response is clear – temporary price cuts increase the
value of the product to the consumer and it leads to immediate action.
Sales boost can be quantified on the basis of brand switching, primary
demand expansion and consumer stockpiling during a promotion.

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Role of sales promotions in FMCG sector
Sales Promotion leads to brand substitution with the
product category:

The sales ‘bump’ during the promotional period into sales due to
brand switching, purchase time acceleration and stockpiling. Studies
on brand switching have shown that brand switching effects within a
category are asymmetric such that promotions on higher quality
brands impacts weaker brands disproportionately. During a
promotion, higher quality brands induce a large number of consumers
to switch to them as compared to lower quality brands. One
explanation advanced for this finding by researchers is that large
share brands have higher brand equity and attract switchers more than
low share brands.

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Role of sales promotions in FMCG sector
Sales Promotion leads to purchase acceleration/stockpiling
effects:
In response to a promotion, consumers may buy more quantity
of the product category or buy at an earlier time than usual (purchase
acceleration effect). If consumers buy extra quantity during a
promotion or earlier than normal, then they are not in the market to
buy products once the promotion is over. Thus purchase acceleration
is demonstrated through
A lengthening of inter purchase times after a promotion. Purchase
acceleration was more likely to be exhibited in increased purchase
quantity than in shortened inter purchase times. Results showed that
consumers mostly made up for the large quantity purchased by
waiting longer until purchasing again. Results indicated that heavy
users tended to accelerate purchases more than light users. There was
negligible difference in the acceleration propensities of high versus
low income groups.
Sales Promotion leads to primary demand expansion for a
category:
While it was traditionally assumed that consumption rates
remain fixed during and after a promotion, but from this project I
came to know that promotions also have a primary demand expansion
effect. When a primary demand expansion occurs, promotion induced
increase in purchase quantities does not significantly extend the time
till the next purchase in the category occurs, thus indicating that there

38
Role of sales promotions in FMCG sector
has been an increase in consumption promotions induced consumers
to buy more and consume faster. It is found that promotion induced
inventory temporarily increased consumption rates within the
category e.g. in categories such as bacon, salted snacks, soft drinks
and yogurt exhibited primary demand expansions as a result of
promotion while bathroom tissue, coffee, detergent and paper towels
exhibited stockpiling only.

Sales Promotions affect sales in complementary and competitive

categories:
From this project it is found that promotion not only increases
sales of main product but it also lead to increase in sales of
complementary categories. Found strong cross relationships between
products of the promoted product category indicating brand
substitution behavior. They stated that retail price promotions work as
a form of implicit price bundling whereby the consumer surplus is
transferred from the promoted item to non promoted items. Also
found that retail price promotions create significant complementary
and substitution effects within the store.

39
Role of sales promotions in FMCG sector
The Long term Impact of Promotions:

Strategies are builds to reap the benefits for longer period of time;
same is true in sales promotion strategies. Let us see impact of
promotions effort and study the impact over a longer time period e.g.
4-6 months or even a few years after a sales promotion campaign.

The result showed that consumer promotions for leading brands of

established packaged products had no after-effects on the brand’s
sales or repeat buying loyalty. The extra sales of a brand while
promoted came virtually all from the brand’s existing long-term
customer base for which the experience of buying the promoted brand
was nothing new.

It is found that although the short term effects of promotions are

strong; these promotions rarely exhibit long term effects. It is
observed that each sales component generally lacked a permanent
effect and the effect of promotion was short lived and increase in
promotions affected consumers’ stockpiling decisions in the long run.
They found that the combined short and long-term elasticity of
promotions was zero. The stockpiling induced by a promotion was
essentially offset by reduced demand in the long term. Thus increased
sales were more a result of sales borrowed from the future than
increased consumption

40
Role of sales promotions in FMCG sector

SWOT Analysis of FMCG Sector

Strengths:

• Well-established distribution network extending to rural areas.

• Strong brands in the FMCG sector.
• Low cost operations.

Weaknesses:

• Low export levels.

• Small-scale sector reservations limit ability to invest in
technology and achieve economies of scale.
• Several "me-too’’ products.

Opportunities:

• Large domestic market.

• Export potential.
• Increasing income levels will result in faster revenue growth..

Threats:

• Imports.
• Tax and regulatory structure.
• Slowdown in rural demand.
41
Role of sales promotions in FMCG sector

DATA ANALYSIS

42
Role of sales promotions in FMCG sector

Consumers

43
Role of sales promotions in FMCG sector
Q1. Which brand of Soap / Detergent do you use?

Bathing –soaps Respondents

Lux 41
Hamm 3
Lifebuoy 14
Nima 8
Others 34

Bathing soaps
50

40

30

20

10

0
Lux Hamam Lifebuoy Nima Others
3 8
Respondents 41 14 34

Interpretation:

The above question has been formed to know the soaps and
detergents at the top of the mind of the customers. It shows those
consumers’ purchase and use of that particular brand. It will help to
the company to know the market scenario and the major brands in the
market.
44
Role of sales promotions in FMCG sector
Form the above result it is clear that out of 100 customers more than
40 are consumers are having the same brand as the image in their
mind, whereas others category is also showing the higher graph than
these 3 major players( Hamam, Lifebuoy, Nima).

Detergent
powder Respondents
Nirma Super 19
Wheel 14
Surf 35
Ariel 18
Others 14

Detergent Powder
40
35
30
25
20
15
10
5
0
Nirma sup Wheel Surf Ariel Othres
Respondents 19 14 35 18 14

Interpretation:
Form the above result it is clear that out of 100 customers 35
are purchasing the same brand of detergent, whereas all others are on
same level.
45
Role of sales promotions in FMCG sector
Q2. Do you always buy the same brand of Soap / Detergent?

Particulars Respondents
Yes 56
No 44

Brand loyal
60

50

40

30

20

10
0
Yes No
Respondents 56 44

Interpretation:

The objective behind the formation of this question is to know

the level of brand loyalty of the consumers towards the brands of
soaps available in the market. The above figure shows that on 56% of
the respondents are loyal to their brands of detergent/soap. FMCG are
such a market where the level of loyalty remains low and this is
because of many reasons.

46
Role of sales promotions in FMCG sector

Q3. Which factors do you normally consider while

purchasing a particular brand of Soap / Detergents?

Bathing
Factors soap Det.powder
Fragrance 19 18
Quality 33 36
Company image 16 13
Price 23 19
Packaging 6 11
Others 3 3

Factors affecting purchase behavior

40

30

20

10
0
Company
Fragrance Quality Price Packaging Others
image
6 3
Bathing soap 19 33 16 23
3
Det.powder 18 36 13 19 11

Interpretation:

The objective behind this question is to know the effect of

influencing factors in the purchase decision of the soaps and detergent

47
Role of sales promotions in FMCG sector
powders. It mainly contains the factors like, quality which players an
important role in the purchase decision of the soaps and detergents
both.
If we look at the graph of the soaps and detergent it shows
quality as the most influencing factors in the purchase decision while
price is also an important for purchase decision.

Q4. Do you consider promotional schemes while

purchasing a particular brand of Soap / Detergent?

Particulars Respondents
Yes 78
No 22

H0: Promotional schemes have a significant effect on the purchase of brand.

H1: Promotional schemes do not have an effect on the purchase of brand.

Effect of schemes purchase behavior

100

80

60

40

20
0
Yes No
Respondents 78 22

48
Role of sales promotions in FMCG sector

Interpretation:

Answer of this question will give idea about the effect

of promotional schemes in the purchase decisions. Such
types of schemes always attract more and more consumers
towards particular brand. Simultaneously it gives idea about
the factors which consumers look most in the product before
they make final decision.
Here H0 is accepted as the graph shows that 78 out of
100 consumers are looking for such schemes before they
make purchase.

Q5. Which of the following promotional schemes you

have come across so far?

Promotional
schemes Respondents
Coupons 16
price off 84
Freebies 24
scratch cards 12
lucky draw 9
Bundling 31
49
Role of sales promotions in FMCG sector
extra qty. 44

Familiarity of promotional Schemes

100

80

60

40

20
0
scratch
Coupons price off Freebies lucky draw Bundling extra qty.
cards
9
Respondents 16 84 24 12 31 44

Interpretation:

The above stated question clearly states the awareness of

promotional schemes offered in the market by the marketers to attract
more and more consumers.
The results show that price off and extra quantity is the two
main offers/schemes which consumers have came across at the time
of purchase. It will help the manufacturers and marketers too how too
launch their new products in the market with which schemes.

50
Role of sales promotions in FMCG sector

Q6. Which medium do you feel is suitable to promote the

various promotional schemes?

Source Respondents
Radio 11
TV 69
Newspaper 43
Hoarding 15
Others 12

Mediums to promote the promotional schemes

80

60

40

20

0
Radio TV News.ppr Hoarding Others
Respondents 11 69 43 15 12

Interpretation:

This question gives stress on the media habit of the people and
through which the product should be launch or they think it would be
better than other Medias.
The above result shows TV as the best media to market the
product which will cover majority of the viewer ship. On the second
51
Role of sales promotions in FMCG sector
place it shows news papers as the media to promote the product in the
market.

Q7. Is there any existing scheme on the Soap / Detergent

you are currently using?

Particulars Respondents
Yes 58
No 42

Existing scheme on the Soap / Detergent

70
60
50
40
30
20
10
0
Yes No
Respondents 58 42

Interpretation:

The answer of the respondents give idea about the awareness of

the promotional schemes offered in the market on their existing soaps
and detergents.

52
Role of sales promotions in FMCG sector
In this situation more then 40% of the people are not aware or
having vague idea about the promotional schemes running into the
market.
It shows that people are not much aware of the schemes which
continue in the market it may be because of the present stock of the
product at their place.

Q8. If yes, please specify?

Particulars Respondents
3+1/Other
Free 36
Discount 22
No idea 6
No answer 36

53
Role of sales promotions in FMCG sector
40

35

30

25

20

15

10

0
3+1/Other Free Discount No idea No answer
Series1 36 22 6 36

Interpretation:

This question supports the above question. It enlists the

answers of those customers who are aware of the present schemes
offered in the market and also those schemes which are more
demanded in the market.
The result shows that 1+1 or 2+1 or other free schemes are
more demanded and more aware schemes in the market.
So manufacturers may go for the same at the time of launching
their product.

54
Role of sales promotions in FMCG sector

Q9. If you get an attractive promotional offer in the

product other then of your choice will you switch over?

Particulars Respondents
Yes 73
No 27

Switching behavior
80
70
60
50
40
30
20
10
0
Yes No
Respondents 73 27

Interpretation:

It shows the level of brand loyalty among the consumers. The

result clearly shows that out of 100, 73 people are ready to switch
over to another brand if they find better promotional schemes which
suits their budget means more qyt + less cost + quality.
Combination of all these schemes will run better in the market.

55
Role of sales promotions in FMCG sector

Q10. Give reason for the same?

Particulars Respondents
Cost+qty 16
Quality 17
Satisfaction 2
Brand loyal 5
More
benefit/budget 22
Season change 2
No answer 36

Reason
40

30

20

10

0
Satisfaction Brand loyal More Season
Cost+qty Quality No answer
Benefit/bud change
2 5 2
Respondents 16 17 22 36

Interpretation:

Above question it gives specific reasons for switching too other

products. It shows that extra quantity with less or same price, more
56
Role of sales promotions in FMCG sector
satisfaction, quality and other factors influence consumers to switch
over too other brands.

Q11. Give suggestions about futuristic promotional

schemes?

This show the consumers’ future expectations from the whether

company to come with new schemes or continue with present one. It
shows consumers demand which the manufacturers have to meet.

57
Role of sales promotions in FMCG sector

Retailers

58
Role of sales promotions in FMCG sector
Q1. Since how long are you in this business?

Particulars Respondents
1-5 Years 24
5-10 Years 27
More than 10 49
years

60

50

40

30

20

10

0
1-5 Years 5-10 Years More than 10 years
Series1 24 27 49

Interpretation:

This question gives idea about the benefit to the retailers who
are on the market from long period of time and the benefits they are
getting more as compare to others. It also shows their experience in
the field and the services they are providing too their new and regular
customers. It also gives idea about the benefits they are gaining for
wholesalers and direct from the company.
59
Role of sales promotions in FMCG sector

Q2. Name the Soap / Detergent (Company) you stock for.

Companies Respondents
Nirma 96
HUL 100
P&G 90
Godrej 94
Others 68

Soap / Detergent in stock

120

100

80

60

40

20
0
Nirma HUL P&G Godrej Others
Series1 96 100 90 94 68

Interpretation:

It gives idea about the capacity of the retailers to stock the

goods and also the variety of the products they are stocking. It will
also make clear the demand of the goods in their stores and the selling

60
 Role of sales promotions in FMCG sector
of the product in market. Most of the retailer stocks all types of soap
and detergent.

Q3. Rank the following factors that customers look for in the
purchase of Soap / Detergent. (Rank from 1 to 6)

Factors 1 2 3 4 5 6
Fragrance 3 24 33 22 10 8
Quality 66 23 7 3 1 0
Company Image 9 18 34 24 11 4
Price 17 28 24 16 6 9
Packaging 4 5 2 27 38 24
Others 1 2 0 8 34 55

Bathing Soap
70

60

50

40

30

20

10
0
1 2 3 4 5 6
3 8
Fragrance 24 33 22 10
7 3 1 0
Quality 66 23
9 4
Company Image 18 34 24 11
6 9
Price 17 28 24 16
4 5 2
Packaging 27 38 24
1 2 0 8
Others 34 55

61
 Role of sales promotions in FMCG sector
Interpretation:

It gives an idea about the priority the influencing factors too the
consumers and also the weight age of that factor over other factors.
In the above result people are more quality and price oriented.
On the other hand people are also conscious about the company
image. Because sometimes the consumer remember that name of the
product by the company name and also from the past performance of
that company. Fragrance and packaging are not influencing factor as
per the respondents.

Factors 1 2 3 4 5 6

Fragrance 11 17 41 21 7 3

Quality 43 34 16 6 1 0

Company Image
13 16 27 26 11 7

Price 27 28 14 9 6 16

Packaging 6 5 2 33 43 11

Others 0 0 0 5 32 63

62
Role of sales promotions in FMCG sector

Detergent
70
60
50
40
30
20
10
0
1 2 3 4 5 6
7 3
Fragrance 11 17 41 21
6 1 0
Quality 43 34 16
7
Company Image 13 16 27 26 11
9 6
Price 27 28 14 16
6 5 2
Packaging 33 43 11
0 0 0 5
Others 32 63

Interpretation :

It gives an idea about the priority the influencing factors too the
consumers and also the weight age of that factor over other factors.
In the above result people are more quality and price oriented.
On the other hand people are also conscious about the company
image. Because sometimes the consumer remembers that name of the
product by the company name and also from the past performance of
that company. Fragrance and packaging are also play important role
for purchasing detergent powder.

63
Role of sales promotions in FMCG sector

Q4. Do you suggest customers to purchase a certain brand?

Particular Respondents
Yes 33
No 67

Suggestion
80
70
60
50
40
30
20
10
0
Yes No
Series1 33 67

Interpretation:

This could be a very help question to understand the role of

retailers in the purchase decision.
In above graph 67% of retailer are not suggest to purchase
particular brand because of personal relation or that customer are
brand loyal. While 33% of the retailer are suggesting the consumers
to buy particular brand. There could be many reasons like, extra

64
Role of sales promotions in FMCG sector
margin, relations with consumers and quality of the products which
retailer may get the benefit of the same.

Q5. If Yes why?

Particular Respondents
High 9
margin
Quality 17
Relationship 7
No reason 67

If yes
80
70
60
50
40
30
20
10
0
High margin Quality Relationship No reason
9 7
Respondents 17 67

Interpretation:
it gives idea about the reasons why retailers suggest the
consumers to buy particular brand.
In above graph and table it is clear that for margin and of better
relations with consumers and too provide quality product to
consumers they suggest consumers too bye particular brand. For the
65
Role of sales promotions in FMCG sector
company it may be helpful to target such retailers to sell their product
in the market easily.

Q6. Do customers look for various schemes in the product?

Particular Respondents
Yes 92
No 8

Customers look for various schemes

100

80

60

40

20

0
Yes No
8
Respondents 92

Interpretation:

This gives a real helpful data for checking the effect of sales
promotions in the market and how seriously consumers follow the
promotions before they go for purchase particular brand.

66
Role of sales promotions in FMCG sector
The above result shows that only 8 out 0f 100 didn’t go for the
promotion otherwise all are looking for any type of the promotions on
the product.

Q7. If yes which schemes?

Promotional Respondents
Schemes
Coupons 11
Price Off 82
Freebies 35
Scratch Cards 2
Lucky Draws 19
Bundling Offer 65
Extra Quantity 79

Which schemes
100

80

60

40

20
0
Scratch Lucky Bundling Extra
Coupons Price Off Freebies
Cards Draws Offer Quantity
2
Respondents 11 82 35 19 65 79

67
Role of sales promotions in FMCG sector
Interpretation:

The above stated results show the demand of various types of

promotional schemes in the market by the consumers. Almost all
types of schemes are being demanded by the consumers in the market
but there are three major schemes which consumers generally look at
the time of purchase or before that.
Price off, product bundling and extra quantity are more
demanded by the consumers over others schemes.

Q8. Which Trade Promotions do various companies offer?

NIRMA
Promotions Respondents
Extra Margin 46
Extra Units 34
credit facility 55
Gifts 24
promo. Exp. 8

H0: Effect of trade promotions for all four brands is similar.

H1: Effect of trade promotions for all four brands is not similar.

68
Role of sales promotions in FMCG sector

Trade Promotions by Nirma

60

50

40

30

20

10
0
Extra Margin Extra Units credit facility gifts promo. Exp.
8
Series1 46 34 55 24

Interpretation:

From the above graph shows the trade promotions offered by

the NIRMA Ltd to the retailers to attract them towards stocking their
goods and also stop them switching them too other major players in
the market.
NIRMA is mainly offering credit facility which is offered by all
major players it may differ in the time limit of the credit. It is also
providing extra margin, and units with occasional gift with their
schemes.

69
Role of sales promotions in FMCG sector

HUL
Promotions Respondents
Extra Margin 47
Extra Units 34
Credit facility 58
Gifts 25
Promo. Exp. 22

Trade Promotions by HUL

70
60
50
40
30
20
10
0
Extra Margin Extra Units Credit facility Gifts Promo. Exp.
Series1 47 34 58 25 22

Interpretation:

The advantage of HLL over NIRMA is that it bare promotional

expenses which NIRMA is not doing. It attracts more consumers
through such promotions, such as display of the product, banners etc.

70
Role of sales promotions in FMCG sector
So this may help it to attract more retailers. It may because of
its less cost of production in other segments in which nirma is not
operating.

P&G
Promotions Respondents
Extra Margin 40
Extra Units 33
Credit facility 55
Gifts 20
Promo. Exp. 12

Trade Promotions by P&G

60

50

40

30

20

10
0
Extra Margin Extra Units Credit facility Gifts Promo. Exp.
Series1 40 33 55 20 12

Interpretation:

P&G is also a big player in the FMCG market. It is also

providing all the facilities which others are providing to retailers.
71
Role of sales promotions in FMCG sector

GODREJ
Promotions Respondents
Extra Margin 46
Extra Units 32
Credit facility 57
Gifts 19
Promo. Exp. 18

Trade Promotions by Godrej

60

50

40

30

20

10
0
Extra Margin Extra Units Credit facility Gifts Promo. Exp.
Series1 46 32 57 19 18

Interpretation:

72
Role of sales promotions in FMCG sector
Godrej is a big player in the FMCG market. It is also providing
all the facilities which others are providing to retailers. But it is
lacking in bearing expenses which HUL is providing to maximum
number of retailers.

OTHERS
Promotions Respondents
Extra
Margin 30
Extra Units 18
Credit
facility 38
Gifts 15
Promo.
Exp. 7

Trade Promotions by Others

40
35
30
25
20
15
10
5
0
Extra Margin Extra Units Credit facility Gifts Promo. Exp.
7
Series1 30 18 38 15

Interpretation:
73
Role of sales promotions in FMCG sector

Others include local players, as well as we established players

like, wipro but their products are not in demand like other players but
still they are providing all the facilities to retailers to attract towards
stocking their products.

74
 Role of sales promotions in FMCG sector

GODR NIR
EJ MA HUL 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
Promo.
Exp. 18 8 22 12
34.4 33.4 37.2 32

Anova: Single Factor

SUMMARY
Groups Count Sum Average Variance
Column 1 5 172 34.4 289.3
Column 2 5 167 33.4 339.8
Column 3 5 186 37.2 229.7
Column 4 5 160 32 284.5

ANOVA
Source of SS df MS F P-value F crit
Variation
Between 72.55 3 24.1833 0.08460 0.96745 3.238872
Groups 3 9 7
Within 4573.2 16 285.825
Groups
Total 4645.75 19

75
Role of sales promotions in FMCG sector

All the big players provide promotion to the retailers due to cut throat
competition; Interpretation: from the one factor anova analysis, it is
clearly seen that there is a effect of trade promotion on various brands
and are similar too. As p> 0.05, it is the evidence that the null
hypothesis is accepted
Q9 Give reasons for not stocking a particular brand.

Retailer stocks all types of soap and detergent because of competition.

Q10 Any Suggestions.

Retailer suggested that packaging should be further improved

and used as promotional tool, to encourage sales during certain
periods the company should provide priceoff or extra quantity
because that influences directly to the consumer.

76
Role of sales promotions in FMCG sector
Findings of the report:

Sales Promotion, a short-term inducement, offered to a

consumer or trade has gained momentum as a promotional tool world
over. It represents nearly three fourth of the marketing budget at most
consumer product companies. Sales promotions can enhance
consumers’ self-perception of being “smart” or a “good” shopper

• FMCG are such a market where the level of loyalty remains

low and this is because of many reasons.

• Quality as the most influencing factors in the purchase decision

while price is also an important for purchase decision.
• Schemes always attract more and more consumers towards
particular brand. Simultaneously it gives idea about the factors
which consumers look most in the product before they make
final decision

• Price off and extra quantity is the two main offers/schemes

which consumers have came across at the time of purchase

• TV as the best media to market the product which will cover

majority of the viewer ship. On the second place it shows news
papers as the media to promote the product in the market

• People are not much aware of the schemes which continue in

the market it may be because of the present stock of the product
at their place.

77
Role of sales promotions in FMCG sector
• 1+1 or 2+1 or other free schemes are more demanded and more
aware schemes in the market.
• People are ready to switch over to another brand if they find
better promotional schemes which suits their budget means
more qyt + less cost + quality.

• Extra quantity with less or same price, more satisfaction,

quality and other factors influence consumers to switch over
too other brands.

• Retailer stocks all types of soap and detergent because of

competition.

• People are more quality and price oriented.

• Consumer remember that name of the product by the company
name and also from the past performance of that company.

• Consumer remembers that name of the product by the company

name and also from the past performance of that company.
• Retailers are not suggest to purchase particular brand because
of personal relation or that customer are brand loyal

• Margin and of better relations with consumers and too provide

quality product to consumers they suggest consumers too bye
particular brand.
• Customers are looking for any type of the promotions on the
product before them going to purchase.
• Price off, product bundling and extra quantity are more
demanded by the consumers over others schemes.

78
Role of sales promotions in FMCG sector
• NIRMA is mainly offering credit facility which is offered by all
major players it may differ in the time limit of the credit.
• HUL attracts more consumers through such promotions, such
as display of the product, banners etc.

Recommendation:

The findings of the empirical study indicate that unless the

brand to be promoted is in the consideration set of the consumer, sales
promotion by itself is unlikely to have any major impact. Clearly this
shows that managers need to invest into brand building exercise so
that his/her brand appears in the consideration set of the target
consumers. Only after this should he spend time, money and energy
on sales promotion activities.

Sales promotion should not be used in isolation but need to be

integrated with other tools and in line with the overall positioning of
the brand. Also the importance of the role of mass media came out
clearly in the study.

Companies need to create sufficient awareness about sales

promotion schemes through mass media in order to create awareness.
FMCG products are low involvement products characterized by
switching behavior. Also the person going to the shop for the

79
Role of sales promotions in FMCG sector
purchase of soap is the final decision maker of the brand. Hence it is
essential that companies need to design attractive, striking, visible
POPs for scheme announcements.

With respect to nature of scheme, the finding suggested that

premium (free gift) was popular with companies. While both retailers
and consumers preferred price offs. So it is necessary that the
perceived value of a free gift has to be appealing and high for the
target consumers.

Repetitive use of the same premium for a prolonged period may

have negative effect on the loyal customers. When the company is
giving its own product free as premium, it needs to ensure the quality
of the product from it as it is likely to jeopardize the image of both its
products.

The findings exhibited that both the retailers and consumers

perceived that sales promotion activities carried out by the companies
for increasing sales in short term and clearing excess stocks. What it
implies is that companies need to use sales promotion synergistically
and communicate so that they provide value to the target audience
and enhance brand quality/image perceptions.

80
Role of sales promotions in FMCG sector
Companies need to systematize information flow regarding sales
promotion activities particularly at dealer and retailer level. Ensuring
proper information flow and devising checks and measures to reduce
misappropriations and implementation flows should be considered
critical aspects for the success of sales promotion activities by the
companies. As retailing is fragmented, direct reach by companies is
next to impossible. Through dealers and proper feedback mechanism,
companies keep in touch with the market.

From the study it was found that smaller retailers felt neglected and
not enthused to implement the schemes, particularly when additional
handling, stocking, accounting was required on the part of a retailer
without compensatory margins. It can be seen that the retailer and
consumer perceptions matched with respect to preferences of
schemes, underlying motivations and role of mass media. This
implies that the retailer would be a rich source of information about
the consumer and the likely response to sales promotion activities.

Developing a system to tap such responses from time to time both at

retailer and consumer level would be helpful for planning future sales
promotion activities. In order to build trust and commitment
companies should tap preferences, perceptions of retailers as well as
consumers.

81
Role of sales promotions in FMCG sector

Limitations of the study

• We considered Raipur & Durg region only because of limited

time duration.

• Due to this, our sample size is only 100, which is not very
large.

• All the respondents could not fill their questionnaire on their

own due to language problem and also problem of time and
lack of positive behavior.

• Respondent may give biased answer due to some lack of

information about other brands.

82
Role of sales promotions in FMCG sector

• Findings of the study are based on the assumption that the

respondents have given correct information.

Emerging Trends

So far as FMCG market is concern there is new trend is emerging

known as Joint sales promotion. Actually it is old concept but it was
more prevailing in durable products now it is coming intro non
durable goods also. When any sales promotion scheme either for trade
or consumer is announced by more than one company and /or more
than one brand of the same company, it is referred as joint sales
promotion or horizontal co-operative sales promotion or cross
promotion or umbrella sales promotion.

Classification of joint sales promotion:

• Use complementarily due to natural use

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Role of sales promotions in FMCG sector
• New use catering complementary relationships
• Commonality of need due to use time
• Tie-up of a new /slow moving brand with an established brand
• Target market commonality
• Seasonal demand
• Distribution commonality
• Targeting new segment
• Derived demand
• Countering competitive joint sales promotions

Conclusion of the Survey

The study reflects that the use of sales promotion undeniably

has increased over the years in India. Future holds lot of promise for
such schemes across wider range of product-markets.

Sales Promotion has ceased to be major differentiator at least in

the metros, with almost all companies offering similar freebies and
gifts. As a result now marketers have to find out some innovative
ways of sales promotion to differentiate from competitors. Currently
Price off and Bye one get one free offers are very effective to attract
the consumers towards the products.

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We have noted that these kind of promotional tools are useful
for short term increase in sales and to induce first trial. These types of
promotional schemes should be consistent and changed from time to
time depending upon season and competitor’s schemes.

With the Increasing number of supermarket, the branded

packaged goods work as silent sales person. So in such stores, sales
promotion plays a more effective role in stimulating consumers’
demands.

One of the very important facts we came to know from this project is
that sale of goods which contain large quantity and having big
packaging e.g. detergent are stagnating because consumer prefer to
buy small pack goods, the reasons are: small pack goods reduce risk
of bad quality, It had low cost or say price, and last but important
factor i.e. mentality to purchase just to try first. Sales of small pack
goods are quite high, but from the company’s point of view small
pack goods is less profitable compare to large pack goods.

So here marketer tries to increase sales of large pack goods by

using sales promotion tactics like price off and percentage extra.

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Role of sales promotions in FMCG sector

Bibliography

BOOKS

 Philip Kotler, “Marketing Management”, 11th edition,

Pearson education Asia Publication.

 C.R.Kothari, “Research Methodology methods &

techniques”,New Age International(p)ltd.publishers,2nd edition.

WEBSITES

 http://www.nirma.co.in_files
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Role of sales promotions in FMCG sector
 http://www.hul.co.in_files

 http://www.pg-india_files

 http://www.godrej_files

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Annexure

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Role of sales promotions in FMCG sector
Questionnaire

Customers

We are students of MBA and carrying out a survey for our academic
project to“Role of sales promotions in FMCG”. So please fill this
questionnaire. Your identity would not be revealed and information
will only be used for academic purpose.

Q1. Which brand of Soap / Detergent do you use?

Bathing –soaps Respondent Detergent powder Respondent

Lux Nirma supper
Hamam Wheel
Lifebuoy Surf
Nirma Ariel
Others Others

Q2. Do you always buy the same brand of Soap / Detergent?

Particulars Respondent
Yes
No

Q3. Which factors do you normally consider while purchasing a

particular brand of Soap / Detergents?

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Role of sales promotions in FMCG sector

Bathing
Factors soap Det.powder
Fragrance
Quality
Company image
Price
Packaging
Others

Q4. Do you consider promotional schemes while purchasing a

particular brand of Soap / Detergent?

Particulars Respondent
Yes
No

Q5. Which of the following promotional schemes you have come

across so far?
Promotional
schemes Respondent
Coupons
price off
Freebies
scratch cards
lucky draw
Bundling
extra qty.

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Role of sales promotions in FMCG sector
Q6. Which medium do you feel is suitable to promote the various
promotional schemes?

Source Respondent
Radio
TV
Newspaper
Hoarding
Others

Q7. Is there any existing scheme on the Soap / Detergent you are
currently using?

Particulars Respondent
Yes
No

Q8. If yes, please specify?

Particulars Respondent
3+1/Other Free
Discount
No idea
No answer

Q9. If you get an attractive promotional offer in the product other

than of your choice will you switch over?

Particulars Respondent
Yes
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Role of sales promotions in FMCG sector
No

Q10. Give reason for the same?

Particulars Respondent
Cost+qty
Quality
Satisfaction
Brand loyal
More benefit/budget
Season change
No answer

Q11. Give suggestions about futuristic promotional schemes.

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 Role of sales promotions in FMCG sector

Retailers
We are students of MBA and carrying out a survey for our academic
project “Role of sales promotions in FMCG”. So please fill this
questionnaire. Your identity would not be revealed and information
will only be used for academic purpose.

Q1. Since how long are you in this business?

Particulars Respondent
1-5 Years
5-10 Years
More than 10
years

Q2. Name the Soap / Detergent (Company) you stock for.

Companies Respondent
Nirma
HUL
P&G
Godrej
Others

Q3. Rank the following factors that customers look for in the
purchase of Soap / Detergent. (Rank from 1 to 6)

Factors 1 2 3 4 5 6
Fragrance
Quality
Company
Image
Price
Packaging
Others

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Role of sales promotions in FMCG sector
Q4. Do you suggest customers to purchase a certain brand?
Particular Respondent
Yes
No

Q5. If Yes why?

Particular Respondent
High
margin
Quality
Relationship
No reason

Q6. Do customers look for various schemes in the product?

Particular Respondent
Yes
No
Q7. If yes which schemes?

Promotional Respondent
Schemes
Coupons
Price Off
Freebies
Scratch Cards
Lucky Draws
Bundling Offer
Extra Quantity

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Role of sales promotions in FMCG sector

Q8. Which Trade Promotions do various companies offer?

NIRMA HUL
Promotions Respondent Promotions Respondent
Extra MarginP&G GODREJ
Extra Margin
Extra Units
Promotions Respondent Promotions
Extra Units Respondent
credit Margin
Extra facility Extra facility
Credit Margin
Gifts
Extra Units Extra Units
Gifts
promo.facility
Credit Exp. Credit facility
Promo. Exp.
Gifts Gifts
Promo. Exp. Promo. Exp.

OTHERS
Promotions Respondent
Extra Margin
Extra Units
Credit facility
Gifts
Promo. Exp.

Q9 Give reasons for not stocking a particular brand.

Q10 Any Suggestions.

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