Sales Promotion in International Marketing!
Meaning and Definitions of Sales Promotion:
Sales promotion is said to be a key ingredient in the international marketing campaign. It consists of mostly collection of those short-term incentive tools, which are designed to stimulate purchase of a particular product or service. In other words, we can say that in national and international marketing, market or sales promotion plays an important role. If efforts for it are not proper, timely and enough, even good products fail to get satisfactory response.
Present information technology and other technical changes and inventions have converted the whole world into a market. The customers for the product are innumerable and spread over various countries. In these circumstances market promotion efforts have assumed importance for informing the customers about the product, to make them enthusiastic, to inspire them to purchase more and to preserve them.
“Sales promotion means, any steps that are taken for the purpose of obtaining or increasing sales. Often this term refers specially to selling efforts that are designed to supplement personal selling and advertising and by coordination, help them to become more effective.”
The term ‘sales promotion’ comprises wide variety of promotional activities.
According to American Marketing Association, Chicago, “Those marketing activities, other than personal selling, advertising and publicity, that stimulate consumer purchasing and dealer effectiveness, such as displays, shows and demonstrations, expositions and various non-current selling efforts, not in the ordinary routine.”
Therefore the activities which link personal selling and advertisement and make them effective are called sales promotion. The word sales promotion is made of two words i.e., Sales + Promotion. Sales means to charge the price and hand-over the product and service. Promotion means to increase the sales. Therefore, sales promotion is a continuous process to increase the sale. Therefore it can be said that any process whose purpose is to increase sale is sales promotion. When a retailer is giving a calendar or any other gift to his customer he is following sales promotion.
According to G.W. Hopkins, “Sales promotion is an organised effort applied to the selling job to secure the greatest effectiveness for advertising and for dealer’s help.”
According to John F. Luick & William Lee Ziegler, “Sales promotion as a tool of marketing promotion gives rise to increase in product usage as well as expansion of markets for a product or introduction of a new product.”
According to Harold Whitehead, “Sales promotion includes the dissemination of information to wholesalers, retailers, customers- actual and potential and not least to the firm’s own salesman.”
According to L.K. Johnson, “Sales promotion consists of all those activities whose purpose is to supplement, to coordinate and to make sure more effective the efforts of the sales force, of the advertising department, and of the distributors and to increase sales and otherwise stimulate consumers to take greater initiative in buying.”
According to C.L. Boiling, “Sales promotion constitutes—1. In a specific sense those sales activities that supplement both personal selling and advertising and co-ordinate them and help to make them effective, such as displays, shows and expositions, demonstrations and other non-recurrent selling efforts not in the ordinary routine. 2. In the general sense, sales promotion includes personal selling, advertising and supplementary selling activities.”
The following are some other reasons to use the sales promotion tools by the sales managers:
(a) Increase in the number of brands and manufacturers.
(b) Increase in competition.
(c) Decline in advertising efficiency and increase in advertising cost.
(d) Legal restraints.
On the basis of analytical study of above definitions, it can be concluded that the major function of sales promotion is to serve as a connecting link or a bridge between advertising and personal selling which are the two wings of promotion.
Sales promotion includes all these activities (except advertising, publicity and personal selling) which attract both the distributors and consumers towards goods and services of the enterprise so that the sales of the enterprise may increase.
Through effective advertisement work, sales promotion helps salesmen to boost up selling. Producers can introduce new products by sales promotion. It reminds the consumers about the product through advertisement.
Nowadays sales promotion has been recognized as a most accepted tool of marketing. The sales managers are under much pressure to increase the sales. They emphasize more on promotional tools to increase the sales of the organisation.
Characteristics of Sales Promotion:
Following are the characteristics of sales promotion:
(i) Sales promotion does not include advertisement, personal selling and publicity.
(ii) Sales promotion is a tool of marketing promotion.
(iii) Sales promotion encourages dealers and distributors to sell the product.
(iv) Sale promotion helps in selling.
(v) Sales promotion makes advertisement and personal selling easy and effective.
(vi) Sales promotion activities are not regular activities.
(vii) Sales promotion activities are performed at certain times.
(viii) Sales promotion activities are more effective in off-seasons.
Sales Promotion in Narrow-Sense, Wider Sense and Special Sense:
In Narrow Sense:
Sales promotion is an organised effort applied to the selling job to secure the greatest effectiveness for advertising and for dealers’ help.
In Wider Sense:
Sales promotion consists of all those activities whose purpose is to supplement to coordinate and to make sure more effective the efforts of the sales force, of the advertising department, and of the distributors and to increase sales and otherwise stimulate consumers to take greater initiative in buying.
Sales promotion in a specific sense constitutes those sales activities that supplement both personal selling and advertising and coordinate them and help to make them effective, such as displays, shows and expositions, demonstrations and other non-recurrent selling efforts not in the ordinary routine. Sales promotion is an important instrument in marketing to lubricate the marketing efforts. Today it is a necessity and not a luxury or a fashion. It is an investment not an expenditure, which can pay rich dividends. It is an integral part of the marketing effort.
For sales promotion following four means are used:
(i) Personal Selling
(iii) Publicity, and
(iv) Public Relations.
All the activities, which are undertaken to increase sales or to enlarge markets or to introduce new products in the market, are parts of sales promotion. These include exhibition, demonstration, distribution of coupons etc., so as to force the buyer to purchase the product.
Reasons for Rapid Growth in Sales Promotion:
The purpose of sales promotion is to increase the sales. Sales promotion is very important in this modern age. Sales promotion increases the demand.
There are both buyers’ and sellers’ markets and different types of goods are available in these markets. The market, where goods are available in plenty as compared to their demand, is called buyer’s market and where supply is less than demand it is called a seller’s market. There are buyers as well as seller’s markets in our country.
The market which is seller’s market today may become buyer’s market tomorrow. This sort of trend is being seen even in our country where many goods of seller’s market have turned into buyer’s market. The example can be cited in this regard of the products like clothe, sewing machine, fridge, tools and furniture. Seller’s market is not everlasting. However, sellers and buyer’s markets may change their form gradually. Sales promotion is important in both the markets.
Objectives of Sales Promotion:
The purpose of sales promotion in International Marketing is to increase the sale. The main objective of a commercial concern is to increase its sale.
The objectives of sales promotion are as follows in details:
1. To Increase Sales Volume:
Today, in the scientific age of specialisation, sales promotion has become a vital need. In its absence it is useless to imagine sales increase in International Market. For the constant sales-increase it is better to determine the sales promotion programmes on the basis of changing policies and to implement them with new strategies. This certainly pre-determines the scope of sales promotion.
2. To Increase the use by Present Customers:
Sales promotion is also done so that the present customers may increase the use. Customers are told new methods to use the product and this is done through work demonstration and cinema. In some conditions the customers leave their old products and adopt the goods with new packing and latest improvement. The fulfilment of these needs is possible through sales promotion programmes.
3. To Introduce New Product:
The main purpose of sales promotion in International Market is to introduce new product among the customers. For this purpose sales promotion plans are started.
4. To Attract New Customers:
Sales promotion is also used to generate new customers in International Market. For this purpose sales promotion plans are started. These new customers raise total sales.
5. To Counter a Competitor’s Sales Promotion Device:
Some products have good market. Such products do not gain much advantage by these sales promotion devices. In some conditions they have to start sales promotion plans because competitor sellers also start such plans. In these conditions sales promotional devices are started to counter the others.
6. To Assist Salesman in Selling:
Sales promotion provides help in sales. Through the medium of sales promotion the institutions make the work of sellers easy and direct contact is established with the customers.
7. To Increase Goodwill:
In particular conditions the institution follows sales promotion polices so that the popularity of the institution may increase. The popularity of the institution becomes firm and strong when customers are offered free gifts and prices are reduced after a fixed time.
8. To Reduce Seasonal Decline:
There are some products whose demand falls badly in a particular season. The purpose of sales promotion is to reduce the seasonal decline. For example, the cold drinks companies’ start prize winning schemes to maintain their sales.
Sales promotion is very important in the field of international marketing. Because of difference in language, culture, education and customs same method of sales promotion cannot be adopted in all countries. Therefore objectives of sales promotion are to be changed definitely as per the needs of the countries. Methods and polices of promotion too need change as per the circumstances. The language of advertisement and methods pertaining to concessions etc., have to be changed according to rules of the government.
Problems of Sales Promotion in International Marketing:
In case an exporter or manufacturer wants to sell his products in foreign market, he will have to bring his product to the notice of the potential buyers. But this is a much more difficult task than the corresponding task in domestic marketing due to following three reasons- (i) The exporter does not have sufficient information as a basis for making promotional decisions; (ii) Customer abroad has no previous knowledge of the exporter and his products; and (iii) Only limited effort is possible because of resource constraint.
The cultural environment, the distribution system, the buying process and the methods of promotion in the foreign market may be totally different from the home market. Therefore, in order to develop the product promotion strategy, the exporting firm must study the total marketing system as operating in the foreign market and then prepare an export marketing plan.
Therefore, following points must be considered before preparing a promotional strategy for foreign market:
1. Objectives of the Exporter:
The objectives of the exporter affect the promotion decision to a great extent. A firm may have different objectives in different foreign markets. Firm’s level of commitment to international operations will determine its promotion strategy. The objective of the firm in international marketing may be to create its image on a long-term basis or it may be to maximize its cash resources or profitability in a short time.
A firm may want to sell its product only to a few customers whereas another firm would like to reach the masses. The promotion strategy would be different in each case.
2. Nature of the Product or Services Offered:
The nature of the product or the services offered by the firm in international market is another factor that will determine the promotion strategy of exporter. Certain products are standardised and their promotional themes are also standardised. In such cases, standardised promotional strategy can be used throughout the world.
Besides there are certain other standardised products which are used in the same form, with slight modifications. The promotional themes and programmes may be used in the standardised form or with slight changes.
3. Financial Resources:
Financial resources of the exporter is one of the main factors in deciding the promotion policy. A firm, not having sufficient financial strength, cannot use a strategy involving a heavy expenditure. As against this, a firm having a good financial background may use any method which may prove useful to the firm.
4. Media Availability:
A medium which is easily available in domestic country need not necessarily be available in the foreign market. Though one may generalise that identical media are available in most industrialised countries, one should keep in mind that they may vary in institution, quality and communications value. In such circumstances, the promotional message, theme and other properties of the media may be adjusted. But the task of international marketer is compounded where a certain type of media is just not available.
5. Environmental Constraints:
The exporter firm should evaluate the environmental factors like the level of economic development of a country, the disposable income of the people, consumers’ preferences and attitudes towards advertising and sales presentation, competitor’s promotion strategies and the legal requirements in a particular foreign market.
(i) Cultural Environment:
The culture of the people in a particular foreign market influences their attitudes towards the promotion programme of a company. People in some countries are against foreign goods because they violate their cultural traditions. In such cases the firm would have to adopt a promotion programme which would remove this bias.
The marketer should endeavour to educate the people on the benefits which would accrue to them through the product use over their traditional products. The marketer may sell the product to the agents or distributors in the foreign markets and they may sell it under their brand names in the manner most suitable to the country’s culture.
Attitude of the people towards their traditions or the image of a particular product cannot be changed overnight. The people are to be educated about the benefits of the product which is a long-drawn out programme.
(ii) Legal Constraints:
The legal requirements as regards promotion techniques must also be fulfilled by an exporter. Legal system in a foreign market may be different from that of the domestic country. The international marketer must have a clear understanding of such requirements before going for a particular promotion strategy or drawing up a promotion programme.
(a) There are specific prohibitions on advertisements on certain products like wine, cigarettes and tobacco etc. Most countries require that cigarette companies must warn their consumers against the injurious effects of smoking. Hence it is statutorily mandatory to print ‘smoking is injurious to health’ on all packs and advertisements.
(b) Certain words or expressions that may be misinterpreted by consumer or may deceive them are prohibited for use.
(c) There are legislations which prohibit the promoter from making tall claims about their products.
(d) Some countries, mainly Islamic countries, ban advertisements which are viewed as obscene.
(e) In certain countries, requirements on packaging such as inscribing the name, address, weight and contents of the inside product, should be strictly observed.
(iii) Other Environmental Constraints:
(a) Purchasing Habits:
These are different in almost all foreign countries. So the messages about product purchase cannot be the same. Buying habits of peoples of developed and under developed countries are different. Developed country citizens insist on readymade things. People of developing countries prefer to prepare the thing and use it. Developed country people have a tendency to buy only when it is needed. Underdeveloped country citizens like to buy all required food grains at a time.
(b) Cost of Promotion:
Manufacturers of developed countries spend a lot on advertisements. But underdeveloped countries cannot afford it. To make advertising effective, enough budget should be allocated for it. Exhibitions, public relations, personal sales have to be provided for. While planning for market promotion a plan and a budget should be made for it.
There are many factors like availability and efficiency of promotion media that are affecting marketing communication. Other affecting factors are services of advertising of agencies, firm undertaking market research studies, artists and places for hoarding etc.
(d) Language Factor:
Question of global market communication also raises many problems in international market. When translated, the meaning of an advertisement may be quite different in another country. Its effect may also become far less. Sometimes same English word may not mean same in all English speaking countries.
(e) Domestic Regulations:
These too have an effect on global market communication. For example, the Indian exporters have to follow rules formed by Indian Government and Reserve Bank of India for promotion expenses abroad. For each activity, how much foreign exchange can be spent, has been fixed by the Government. These guidelines have to be kept in mind by exporters while planning business and sale promotion programmes.
6. Competitors’ Promotional Strategy:
In designing its promotion or strategy for foreign market, a firm should not ignore the promotion strategies, policies and programmes undertaken by the competitors. The firm should study them before deciding its sales promotion policy. This, however, depends very much on the company’s resources, culture and attitude of the people, etc.
Thus, the exporter must take the above factors into consideration before making any strategy for sales promotion. He should not do what others are doing. He must study and evaluate all the factors relevant to reach a decision for the promotion of his product in the foreign market.
Importance of Sales Promotion:
The sales promotion activities help in promoting the sales of the concern effectively. More and more promotional activities are required to induce the consumers to purchase more and more products and thus they produce the demand.
In a business enterprise sales promotion is essential because:
(i) It stimulates in the consumers an attitude towards the product.
(ii) It gives direct inducement to the consumers to take immediate action.
(iii) It creates a better incentive to the consumers to make a purchase and create a demand.
(iv) It is an effective supporter of sales. It helps the salesman and makes his effort more productive.
(v) Sales promotion leads to low unit-cost, due to large-scale production and large-scale selling.
(vi) It is flexible. It can be used at any stage of a new product introduction.
(vii) The promotional tools are the most effective to be used in increasing the sales volume.
(viii) Sales promotion is useful in increasing consumer satisfaction.
(ix) The sales promotional tools enables a seller to adjust short-term variation in demand and supply.
(x) It is useful for the manufacturer to adopt a suitable strategy to different market segments.
(xi) Sales promotional tools are used to turn the customers into loyal customers.
Sales promotion is also effective for following reasons:
(i) A new brand is introduced.
(ii) We have to communicate a major improvement or attraction in product.
(iii) Increasing the number of retail stores in order to sell our products.
(iv) Enlarging the result of advertising.
(v) Engaging or embarking upon aggressive sales campaign.
On the basis of above, the importance of sales promotion may be divided into the following parts:
1. Importance for Producer:
Sales promotion is very important for producers. Activities of sales promotion are helpful in supplying the new products in the market. As a result increase in the demand of a product leads to the increase in sale. Sales promotion helps in making new customers and it is also effective in maintaining the old customers.
Like a magnetic force sales promotion attracts the customers towards the new product. To fulfil the high demand production is increased by reducing the cost per unit.
Sales promotion enhances the popularity of a particular institution. A product makes its special place in the customer’s class and after a fixed period of time expenditure on distribution gets reduced because of these efforts. It has its importance in facing the sales policy of competitive producers.
2. Importance for Wholesalers:
A wholesaler has the first place in the class of middlemen. Sales promotion helps the wholesalers. As a result of these activities the marketing area of the wholesaler increases. New retailers get the opportunities of contact and increasing sales increases the profit. A wholesaler does not have to bear expenses on the activities of sales promotion. Therefore he gets the increased profit from all directions.
3. Importance for Retailers:
A retailer has the second place in the class of middlemen. Through sales promotion it becomes easy for the retailer to sell his product and his turnover increases for which he gets high profit. The product sold under sales promotional devices come into such a large circulation that the retailers do not have to work separately. They do not have to explain to the customers in detail about these products. As a result they have a hopeful increase in the sales and profit.
4. Importance for Consumers:
Sales promotion is also very important for consumers. Consumers get direct or indirect profit from sales promotion like distribution of free products, reduction in prices etc. They also get the opportunities to take part in various competitions. A consumer gets a product at a low price and gets a chance to use the latest product.
From the following points the importance of sales promotion in international marketing may also be judged:
1. Selling Goods in Imperfect Markets:
Every market is imperfect. Under imperfect conditions, there is severe competition and the selling of the product is not easy only on the basis of price differentiation or product attributes unless necessary information about the differences in the characteristics and the uses of the products of various competitors in the market are brought to the knowledge of the target consumers. This can be done by promotion activities, i.e., either through demonstration or comparative advertisement. Therefore, promotional activities are necessary.
2. Distance between Manufacturers and Consumers:
Due to prevalent marketing conditions, mass selling is quite impossible without promotional activities. The world market has so widened in present days that it has crossed the geographical boundaries. The distance between manufacturers and consumers has increased beyond imagination and, therefore, the manufacturer now cannot contact the consumers directly to get them acquainted with the product. In foreign trade this factor assumes greater importance.
3. Promotion War:
In world market if one competitor increases his promotional spending and adopts aggressive strategy in order to oust the other competitors and capture the market in the foreign country, it becomes imperative for other competitors to adopt similar or the same promotional strategy in order to oust others or to survive in the market.
4. Increased Standard of Living and Employment Opportunities:
Sales promotion is always the result of large scale production. But this could be achieved only with the appropriate methods of large scale selling. It means large scale selling is the precondition of large scale production. Large scale selling is possible only with the help of promotional activities. In this way promotional activities increase production and employment.
5. Increased Trade Pressures:
Growth of large scale retailers, such as super markets, chain stores, shopping malls etc., has brought greater pressure on manufacturers for support and allowance because of increase in the profitability of the manufacturers. In export trade, this pressure is even greater because the exporter is dependent on middlemen’s services to a greater extent because selling by his own sales establishment is not so easy. Therefore, sales promotion activities are a must.
6. Effective Sales Support:
Basically sales promotion policies supplement the efforts of personal and non-personal salesmanship’s (advertising). It has been found that good sales promotion materials make the salesman’s efforts more productive.
Thus, in the light of the above considerations, it can be concluded that the sales promotional activities have become part and parcel of marketing mix. Perhaps, there is hardly a manufacturer who does not resort to such activities. Promotional activities are necessary to survive in the international market. No product will reach the consumers unless it is promoted effectively in domestic as well as in international markets.