Consumer Oriented Sales Promotion In FMCG

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26th May 2017 Marketing Reference this

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“Study of consumer oriented sales promotion in FMCG sector” emphasis on 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 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 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.

Keywords: Consumer, Sales Promotion, FMCG Sector, Primary Research,

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

1.1 Promotion

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

1.2 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.

Sales promotion serves three essential roles: It informs, persuades and reminds prospective customers about a company and its products. Companies use sales promotion tools to draw a stronger and quicker buyer response, including short run effects such as highlighting product offers and boosting sagging sales (PhilipKotler,2009).

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 paper. Further Sales Promotion is quite broad term it includes …

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.

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…

Coupons

Price-Off

Freebies

Scratch Cards

Lucky Draws

Bundling Offer

Extra Quantity

2.1 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

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

Research Methodology

4.1 Research Objectives:

To study consumer preferences with respect to sales promotion in FMCG sector.

To examine tradeoffs, relative importance of different attributes while responding to a sales promotion offer.

To study the effect of sales promotions in FMCG sector esp. in soaps and detergent industry.

To study consumer behavior in purchase of soaps and detergent

4.2 Product categories under study

Detergents: Washing Powder for Clothes

Toiletries Soaps

4.3 Research Design

Research design selected for this project is Descriptive.

4.4 Data collection Method:

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.

Secondary Data Collection method:

Reference books &Internet.

4.5 Sampling Detail

Target population:

The Population for this research study consists of the residence Of Raipur City.

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

Sample size: 30 consumers 30 retailers.

Data Analysis & Interpretation

5.1 Consumers:

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

Table 1- Soap Preference of consumers

Bathing -soaps

Respondents

Lux

8

Hamm

2

Lifebuoy

10

Nirma

6

Others

4

Source: Primary Data

Interpretation:

The above question has been formed to know the soaps and detergents at the top of the mind of the customers. The Table 1 implies the 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.

Form the above result it is clear that out of 30 customers more than 10 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(Lux, Lifebuoy, Nima).

Table 1.1- Detergent Preference of consumers

Detergent powder

Respondents

Nirma supper

5

Wheel

5

Surf

10

Ariel

8

Others

2

Source: Primary Data

Interpretation:

Form the above result it is clear that out of 30 customers 10 are purchasing the same brand of detergent.

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

Table 2- Brand Loyalty of consumers

Particulars

Respondents

Yes

19

No

11

Source: Primary Data

Interpretation: Table 2 indicates the level of brand loyalty of the consumers towards the brands of soaps available in the market. The above figure shows that on 63% of the respondents are loyal to their brands of detergent/soap.

Q3. Which factors do you normally consider while purchasing a particular brand of Soap / Detergents?

Table 3 – Purchasing Criteria of consumers

Factors

Bathing soap

Det.powder

Fragrance

6

5

Quality

10

12

Company image

3

3

Price

6

5

Packaging

3

2

Others

2

3

Source: Primary Data

Interpretation:

Table 3 shows the effect of influencing factors in the purchase decision of the soaps and detergent 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 table above it shows quality as the most influencing factors in the purchase decision while price& fragrance is also an important for purchase decision.

Q4. Do you consider promotional schemes while purchasing a particular brand of Soap / Detergent?

Table 4 – Impact of Promotional Schemes

Particulars

Respondents

Yes

19

No

11

Source: Interview Method

Interpretation:

Table 4 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.

Q5. Which of the following promotional schemes you have come across so far?

Table 5 – Available Promotional Schemes

Promotional schemes

Respondents

Coupons

3

price off

12

Freebies

4

scratch cards

3

lucky draw

2

Bundling

1

extra qty.

5

Source: Primary Data

Interpretation:

Table 5 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 to launch their new products in the market with which schemes.

Q6. Which medium do you feel is suitable to promote the various promotional schemes?

Table 6 – Mediums for Promotion

Source

Respondents

Radio

8

TV

16

Newspaper

3

Hoarding

2

Others

1

Source: Primary Data

Interpretation:

Table 6 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 place it shows radio as the media to promote the product in the market.

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

Table 7 – Existing Schemes being used

Particulars

Respondents

Yes

18

No

12

Source: Primary Data

Interpretation:

Table 7 idea about the awareness of the promotional schemes offered in the market on their existing soaps and detergents.

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 you get an attractive promotional offer in the product other then of your choice will you switch over?

Table 8 – Consumers Choices

Particulars

Respondents

Yes

19

No

11

Source: Primary Data

Interpretation:

Table 8 shows the level of brand loyalty among the consumers. The result clearly shows that out of 63% 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.

5.2 Retailers:

Q1. Since how long are you in this business?

Table 9 – Retailers Experience

Particulars

Respondents

1-5 Years

3

5-10 Years

10

More than 10 years

17

Source: Primary Data

Interpretation:

Table 9 gives an 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.

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

Table 10 – Stock Details

Companies

Respondents

Nirma

3

HUL

10

P&G

10

Godrej

5

Others

2

Source: Primary Data

Interpretation:

Table 10 gives an 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 of the product in market. Most of the retailer stocks all types of soap and detergent.

Q3. Do you suggest customers to purchase a certain brand?

Table11 – Retailers Influence over customers

Particular

Respondents

Yes

8

No

22

Source: Primary Data

Interpretation:

Table 11 helps to understand the role of retailers in the purchase decision.In above table 73% of retailer are not suggested to purchase particular brand because of personal relation or that customer are brand loyal. While 27% of the retailer are suggesting the consumers to buy particular brand. There could be many reasons like, extra margin, relations with consumers and quality of the products which retailer may get the benefit of the same.

Q4. If Yes why?

Table 11.1 – Retailer’s Preference

Particular

Respondents

High margin

17

Quality

10

Relationship

03

Source: Primary Data

Interpretation:

Table 11.1 gives an idea about the reasons why retailers suggest the consumers to buy particular brand. In above table it is clear that for margin and quality are the reasons behind the same. For the company it may be helpful to target such retailers to sell their product in the market easily.

Q5. Do customers look for various schemes in the product?

Table 12 – Customers Preference

Particular

Respondents

Yes

22

No

8

Source: Primary Data

Interpretation:

Table 12 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.

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.

Other types of schemes, such as zero-percent financing, reward points, constituted the remaining proportion of the promotions. .(Priya Jha Dang, 2005).

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.

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.

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.

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

People are more quality and price oriented.

Retailers are not suggest to purchase particular brand because of personal relation or that customer are brand loyal

Price off, product bundling and extra quantity are more demanded by the consumers over others schemes.

The most frequently launched promotion is the premium offer. This scheme constitutes 56% of the promotions.(Priya Jha Dang, 2005).

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 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.

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.

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.

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.

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