Tag: Advanced Accounting B.com Notes

Event Sponsorship

Event Sponsorship is a way of advertising your brand by “sponsoring” or supporting an event financially in exchange for brand exposure to highly engaged attendees.

1. It’s personal.

Nowadays, a growing number of companies are reallocating their advertising budget towards event sponsorship to connect with prospects and customers in a more personal way.

2. It’s cost-efficient.

For a relatively minor financial outlay, the right event partnerships have great potential for customer reach, influence and engagement which means more bang for your buck compared to traditional forms of advertising.

3. It’s seamless.

The right event partnership can seamlessly integrate your brand message into the event’s theme and content. Your message is delivered in a harmonious way, unlike ads that are sometimes annoying and intrusive.

Benefit

1. Brand Interaction

Aside from the visibility and awareness, events are an opportunity for brands to directly interact with prospects or current customers. It lets you connect with your audience in a meaningful way.

2. Attendee Data

The database of highly qualified prospects from the attendee list is worth its weight in gold. Events are a terrific platform for advancing your brand message and staying connected with your fresh targets.

3. Media Exposure

High-profile events featuring VIP attendees and speakers get ample media coverage. Sponsoring such events can give your brand free media exposure.

4. Direct Engagement

Small events are not to be dismissed. As a sponsor, your brand will likely get better quality engagements with a niche group of prospects.

5. Brand prestige

Industry influencers, top executives, VIPs attending or speaking at events have interests that may align with your business. Sponsoring the right events will open doors for lucrative opportunities and lend some level of brand prestige by association.

Cause Sponsorship

Cause sponsorship is an interesting and accessible tool for companies to get involved in corporate social responsibility without having to create a platform on their own and by partnering with experts on specific issues as well as providing support for a long-term platform versus a PR stunt.

Cause marketing builds an extra level of brand loyalty by giving customers an extra reason to support your business. When you communicate to customers about the ways that your business contributes to the common good, you create a shared sense of purpose while branding your company as a conscious, forward-thinking enterprise. Sponsorship is a form of cause marketing that involves donating to an event or organization and receiving public recognition for your contribution, linking your business name to the name of the cause.

Timing

A business that launches a cause marketing campaign has some degree of control over the timing of the promotion. For example, a food business could market a plan to switch to organic ingredients to coincide with Earth Day. This business can promote its involvement with this cause as frequently and as widely as it chooses. In contrast, a business that sponsors an event or an enterprise such as a team has less control over the promotional efforts that link its name with its cause, because these acknowledgements usually originate with the organization rather than with the donating business.

Effectiveness

According to the Cause Marketing Forum, 47 percent of consumers in 2012 purchased a product at least once a month because its brand was aligned with a worthwhile cause. While cause marketing efforts such as commercials that raise awareness about a company’s environmental practices are aimed at encouraging customers to buy products right away, sponsorships may be geared more toward building long-term awareness of a company’s brand. Both approaches ultimately help to increase sales, but the effect of sponsorship brand-building is harder to measure.

Scope

When your business launches a cause marketing campaign, you align yourself with an idea that is consistent with your overall mission. For example, a company that sells outdoor gear might get involved in a campaign to preserve wilderness areas. When you include sponsorship as an element in your cause marketing campaign, you align your business with a specific organization that shares your goals. Sponsorship has a more limited scope than general cause marketing, because it involves targeted contributions, usually earmarked for specific funds or happenings.

Audience

Unless your company is sponsoring a major global event such as the Olympics, sponsorship will usually reach a more limited audience than a general cause marketing campaign. For example, raising money to help children in need may appeal to anyone who cares about needy children, while corporate sponsorship of an elementary school baseball team will speak directly to parents at that particular elementary school. However, these elementary school parents will be particularly invested in the business that supports them specifically.

Cause marketing is marketing done by a for-profit business that seeks to both increase profits and to better society in accordance with corporate social responsibility, such as by including activist messages in advertising.

A similar phrase, cause-related marketing, usually refers to a subset of cause marketing that involves the cooperative efforts of a for-profit business and a non-profit organization for mutual benefit. A high-profile form of cause-related marketing occurs at checkout counters when customers are asked to support a cause with a charitable donation. Cause marketing differs from corporate giving (philanthropy), as the latter generally involves a specific donation that is tax-deductible, while because marketing is a promotional campaign not necessarily based on a donation.

Cause marketing can take on many forms, including:

• Transactional Campaigns: A corporate donation triggered by a consumer action (e.g. sharing a message social media, making a purchase, etc.) and Non-Transactional Campaigns: A corporate donation to a cause such as in cause sponsorship is not contingent on an explicit action of the consumer.
• Point of Sale Campaigns: A donation solicited by a company at the point of sale but made by the consumer (e.g. consumers are asked to round up their purchase or donate a dollar when they check out online or in-stores)
• Message-Focused Campaigns: Business resources are used to share a cause-focused message. For example, a campaign that encourages behavior change (e.g. don’t text and drive), drives awareness about an important cause (e.g. talking with elderly parents about driving) or encourages consumer action (e.g. signing a petition to save whales from captivity).
• Portion of Purchase: Businesses donate a portion of their sales to a nonprofit or cause.
• Pin Ups: Primarily for in-house use. Customers will donate and fill their name on paper icon, which will then be hung up in the store.
• Buy One Give One: Businesses will donate a product with comparable value to a designated product based on each sale of that product.
• Volunteerism: Rather than asking for a donation, businesses will ask if customers will volunteer their time to a certain organization.
• Digital Engagement: Businesses create a “digital experience” using social media and software engineers to spread awareness and raise funds for a cause or nonprofit.

Personal selling consists of individual and personal communication with the customers in contrast to the mass and impersonal communication through advertising. Because of this characteristic, personal selling has the advantage of being more flexible in operation.

A salesperson can tailor his sales presentation to fit the needs, motives, and behaviour of individual customers. He can observe the customer’s reaction to a particular sales approach and then make necessary adjustment on the spot. Thus, personal selling involves a minimum of wasteful efforts. The salesperson can select and concentrate on the prospective customers.

Personal selling helps in sales promotion. It is very important to manufacturers and traders because it helps them to sell their products. It also helps them in knowing the tastes, habits, attitudes and reactions of the people.

The manufacturer can concentrate on producing those goods which are required by the customers. This will further promote the sales. Moreover, a good salesman is able to establish personal support with customers. This way, the business gains permanent customers.

Improving Image:

Note that salesmanship can remove bad image or misunderstanding by highlighting company’s achievements and offers. The detailed explanation about company and its products removes all doubts and misunderstandings. It helps in restoring company image and reputation in market.

Customer Confidence:

By systematic sales talk and presentation, a capable salesman can remove all doubts, quarries, objections and misunderstandings, and can win customer’s confidence. It increases customers’ faith in company and its offers.

Flexibility:

Sales talks and presentation can be adjusted according to situation to suit individual nature, motives, and problems.

Individual Services:

Salesmanship offers individual services. It can meet personal expectations of buyers. It leads to customer satisfaction.

Complementary to other Promotional Tools:

Personal selling can support advertising, sales promotion, and publicity. It removes the drawbacks of advertising and sales promotion. Advertising increases awareness while personal selling reinforces the advertising message. Similarly, it can make sales promotion tools more effective by personal guidance or conviction.

Personal Attention:

Advertising and publicity are among mass communication tools. They do not cater individual needs. Personal selling focuses on personal problems of customers. It is comparatively more effective and result-oriented.

Importance to Customers:

Personal selling is equally important to the customer as it is for organization. However, the role of personal selling becomes more important for the illiterate and rural customers, who do not have many other means of getting product information.

The customers are benefited by personal selling in the following ways:

1. Helps in identification of needs: Personal selling helps the customers in identifying their needs and wants and knowing how these can be satisfied.
2. Latest Market Information: Through personal selling customers get latest market information regarding price changes; product availability and new product introduction etc. which helps them in taking their purchase decisions in a better way.
3. Expert Advice: Consumers get expert advice and guidance in purchasing various goods and services, which helps them in making better purchase.
4. Better Standard of Living: It induces the customers to purchase a new product which is capable of satisfying their needs and wants in better way and thus, helps in improving their standard of living.

Direct marketing is a type of advertising campaign that seeks to achieve a specific action in a selected group of consumers (such as an order, store or website visit, or a request for information) in response a communication action done by the marketer. This communication can take many different formats, such as postal mail, telemarketing, point of sale, etc. One of the most interesting methods is direct email marketing.

Much direct marketing activity is intended to result in a sale. However, in some situations a direct sale might be unlikely or inappropriate. In such cases some other form of measurable response might be used. For example, a direct mail campaign and a telephone-marketing programme may be used in the engineering industry to invite and encourage buyers to attend a machine tool exhibition. A leaflet drop for double-glazing might contain a free telephone number for the prospect to request a brochure or estimate.

The result may not be a sale, but some specific, measurable action that will hopefully contribute to an ultimate sale. Although a sale may not be the immediate objective of a direct marketing campaign, some form of direct response on behalf of the recipient of the message will be. This, in turn, will contribute to the eventual sale. Hence, direct marketing is not necessarily the same as direct sales. It might be used to keep customers informed of new product developments or to send them specific discount offers.

Direct marketing should not only be used as a simple tactical marketing communications tool, but should be integrated with the rest of the communications mix. All marketing communications elements interact to some extent. Direct marketing is likely to form a major part of communications strategy of many companies and not simply be used as a tactical adjunct. Other forms of communication are likely to be used in conjunction with direct marketing programmes even if these are only general corporate advertising programmes. Many firms use direct marketing predominantly, but not to the exclusion of other communication methods. Direct marketing is often used as part of integrated CRM programmes, and such CRM programmes, by their very nature, are long term and strategic in nature.

The goal is to provide customers with information relative to their needs and interests. A profile on the direct and interactive marketing industry offers a useful way of looking at it as a cyclical process with six distinct phases:

• The creative stage and design phase, where the marketing plan is constructed and appropriate media channels are selected;
• Data compilation where both internal data, such as customer lists and outside data from a database company or list broker is assembled in preparation for the next stage in the programme;
• Database management, where information is mined, fused, aggregated or disaggregated, enhanced and standardized for use in the programme;
• Database analysis, or fine tuning the database which further focuses on an optimal target market;
• Execution and fulfilment where customer inquiries and orders are acted upon and information on response rates is collected for final post programme analysis;
• Response analysis where the results of the campaign are examined for effectiveness before the cycle begins again.

Objectives

1. High segmentation and targeting

It enables the company to reach segments of the audience with personalized messages. Thus, companies that invest their time in researching and identifying the customers that are most likely to convert get a huge payoff. It is because the efficiency of where the marketing team directs its efforts is increased.

2. Optimizing the marketing budget

Setting realistic goals is the best method for a marketing manager to achieve sales growth, especially when they are on a tight budget. Proper optimization of a direct campaign enables them to achieve the same or even better results while using only a fraction of the costs usually associated with traditional methods of advertising.

3. Increasing customer loyalty

Cultivating customer loyalty is an important aspect of retention and sales growth. It enables companies to increase their sales volume with current and former clients. Digital direct marketing facilitates the sales growth by letting companies communicate with their current customers in a way that the company-client relationship is well maintained.

According to the Direct marketing Association (DAM),” Direct marketing is an interactive marketing system that uses one or more advertising media to affect a measurable response and/ or transaction at any location.”

It is the oldest form of communication where organizations directly communicate with end-users through emails, telephone, fax, text messages, catalog, brochure, and promotional letter.

Nowadays people buy more online, so marketers help consumers in the buying process by sending those catalogs and other marketing material which makes the process easier for consumers.

Historically, direct marketing is the first area of marketing communication that adopted an integrated marketing approach. In fact, it would be in appropriate to rename the direct marketing as integrated direct marketing.

One reason that integration placed so well in direct response marketing is because of its factors on the customers. By using databases, companies can become more sensitive to customers warns & needs & less likely to bother them with unwanted commercial message. An authority on the subject has defined Integrated Direct Marketing as a systematic method of getting close to your best current potential customers.

Direct marketing enables organizations to communicate directly with the end-users. Various tools for direct marketing are emails, text messages, catalogues, brochures, promotional letters and so on. Through direct marketing, messages reach end-users directly.

Direct Marketing is a form of advertising through mail, print or TV- Direct response ad.

Combining Direct Marketing with Internet/Interactive:

Direct marketing makes use of online promotions through websites, interactive CDs/DVDs/kiosks to seek a response or complete a sale. Online catalogues promote the product/service to elicit a response.

Combining Direct Marketing with Public Relations/ Publicity:

Public relations activities and Publicity oriented activities employ direct marketing & direct response techniques.

Combining Direct Marketing with Personal Selling:

Telemarketing & direct selling is an aspect of Personal selling. In multi-stage selling, direct mailers are used to invite prospects or after direct selling efforts, direct mailers are sent as a follow-up & reminder.

Combining Direct Marketing with Sales Promotion:

Direct mailers inform a prospect of sales promotion events/activities or invites a prospect by way of contests & prizes & gifts as incentives. In sales promotion implementation, direct marketing tools are employed to inform customers.

Benefits of digital direct marketing:

• High segmentation and targeting. One of the great advantages of this type of marketing is that you can reach your specific audience segments with personalized messages. If you want to succeed, you should invest time to research and identify the consumers most likely to convert and thus direct your efforts to actions that really work.
• Optimize your marketing budget. Addressing online direct marketing to a specific audience allows you to set realistic goals and improve your sales on a tight budget. If you properly optimize your direct campaign, you will achieve results with only a small percentage of the cost of traditional advertising.
• Increase your sales with current and former clients. Digital direct marketing lets you communicate with your current customers to keep the relationship alive while continuing to bring value. It also allows you to get back in touch with old customers and generate new sales opportunities.
• Upgrade your loyalty strategies. Direct contact with your customers allows you to customize your promotions, emails, and offers to create an instant bond. To maximize results, you can combine your direct marketing methods with your loyalty program.
• Create new business opportunities. Direct marketing allows you to adapt to market demands at all times and respond more effectively.
• Tests and analyzes the results. Direct response campaigns give you the opportunity to directly measure your results. Take the opportunity to squeeze the most of your tests and make decisions in real time.

Companies use sales promotions to increase demand for their products and services, improve product availability among distribution channel partners, and to coordinate selling, advertising, and public relations. A successful sales promotion tries to prompt a target segment to show interest in the product or service, try it, and ideally buy it and become loyal customers.

Messaging development

PR is used to effectively communicate key messages to a diverse public. By first identifying all audiences and their drivers messages can then be tailored to resonate with each party so that each takes the desired action.

Try using this PR approach when developing messaging for your next marketing program. Start by identifying all of your primary and secondary audiences to ensure your message will stick. Grab a whiteboard and make a list. Include all of the distinct groups that make up your audience so your messaging addresses each of their unique needs. Following are some key groups to consider:  

• Customers
• Prospects
• Employees
• Investors
• Partners
• Suppliers
• Press
• News outlets
• Social media networks
• Content marketing

A fundamental principle of PR is establishing and nurturing relationships. Having long-standing relationships with industry experts, reporters, editors, reviewers and bloggers is important to get your stories covered and keep your company relevant.

Consider leveraging these relationships when developing your content marketing strategy. How can these industry influencers help you distribute your content and raise awareness? Providing these key contacts with your story (i.e., content) offers an opportunity to gain additional impressions and a better chance for your content to go viral.

Brand awareness

A core function of PR is to quickly distribute information and generate awareness among large audiences. Seeing a company name published across a trusted news source implies validation and leaves the impression that the brand is credible and trustworthy.

Take this PR tactic of gaining exposure and validation through media hits, and apply it to your advertising strategy. What news outlets, trade events, industry publications and online sources do your prospects and customers visit or attend? To gain valuable impressions, you need to focus your advertising efforts on news sources and events your audience relies on regularly.

PR and marketing serve similar purposes. Consciously promoting PR from a line item in your corporate communications budget to a supporting role infused across your marketing mix will enable you to deliver on a clear, coordinated plan that combines the best of both worlds.

Direct mail: It is referred to a message sent to the prospective buyers through mail. It can be an announcement, offer, reminder, products (pre-approved credit cards, etc.), etc. It advertises the organisation, and its product and services. Marketers need to shortlist the buyers carefully and send the messages accordingly. Most of the organisations get the benefit of lower rates when the mails are sent in bulk. The organisations get the details of buyers when they visit store.

Catalogue marketing: The organisations send details of their products in the form of a catalogue to the potential buyers. These can be in the form of a print media or even a CD or an online link.

Telemarketing: It involves reaching the potential customers over the phone to sell the product and services. To run a successful telemarketing campaign, the organisation has to rely on well researched customer data. The customer’s profile should match the product which the customer may buy. This is a tool that is gaining lot of significance as it reduces the cost of personal selling, and is considered reliable on following up on direct marketing campaigns. For example, after sending a catalogue or an offer via direct mail, telemarketing representatives do follow up calls to remind as well as influence buyers to buy the product or service. The organisations need to ensure that the telemarketing representatives are well trained on products as well as soft skills.

Direct Response

Direct response is a type of marketing designed to elicit an instant response by encouraging prospects to take a specific action. Direct response advertisements must trigger immediate action from prospects, since the goal is to generate leads quickly. In contrast to traditional marketing, which aims to raise brand awareness and promote brand image long term, direct response shows ROI immediately. 

Marketers can leverage direct response on any numbers of channels, including TV, print, radio, email, digital and social. Each direct response campaign should have a specific goal sign up, share with contacts, register, etc. and, in exchange, provide prospects with an irresistible offer.

Internet marketing/ online marketing: Internet today is accessed for everything from reading news, buying merchandise, communication, information, relationships, etc. This gives a great opportunity for marketers to reach the masses directly and individually. Search Engine Optimisation is done on large scale to ensure prominent listings in the search results on internet. Display Ads like pop-ups and pop-downs give opportunity to buyers to respond directly to the message. Social media sites like twitter, facebook, etc. are a great medium to directly reach the buyers. Direct mail, newspapers, etc. hardly give an opportunity to marketers to interact with buyers. Internet or e-marketing gives ample opportunities to interact directly with buyers.

Mobile marketing: The marketers try to reach out the prospective buyer via messages on their mobile phones like SMS, MMS, push notifications, mobile APS, etc. When a mobile user opens a certain APP, he/she may receive various notifications, ads, etc. promoting certain products. The APPs (Application) automatically detect a person’s location information and displays relevant promotion message. Organisations strive to make this tool as efficient and effective as possible. If the user is inclined to explore or buy a certain product, he/ she should face minimum hassle for the same.

Public relations are different from advertising. Public relations agencies don’t buy ads, they don’t write stories for reporters, and they don’t focus on attractive paid promotions. The main role of public relations is to promote the brand by using editorial content appearing on magazines, newspapers, news channels, websites, blogs, and TV programs.

Using earned or free media for promotion has its own benefits as information on these mediums aren’t bought. It has a third-party validation and hence isn’t viewed with skepticism by the public.

External Publics of Public Relations: External Publics of Public Relations includes Consumers/Customers, Community, Mass Media, Government, Financial Institutions, Action Groups and General Publics: External communication covers how a provider interacts with those outside their own organization.

Internal PR is just as important and can make a huge difference when it comes to your external efforts.

Media Relations: Establishing a good relationship with the media organizations and acting as their content source. The PR department collects information from the press or media sources while maintaining cordial relations with them. This data is used by the company to plan its marketing strategies.

Investor Relations: Handling investors events, releasing financial reports and regulatory filings, and handling investors, analysts and media queries and complaints. Investors are essential to the organization. Hence, the PR department keeps them informed, manages their events, releases financial reports and manages queries and complaints.

Government Relations: Representing the brand to the government with regard to the fulfilment of policies like corporate social responsibility, fair competition, consumer protection, employee protection, etc.

Community Relations: Handling the social aspect of the brand and establishing a positive reputation in the social niche like environment protection, education, etc.

Internal Relations: Counselling the employees of the organisation with regard to policies, course of action, organization’s responsibility and their responsibility. Cooperating with them during special product launches and events.

Customer Relations: Handling relationships with the target market and lead consumers. Conducting market research to know more about interests, attitudes, and priorities of the customers and crafting strategies to influence the same using earned media.

Marketing Communications: Supporting marketing efforts relating to product launch, special campaigns, brand awareness, image, and positioning.

Sales promotions have traditionally been heavily regulated in many advanced industrial nations, with the notable exception of the United States. For example, the United Kingdom formerly operated under a resale price maintenance regime in which manufacturers could legally dictate the minimum resale price for virtually all goods; this practice was abolished in 1964.

Most European countries also have controls on the scheduling and permissible types of sales promotions, as they are regarded in those countries as bordering upon unfair business practices. Germany is notorious for having the most strict regulations. Famous examples include the car wash that was barred from giving free car washes to regular customers and a baker who could not give a free cloth bag to customers who bought more than 10 rolls.

Advantages of Sales Promotion

Strengthens Customer Involvement and Loyalty: Sales promotion can be the primary mechanism organizations use to interact with their customers and ultimately build a stronger connection (e.g., offer customer rewards).

Helps Create Awareness of New Products: Sales promotion is a highly effective methods for exposing customers and business partners to new products and for moving customers to take an action (e.g., sample a product).

Can Be Quick to Develop: Compared to other types of promotion, some sales promotions can be quickly created and made available within a market (e.g., creation and distribution of email coupon).

Helps Reduce Inventory: Sales promotion can be used to rapidly reduce inventory in situations where product replacement is needed (e.g., products nearing expiration date; clearing inventory to make room for new models).

Used to Support Other Promotions: Sales promotion is often used as a supporting feature of other methods of promotion (e.g., salespeople may give promotional items to give to sales prospects).

Disadvantages of sales promotion

• As the sales promotional activities are short-lived, the results of such activities will also be short-lived. The moment the various inducements offered by the marketer are withdrawn, the demand is bound to fall.
• The number of sales promotional activities to be performed are too many, distribution of free samples and gifts, making such offers as price off and money refund, holding contests, participating in trade fairs and exhibitions, display and demonstration of goods and so on.
• As far as the various types of discounts (cash discount, off-season discount and festival discount etc.) are concerned, there is always a feeling that these are not real and the price would have already been hiked.
• Sales promotion offers such as price cut, discount, free gift etc., may sometimes create an impression that these are being done to sell a poor-quality product.
• Sales promotion is generally required to promote sales of those brands which are not so very popular. Popular brands move fast in the market without much effort. Brand popularity can be secured mainly by means of advertisement and personal selling.
• Another drawback of sales promotion is that there is a tendency on the part of all the competitors to use the same method of sales promotion at the same time. Such an approach may not benefit all. For example, if all the manufacturers of air-conditioners offer off season discount (during winter), the consumer may only decide based on brand popularity.
• The marketer cannot use any sales promotional tool at any time. Certain tools are to be used only in the introduction stage of a product, while others will be used in the growth and maturity stages. Indiscriminate use will not produce the expected results.
• Sales promotion, by itself, cannot produce results. It can only supplement advertising and personal selling which are vital for a business.
• It involves additional expenditure on the part of the business. Apart from the heavy expenditure to be incurred on advertisement and personal selling, the business may have to spend further on sales promotion. This leads to an overall increase in promotional costs.
• Sales promotion is non-recurrent in nature. It cannot, therefore, be used continuously. The marketer has to select the most appropriate tool of sales promotion and the same shall be introduced at the right time.

Sales promotion aimed at consumers is called ‘consumer sales promotion ‘. It aims at stimulating consumers.

• Opportunity: A promotion allows brands the opportunity to communicate on packaging and enables them to focus campaigns around an event. Communication is a skill that creates formidable relationships with consumers that make your brand unique.
• Reputation: A brand is not the only one who can communicate a consumer promotion. Word of mouth is one of the most positive forms of communication, especially if it is coming from a friend or colleague, as they are usually a trusted and reliable source. Give your consumers a reason to be surprised and they will make sure your reputation thrives.
• Differentiation: A brand needs to be different to survive, and a consumer promotion can be a fantastic way to make a brand stand out from the crowd. It holds the potential to add unique value to a customer through a competition or unique experience, creating a reason to choose your product in a crowded market.
• Revenue: Simply put, more sales from your promotion will create higher revenue. However, brands need to always calculate their costs and ensure they are aware of how many people may redeem the promotion and ensure that it is a profitable endeavor.
• Focus: A consumer promotion often becomes an event for the company, which then allows it to focus all its channels of marketing. A focused approach can force a firm to change the way they market themselves and create brand engagement through those changes.
• Information: When customers attempt to redeem promotions, brands can often retrieve data such as email addresses and their home address. This creates the opportunity to target a customer through segmentation; you can then use direct mail or email campaigns to create personalized marketing.
• Incentive: All the points above drive sales and make consumers’ decision-making much simpler. If a brand is offering a similar product but something additional, then the consumer will often want more for their money.

Objectives of Trade Promotion

Support other forms of promotions

If you are running an advertisement and marketing campaign in a particular geography, you need to ensure that your dealer is also carrying ample stock. On the other hand, there are other trade promotions which can run down to the retailer level as well. The company might not reimburse to the distributor only. They can reimburse the retailer as well. And at such times, the distributor needs to support the company in such forms of trade promotions to perform better and bring in more sales.

The company can also support the distributor with co-branding By giving a set percentage of advertisement money to the distributor, provided he also contributes towards the advertisements. Through these means, the brand is expanding its own presence in the market and also ensuring that there is enough pull and push in the market for its products to be liquidated at the ground level.

The above were the 6 objectives of trade promotions adopted by any company. The main thing is – these objectives are achieved if the trade promotions are done in a smart manner and the benefits are actually passed on to the dealer or distributor.

Many times, there are too many channel conflicts when the company commits something and does not deliver. At other times, the company runs so many promotions that the dealers expect promotions each and every time and they do not promote the product when no trade promotions are available.

To push more than competitors

It is not necessary that a channel dealer will deal in only one brand. He can be a multi-brand dealer as well. As a result, your share on his counter might be small. However, if the dealer is carrying more of your stock then the competitor’s, then he will definitely push your brand over that of the competitor.

Thus, one of the objectives of trade promotions is to ensure that the dealer has ample stock and that he is pushing your product above competitors.

Example: If HTC offers 10% discount to the dealer If he does 100 numbers, then the dealer will likely sell more of HTC mobiles rather the selling Samsung. As a result, HTC will have much more sale and counter share than Samsung.

Increase stock holding in market vs company warehouse

Inventory lying in company warehouse is a huge cost to the company. Supposing 1000 refrigerators were lying in a company’s warehouse (they have much more than that). The company is paying interest on the capital invested for these 1000 units. They are paying money for rent of warehouse as well as for the manpower handling the products.

Not only this, the products could have been lying in the warehouse at least 1 month after the manufacturing process. So the interest rate is skyrocketing. At such times, it is one of the objectives of trade promotions to push the product in the market and to end dealers instead of keeping the product in the company warehouse. This ensures greater stock holding in the market and creates more push in the market because of the availability of the product.

Increase display levels

One of the key aspects of products at the consumer level is the level of display you have in the market. Samsung company is notorious for the pressure it puts on its salespeople to ensure that their smartphones are displayed in the market. The competition in the smartphone market is so high, that when a consumer needs a smartphone, he will buy the brand which is immediately available. If the product from one brand is not available, he may buy another brand of the same specs.

Even companies like Apple use trade promotions to ensure that there is ample stock at dealers ends during festivals or during peak buying time. This is because more the display, more will be the sale; which is the crux of retail selling. The same goes for television. There are so many television brands in the market with little or no differentiation, that the customer will rely on the local retail executive and the product which is available rather than holding for some other brand.

Move excess stock forward

Many products are known to be seasonal in nature. However, because it is not the season of the product, there will still be sales pressure on salesmen to move the product in the market. This can be done via Trade promotions. In non-season, most companies offer incentives to their channel dealers or to their sales executive to achieve better sales figures.

The advantage of offering these incentives is that the channel dealer will push the product in the market. If you notice, most air conditioner retailers and dealers give huge discounts during the offseason (rainy season or winter season). This is because the discount is given from the company to the dealers, which is in turn passed on to the customers. Thus, the company achieves more sales by pushing more stock in the market.

It is one of the objectives of trade promotions that the excess inventory lying with the company should be liquidated. Not only seasonal product, any consumer or industrial level product can be pushed in the market when the company has excess inventory. Management of this excess inventory is a cost to the company in terms of warehousing and capital invested. So it is better than the inventory be paid up by dealers and they lie at dealers place rather than lying in company warehouse.

Achieve widespread distribution

One of the first objectives of trade promotions is to increase the distribution level of a company. If Kwality walls want to improve the distribution of its ice cream, it can give 1 ice cream free for every ice cream sold. This means higher margins to the retailer.

Looking at the margins, more and more retailers will tie up with the company. These new tie-ups mean more branding and sales opportunity for the company as well. Thus, by using various trade promotion strategies, a company can achieve widespread distribution.

This is especially important for start-ups which are not recognized but which want to establish themselves in the market. Hence, you will see start-ups using more trade promotions then mature companies.