SALES PROMOTION IN FMCG

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ROLE OF SALESPROMOTION IN

FMCG : SOAP &

DETERGENT

INDUSTRY

Ankur Jain

128070592004

Ajaysinh Parmar

128070592076


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Introduction - FMCG

The term FMCG (fast moving consumer goods) , Frequently used and is

generally used in India to refer to products of everyday use.

However, the term refers to relatively fast moving items that are used

directly by the consumer.

Characteristics of FMCG Products:

Individual items are of small value

The consumer keeps limited inventory of these products and prefers to

purchase them frequently, as and when required.

Many of these products are perishable.

The consumer spends little time on the purchase decision

Trial of a new product

These products cater to necessities, comforts as well as luxuries


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Well-established distribution networkextending to rural areas.

Strong brands in the FMCG sector.

Low cost operations.

Low export levels.

Small-scale sector reservations limit abilityto invest in technology and achieve

economies of scale.

Several identical products.

Large domestic market.

Export potential.

Increasing income levels will result infaster revenue growth..

Imports.

Tax and regulatory structure.

Slowdown in rural demand.

SWOT

SWOT ANALYSIS OF FMCG SECTOR


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Introduction to the topic

The importance of consumer sales promotion in the marketing mix of the

(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 consumers perceptions regarding sales

promotion.


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Introduction to the topic

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

Convenience as well as hedonic benefits such as entertainment,

exploration

Self-expression.


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4 Ps Of Marketing

Product Place

Price Promotion


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Promotion is one of the important elements of marketing mix.

There are so many elements of promotion such as

AdvertisingDirect

Marketing

PublicRelation

SalesPromotion


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Sales promotion serves three essential

roles

informs persuades reminds


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Informs

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 asultimate consumers about the attributes and availability of his

products.


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Persuades

The second purpose of promotion is persuasion.

The cut throat competition among different products putstremendous pressure on their manufacturers and they are

compelled to undertake sales promotion activities.


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The third purpose of promotion is reminding consumers aboutproducts availability and its potential to satisfy their needs.

Reminds


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Types Of Sales Promotion

SalesPromotion

Customer

oriented

Trade

oriented


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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 is targeted to the ultimate

user of a product or service and includes

Consumer Oriented Sales Promotion includes


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Sampling

Couponing

Premiums

Contest

Refunds


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Rebates

Bonus Packs

Price-off

Loyalty Programs

Event marketing

Point of Purchase


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Marketers 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


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Factors Influencing Consumer Oriented sales

promotion:

Target market

Nature of product

Stage of product life cycle

Budget available for promotion


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Sales Promotion from the Consumers point

of view

Willingness to buy on sales promotion offer

Ability to induce trial

Long-term impact

Preference of Schemes

Perceived Quality


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Perceptions regarding underlying company

motivations

On tapping perceptions regarding underlying company motivationsfor sales promotion :

to increase sales was ranked highest followed by to attract

switchers and to sell excess stocks. While providing value to

customers

To reinforce company image were ranked lowest. This indicates

that consumers believed that companies undertake 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.)


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Perceptions regarding underlying company

motivations

Since retailers observe consumers in-store behavior 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 theconsumer 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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Trade Oriented Sales Promotion

Trade oriented sales promotion is targeted toward marketing

intermediaries such as wholesalers, distributors, and retailers.

Promotional and merchandising allowances, price deals, salescontests, and trade shows are some of the promotional tools

used to encourage the trade to stock and promote a companys

products.


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Sales promotion from the retailers point of

view:

Perceptions on Scheme Preference

Perceptions about Buying Roles

Perceptions about their role in decision-making Perceptions about Response to Sales Promotion Offers

Variations in Information Flow

Dealer-Retailer Dynamics

Margins


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Sales promotion from the retailers point of

view:

Perceptions about terms and conditions

Nature of POP

Servicing during duration of Scheme Problem of left-over

Gifts for Retailer motivation

Post Promotion Behavior

Perceptions about mass media announcements Handling Problems


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Why do Sales promotion schemes

affect sales?There are three mechanisms behind these facts.

Categoryexpansion

Brandswitching

Purchase

quantity


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Why do Sales promotion schemes affect

sales?

First,consumer can increase the quantity they buy just because the

product is on sale.

Second,consumers are inducing to purchase another branddifferent from the one they would have purchased when there is no

promotional incentive.

Finally,consumers total consumption of the product category is

increased by the promotion. However, in the long term this positiveeffect may be diluted because a promotional campaign has no

permanent effect in the sales of the firm


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sales promotion strategy

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 :

advertising campaign

public relation activities

free sampling campaign

free gift campaignThrough prize giving

competitions

exhibitions

through demonstrations

a trading stamps campaign

telemarketing

door-to-door salestemporary price cuts

personal sales letters/e-mails


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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


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Types Of Sales Promotion Strategies

PushStrategy Pull Strategy

Combinationof Two


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Push Strategy :

A pushsales promotion strategy involves pushingdistributors and

retailers to sell your products and services to the consumer by

offering various kinds of promotions and personal selling efforts.

Typical push sales promotion strategies include; buy-back

guarantees, free trials, contests, discounts, and specialty advertising

items.


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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 pullor purchase the product/services directly from

the company itself.

Pull sales promotion strategies include; samples, coupons, cash

refunds or rebates, loyalty programs and rewards, contests,

sweepstakes, games, and point-of-purchase displays.


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A Combination of Two Strategies:

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.


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The Short term Impact of Promotions:

Temporary price reductions (price off) substantially increase sales.

Sales Promotion leads to brand substitution with the product

category.

Sales Promotion leads to purchase acceleration/stockpiling effects.

Sales Promotion leads to primary demand expansion for a category.

Sales Promotions affect sales in complementary and competitive

categories.


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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

Impact of promotions effort 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 brands

sales or repeat buying loyalty.

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

strong; these promotions rarely exhibit long term effects.


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The Long term Impact of Promotions:

It is observed that each sales component generally lacked apermanent effect and the effect of promotion was short lived and

increase in promotions affected consumers stockpiling decisions in

the long run.

We found that the combined short and long-term elasticity ofpromotions 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


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RESEARCH METHODOLOGY

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


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Product categories under study

DETERGENTS: Washing Powder for Clothes

TOILETERIES : Soaps

Research Design :

We have used Conclusive research design. Under conclusive

research design our research falls under Descriptive Research.

Descriptive design consists of two parts:

Cross sectional design

Longitudinal design


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Our research comes under the category of Cross sectional

design, its a type of research design which involves

collection of information from any given sample of population

elements only once.

Cross sectional design consist of two parts:

Single cross sectional design

Multiple cross sectional design

We have used multiple cross sectional design, in which

there are two samples of respondents, and information from

each sample is obtained only once.


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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.


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Sampling Detail

Target population: The population for this research study consists

residence of Ahmedabad.

Sample size: 100consumers 100retailers.

Sampling method: The sample is selected by using convenience-

Sampling method


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SOAP


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DETERGENT


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RESULTS ND FINDINGS OF CONSUMERS


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From the above result it is clear that 92% of customers use Lux,

whereas 8% use Dettol. Lifebuoy and Nirma are way out of competition.


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From the above result it is clear that 81% of customers use Surf,

whereas 19% use Ariel. Wheel and Nirma are way out of

competition.


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The above figure shows that 22% 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.


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Result Of The Soaps And Detergent Shows Company Image As The

Most Influencing Factors In The Purchase Decision While Fragrance Is

Also An Important For Purchase Decision.


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Consumers look most in the product before they make final decision.

From our study we can say that Sales Promotion is the need of time.

As 100% respondent consider promotional scheme while purchasing

particular brand of soap / detergent.


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The results show that price off and freebies are the two main

offers/schemes which consumers have come across at the time of

purchase. It will help the manufacturers and marketers to launch

their new products in the market with such schemes.


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The above result shows TV as the best medium to market the

product which will cover majority of the viewer ship. On the second

place it shows Social Media Marketing as the other media to

promote the product in the market.


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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.


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The result shows that 3+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.


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

clearly shows that out of 100, 76% people are ready to switch over

to another brand if they find better promotional schemes which suits

their budget means more qty + less cost + quality. Combination of all

these schemes will run better in the market.


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Above question it gives specific reasons for switching too other

products. It shows that extra quantity with less or same price, more

benefit, quality, satisfaction and other factors influence consumers to

switch over to other brands.


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RESULTS ND FINDINGS OF RET ILERS


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Above question show that we have taken our most ofresponses from that retailer who are in the same businessfrom more than 10 years, our 49% respondents are in thesame business from more than 10 years.


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From the above chart we can see that 41% of the retailer store

Nirma in there shop regularly and second one in the particular

category is HUL with 35%.


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Above question shows that the most of the retailer does not

recommend any of the brand to the customer so we can say that the

companies are not providing such motivation to the retailer that they

recommend their brand to the customers.


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Above question shows that the most of 92% of the customer who

came to buy the particular product will always look for various

schemes in the particular product.


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From the above question we can see that the most of the customer

are always looking for getting price off on the particular product

which they are going to buy.


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Nirma is providing more percentage of promotional expenses as a

trade promotion to the retailer and such promotional expenses are

account for 27% of all the promotion.


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HUL is providing highest percentage of Extra Margin as a trade

promotion to the retailer and such Extra Margin s are account for

25% of all the promotions.


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P&G is providing more percentage of Gifts as a trade promotion to

the retailer and such Gifts are account for 27% of all the promotion.


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Godrej is providing more percentage of credit facility as a trade

promotion to the retailer and such credit facility are account for 27%

of all the promotion.


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Others players in the same segment is also providing more percentage of

Extra Margins as a trade promotion to the retailer and such more

percentage of Extra Margins are account for 26% of all the promotions.


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HYPOTHESIS


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H0 = There is no Significant association between Number Of years retailer is in

particular business and Brand of soap or Detergent he Stock most.

H1= There is Significant association between Number Of years retailer is in

particular business and Brand of soap or Detergent he Stock most.

The Pearson Chi-Square statistic is used to determine whether there

is a Significant Relationship between Numbers Of yearsretailer is in

particular business and Brand of soap or Detergent he Stock most.The Pearson Chi-Square value is statistically significant, 2 (df = 8)

= 20.242, p > 0.05. So it can be concluded that there is no

significant relationship between Age and vehicle owned in Family

Value df Asymp. Sig. (2-sided)

Pearson Chi-Square- 20.242a 8 .009


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H0 = There is no Significant Association between Age and Factors consider

while purchasing particular brand of soap.

H1= There is Significant Association between Age and Factors consider whilepurchasing particular brand of soap.

The Pearson Chi-Square statistic is used to determine whether

there is a Significant Association between Age and Factors

consider while purchasing particular brand of soap. The Pearson

Chi-Square value is statistically significant, 2 (df = 15) = 6.412,p < 0.05. So it can be concluded that there is no Significant

Association between Age and Factors consider while purchasing

particular brand of soap.

Value df Asymp. Sig. (2-sided)Pearson Chi-

Square 6.421a 15 .972


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Findings of the report


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Sales promotions can enhance consumers self-perception of beingsmartor a goodshopper

FMCG are such a market where the level of loyalty remains low and this isbecause of many reasons.

Quality as the most influencing factors in the purchase decision whileprice is also an important for purchase decision.

Schemes always attract more and more consumers towards particularbrand. Simultaneously it gives idea about the factors which consumerslook most in the product before they make final decision

Price off and extra quantity is the two main offers/schemes whichconsumers have came across at the time of purchase

TV as the best media to market the product which will cover majority ofthe viewer ship. On the second place it shows news papers as the mediato promote the product in the market

People are not much aware of the schemes which continue in the marketit may be because of the present stock of the product at their place.

P l d t it h t th b d if th fi d b tt


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People are ready to switch over to another brand if they find betterpromotional schemes which suits their budget means more qyt + lesscost + quality.

Extra quantity with less or same price, more satisfaction, quality andother 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 nameand also from the past performance of that company

Retailers do not suggest to purchase particular brand because ofpersonal relation or that customer are brand loyal

Margin and of better relations with consumers and to provide qualityproduct to consumers they suggest consumers too buy particular brand.


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Recommendation


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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.

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.

Companies need to systematize information flow regarding sales

promotion activities particularly at dealer and retailer level.


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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.

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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Limitations of the study


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The study is confined to Ahmedabad Region only

Due to this, our sample size is only 200, 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.

Findings of the study are based on the assumption that the

respondents have given correct information.


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Conclusion of the Survey

The study reflects that the use of sales promotion undeniably has


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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.

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 competitorsschemes.

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

BIBLIOGRAPHY


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BIBLIOGRAPHY

BOOKS

Philip Kotler, Marketing Management, 11thedition, Pearson education Asia

Publication.

C.R.Kothari, Research Methodology methods & techniques,New Age

International(p)ltd.publishers,2ndedition.

WEBSITES

http://www.nirma.co.in_files

http://www.hul.co.in_files http://www.pg-india_files

http://www.godrej_files


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hank you

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