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CHAPTER IV
GENERAL SALES PROMOTION AND MARKETING STARTEGIES
OF WHEAT FLOUR COMPANIES
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Priya Jha Dang and Abrahan Koshy, An Empirical View of the Different Types
of Consumer Promotions in India, Financial Express, 2000, p.3.
119
There have been very few discussions in sales promotion literature about how
different types of promotions may be classified. One dimension, which has been suggested
to classify different promotions, is the price versus non-price nature of the promotion
(Campbell and Diamond, 199693; Blattberg and Neslin94, 1990). Price promotions are
defined as promotions such as coupons, cents off, refunds and rebates that temporarily
reduce the cost of the goods or services (Cooke95, 1983). These promotions focus on the
reduced economic outlay required to obtain goods or services. Non-price promotions are
defined as promotion such as giveaways or contests in which value is temporarily added to
the product at full price (Cooke, 1983). Studies, which have compared consumer responses
to different promotions, have followed this classification by differentiating between types of
promotion. A list of the different types of price and non-price promotions and their
definitions is shown in Table 4.1.
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TABLE 4.1
CLASSIFICATION OF DIFFERENT PROMOTIONS
Nature of promotion
Price promotions
Offer
Definition
Definition
Price-off
Extra product
Offers an increased
quantity of the product
without an increase in
normal retail price
Coupon
Premium
Rebate
Contest
Sweepstake
Although a wider variety of price and non-price promotions are launched in the
market, most of HI (Household Insecticide) academic research on promotions has focused
on price promotions, namely price-off and coupon offers (Blattberg, Briesch and Fox96,
1995). Promotional tools such as free gift offers, extra product offers that are increasingly
being used in the market place. However very little academic theory or research has looked
at how consumers perceive and respond to such promotions. In the recent years, researchers
96
Blattberg R.C., Briesch R. and Fox E.J., How Promotion Work, Marketing
Science, Vol. 14, 1995, G122-132.
121
have started comparing consumers response to different promotions e.g. price promotion
versus premium promotion or extra product promotion versus price promotion (Smith and
Sinha97, 2000). These researchers have found that different types of promotions evoke
differential response. However, studies have not attempted to systematically indemnify the
entire range of promotions launched in the market place.
Details about Different Types of Promotions
The specific details about the different types of promotions price off, free gift
offers, sweepstakes, extra product offers, contests, exchange offers and buy-more-and-save /
get offers-are discussed in the following section.
(i) Price off or discount
Price probably is the most commonly used promotional techniques. The
concession or reduction in price is given to the customers and they save the money in the
purchase. The customers get the products in lower price. The same features of the products
are offered to the customers at lower price. The value of the money among customers is
increased. The concession is given in net amount then it is called price off and if it is given
in percentage then it is called discount. These methods can be communicated through POP
advertising, window displays, sales men, advertising, packaging etc. Such promotion
methods work very well in gaining the attention of consumers, particularly at the point of
purchase among similar brands. For example, the price of Colgate Total tooth paste is
marked MRP as Rs. 100. When it is marked Rs.10 off, then it means the customer has to pay
97
Smith M.F. and Sinha I, The Impact of Price and Extra Product Promotions on
Store Preference, International Journal of Retail and Distribution Management, Vol.28,
2000, pp.83-92.
122
Rs. 90 only. When it is mentioned on package 15 % discount then the percentage on MRP is
to be calculated and deducted. Rs. 100-15= Rs. 85 is to be paid.
(ii) Premium
When the product is purchased the customers get additional items with the purchased
item free of cost. This provides extra benefit or value to the customers. The customers save
money through this. Sometimes when extra item with the purchased item is given to the
customers and they may not be in need of that item. It may not be motivated much more
customers in comparison with price off or discount. The premium may be of different types
such as over the counter, packed premium, banded premium and loyalty premium.
When a customer is purchasing items and on the counter itself an extra item is given
that is called over the counter premium. For example a customer purchased one pen and
with pen a pencil is given free of cost on the counter itself it is an example of over the
counter premium.
When a product is packed inside the pack of the product purchased then it is called
packed premium. For example a packet of pencils is purchased and inside the pack a scale
and cutter are enclosed. This is called packed premium.
When a product is banded with the tape or strip with the main product and sold to
the customers. It is an example of banded premium.
When a customer repeatedly bought the products in past and giving proof of the
purchase, then it is called loyalty premium. By producing evidence of the purchase the
customers get additional item an example of loyalty premium.
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useful for drawing attention to the product improvement. This is more suitable for the
durable goods mainly. For example a colour TV set price is Rs 10,000 and exchange offer is
giving for black and while set of Rs 1000. It means the old set is to be given to the dealer
and it price would be counted Rs. 1000. Balance Rs. 9000 is to be paid. This motivates the
person those who are having less amount but want to purchase the costly item.
(vi) Coupons
Sometimes, the company issues coupons either in the packet of a product or through
an advertisement printed in the newspaper or magazine or through mail. The presentation of
the coupon accepts the benefits to the customers. A coupon authorizes the holders to get the
discount of printed amount of coupon. These coupons can be presented to the retailer while
buying the product. The holder of the coupon gets the product at a discounted price. For
example, if a packet of biscuit is purchased and inside its pack a coupon of Rs. 3 is found.
The customer presents it to the retailer and get discount of Rs 3 when he buys another packet
of biscuit.
(vii) Fairs and exhibitions
This is one of the promotion methods for creating awareness of the new products and
mainly durable and high price products. Fairs and exhibitions may be organized at local,
regional, national or international level to introduce new products, demonstrate the products
and to explain special features and the usefulness of the products. Goods are displayed and
demonstrated and their sale is also conducted at a reasonable discount. The fairs are
conducted mainly for IT, engineering goods, automobiles, industrial goods etc.
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consumers to purchase 3 fans and pay Rs.90 to get a wristwatch worth Rs.480. Another such
promotion requires the consumer to buy a fan, pay Rs.40 and get a free camera worth
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Rs.300. In case of health drinks, the promotion requires the consumers to pay Rs.7/ more
and get a badminton racket free.
A variant of this promotion is another promotion, which requires an investment of
effort rather than money from the consumers. For example, in case of tea, the consumers are
required to pay Rs.1 and get a Britannia biscuit pack free along with the tea pack. In case of
salt, the consumers are required to collect a newspaper coupon and pay Re.1 to get a pack of
salt.
Yet other types of promotions require an investment of both money and effort from
the consumers in order to avail of the promotional benefit. For example, a soft drink
promotion requires the consumers to collect crowns and put in some money to get a price
discount on the soft drink. In case of ice cream the consumers are required to collect three
ice cream wrappers to get a scratch card which gives them the opportunity to win lakhs of
prizes. In case of chocolates, the promotion requires a consumer to exchange empty
chocolate wrappers to get movie tickets or bunny stickers free.
Traders Oriented Promotion Methods
With the intention to get the best cooperation from the distribution channel members
the companies are using different promotional methods. These methods directed at traders
are called traders oriented promotional method. The traders provide the important link
between the marketers and the customers. The traders may include dealers, wholesalers and
retailers. The company cannot take chance to miss them. These types of methods are applied
to strengthen the team work among all concerned parties of sales. Some of the methods for
motivation of traders are following;
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(i)
provided by the manufacturers to the traders for display at their showrooms or shops. The
types of products sold out at the outlet are displayed at the points. This gives the clear idea
to the buyers that the particular type of products are sold at the store. Without display the
ideas regarding availability for buying would not be known to the customers. It supports the
traders to improve the internal and external atmosphere of the store. By this the customers
are attracted and traffic of customers are also increased. This creates the visibility of the
products and further it supports the promotional methods like personal selling and
advertising. The only difficult in this is that the traders are not maintaining the POP facilities
and they all selling these also to get money. These facilities are provided free of cost to the
traders. This improves the status of the store and motivates the traders.
(ii)
Trade Fair
The trade fair is also used for the traders. A large number of manufacturers display
their wares and take orders at trade shows. In fact, companies spend a huge amount on this
type of show. They also provide a chance to demonstrate products share information, answer
questions, and enable them to have critical comparison with the products of competitors.
The participants may be the traders and customers. They are provided with all supports and
orders can be taken from them. The traders get motivated to deal in those products displayed
in trade shows.
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(iii)
Traders meeting
Time to time the company arranges meeting of traders so that the related issues of
business can be discussed and shorted out easily. The participants are traders or their
salesmen. The meeting can be sponsored by the company or jointly company and traders.
These can be conducted at local, regional and national levels. The objective of the meetings
is to discuss the difficulties, answer the confusions, and guide the sales men for promotional
campaign. The facilities are given to the traders to increase the sales and their earnings for
free of cost. This helps a lot to motivate the traders and they provide adequate support to the
company to meet their objectives of sale.
(iv)
Sales contests
The Company arranges the sales contests for the traders those who achieve the quota
of sales within the stipulated period. Those who achieve the specified quota they participates
in contests. They may win the prizes, free tours sponsored by the company and other
benefits. This triggers to encourage them to put efforts for increasing the sales and providing
the support.
(v)
Training of staff
This type of method provides training to the technical staff for servicing and
repairing of the durable goods like car, TV, computers, refrigerators etc. The engineers of
the traders are not having much systematic knowledge of the products, to repair and replace
the faulty parts of the products. They are trained by the experts of the company in their
workshop at free of cost. The training facility can be arranged at workshops of traders
locally. This provides a lot of supports to increase their sales.
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The focus of ITC has always been on the providing its customers with best the
possible quality and in the case of Aashirvaad Atta also, they have emphasized on the
quality and freshness. To keep the taste of packaged Atta authentic with respect to Chakki
Atta, ITC follows traditional methods to produce it. It obtains the finest wheat grains
directly from the farmers and then the grains are grounded using modern 'Chakki - grinding'
process to produce genuine and authentic Atta. ITC also tries to ensure that Aashirvaad Atta
contains 100% Atta and no Maida. In addition, the quality is maintained such that the dough
made from Aashirvaad Atta absorbs more water making the Rotis softer.
ITC has been able to successfully use its E-choupals initiatives to obtain the finest
wheat grains for the production of Atta directly from farmers. This backward integration
gives them two distinct advantages. The first being reduction in the cost of wheat by around
2 percent as no middlemen is involved in the process. The second advantage is of course
quality since ITC does not have to rely upon the Mandi system where the wheat grain can be
of inferior quality.
ITC offers a wide range of Aashirvaad Atta products cater to the different
consumers demands. Apart from the basic brands, there are two high-end brands with some
special ingredients.
ITC has its own packaging business and it utilizes its packaging business to come out
with really superior and innovative packaging. The material used for packaging the
Aashirvaad Atta is PET Poly which keeps the Atta fresh. Further, it also offers carton
packaging and vacuum sealing for its premium packs.
Although ITC already had excellent distribution network for its cigarette products, it
needed to develop the new and different distribution infrastructure for its Aashirvaad Atta
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product. However, in the last 8 years it had really developed its distribution network and
with its strong E-Choupal network it can competed with its competitors on the distribution
front.
(ii)
Weaknesses
Aashirvaad Atta can be considered as a premium priced product, as it is very costly
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ITC can collaborate with fast food chains such as McDonalds, Pizza Hut and
Subway. This has been an untapped market until now and tying up with these chains as their
main flour suppliers can open up a new window for ITC.
(iv) Threats
Indian market is largely dominated by innumerable local flourmills and Chakki
Atta, which are the biggest threat to Aashirvaad Atta. Chakki Atta is still perceived as the
best quality Atta and it is cheaper as compared to branded packaged Atta.
Obvious threat is the domestic competition. Competitors such as Annapurna and
Pillsbury are doing their best to increase their market share.
Until now, the competition is mainly domestic. In future when Western companies
will see India as an exciting opportunity for packaged Atta, then the competition will get
intense.
Promotion Strategy:
Aggressive Advertisements in television targeting Indian Housewife.
Exclusively Aashirvad Stores
Tie up with Government to sell Aashirvaad Atta at military canteen at a subsidized
rate.
Informative advertising will be used for new variants are launching
Newspapers would be the most effective media for targeting Industrial buyer
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Sales Promotion:
Free 1 Kg packs of Aashirvaad can be in regions where the penetration of branded
atta is low
Free packs of Aashirvaad salt to be bundled with Aashirvaad 1 Kg atta Pack
The company can collaborate with all the fast food retailing chains can be given
along with Aashirvaad atta packs
Free samples through distribution at posh public areas such as malls and multiplexes.
Cookery contest for Housewives.
Kolam contest for Housewives.
2. Pillsbury:
Pillsbury is a global food brand that is trying to replicate its success in Indian market.
The brand was launched in India in 1998 as a result of a joint venture between Godrej
and Selviac Nederland BV ( Pillsbury). Pillsbury has a rich heritage dating back to 1869. It
started as a flour milling company named A Pillsbury and is now one of the largest brands in
the food products market in the world. In 2002, the company was taken over by General
Mills.
When Pillsbury was launched, it had the option of coming with the blockbuster
global "ready to eat products". But it chose a contra approach heeding to the advice given by
Mckinsey GO Basic. So Pillsbury launched Pillsbury Chakki fresh atta ( pounded wheat
flour) in the Indian market. It was a bold move because the atta market is a commodity
market and the branded atta market is only 3% of the total atta market in India estimated to
be around 23,000 crore.
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Pillsbury chakkifresh atta was launched in India on the platform of softness. Since
ordinary Rotis lost their softness after some time, Pillsbury claimed that its Rotis retained
the softness for over 6 hours. This appealed to the modern homemakers since Rotis can be
kept in tiffin boxes without worrying about softness.
It was a tough task for Pillsbury to enter into Indian kitchens since the households
followed traditional way of buying wheat and giving them to flour mills. Pillsbury realized
that food products marketing are more of Repertoire marketing where more variety is the
key to success. Pillsbury decided to move up the value chain by coming out with a range of
products.
The first one was the launch of Oven cake mixes in 1999. The product failed in the
market because of poor penetration of microwave ovens. Taking a lesson from this failure,
came the successful launch of Cooker Cake mixes in 2000 ie cakes can be made by using
pressure cookers.
Despite these launches, Pillsbury was not happy with the way the atta brand was
moving. A marketing research showed that health was a leading attribute that customers
look for when they buy food products.
In 2004 the product was relaunched in the health platform with emphasis on good
to heart since heart problems are on a rise in Urban market. The idea is to promote the idea
that whole wheat atta is good for your familys heart .The latest positioning is Dil se Khao
reinforces the health positioning. The brand is endorsed by Healthcare foundation.
Using the innovative differentiation and positioning, Pillsbury is having a market
share of 8% in the branded Atta market.
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3. Annapurna:
Launched nationally in 1998, Annapurna Atta was aimed at helping the homemakers
to provide wholesome tasty nutrition to their family. After its successful launch, in a pursuit
to stay ahead and cater to the changing mindsets of the Indian consumer, Annapurna Atta
was fortified with extra iron and vitamins, which are essential for children during their
formative years. It was awarded the prestigious Awaaz Consumer Award for the most
preferred brand of atta for two successive years in 2006 and 2007. Annapurna atta continues
to promise soft tasty rotis as it is made from the choicest of grains, brought fresh from the
farms, cleaned three times and packed in the most hygienic conditions.
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3. Due to vast the marketing network by Hindustan lever, push the sales throughout the
country.
4.
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4. Ramalinga:
1. Tie up with various educational institutions in southern district of Tamilnadu,
supplies Ramalinga brand wheat flour to their students hostels.
2. Ramalinga brand from one of the Prestious Industrial giant Jayavillas. They have
their own separate transport division also. They have delivered the Ramalinga wheat
flour to the whole sellers and retailers through their transport division at concessional
freight and on time delivery also.
3. Arranging Extra product offers for limited period
4. Provide Trade Discount for selected wholesalers based on their sales volume.
5. Scratch Coupons available in wheat flour pocket.
6. Sponsorship for conducting village level sports activities in southern region of
Tamilnadu under Ramalinga Brand.
6. Lion:
1. The company can collaborate with all the major hotels in southern parts of
Tamilnadu and directly can deliver their wheat flour.
2. In their bulk level of packaging, they pack T shirts along with Lion brand flour in 90
kg pack. This 90 kg pack particularly purchased by the hotles and this T shirt
marketing strategy is attracted by the Parrotta Master.
3. Purchase high quality wheat and maintain their wheat flour quality throughout the
year in the same manner.
4. Arranging extra cash discount or price off for extra load purchase by wholesalers in
the particular month.
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5. Every year company honouring the best wholesalers and retailers based on their sales
volume.
6. Every year company spending some of their profit to their laboratory for improving
quality.
7. Naga:
1. Due to the diversification of different business and good cash position, purchase the
good quality of wheat in bulk quantity at the time of wheat cultivation period from
Feb to May and stock in to different warehouses in Tamil Nadu. And at sametime,
high warehousing and place available in their mill premises, throughout year, they
will give good wheat flour in the market.
2. They have separate transport divisions also. They have delivered the Naga wheat
flour to the whole seller and retailer through their transport division at concessional
freight and on time delivery also.
3. Free gift for Naga Detergent soap along with Naga wheat flour for a specific period.
4. Every year company is arranging the family tour for honoruing the best whole seller
and retailers based on their sales volume.
5. Collaboration with multinational companies like Parle, Britania, ITC and Hindustan
Lever and fulfilling their requirement.
6. Arranging kolam drawing competitions for housewives.
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8. Narasus:
1. Due to the vast marketing network of Narasus, push as the sales throughout the
TamilNadu.
2. Aggressive Advertisements in Television and Newspaper targeting Housewives.
3. Provide cash discount to the whole seller for the big volume of sale.
4. Arranging cookery contest for housewives in selected town.
5. Arranging Extra product offers for limited period
6. Provide Trade Discount for selected whole sellers based on their sales volume.
7. Scratch Coupons available in wheat flour pocket.