International Journal of Business Administration and Management.

ISSN 2278-3660 Volume 7, Number 1 (2017),

© Research India Publications http://www.ripublication.com

Effect of Sales Promotion on Consumer s with reference

to FMCG Companies in India

Rahul Goel
Ph.D Scholar (Management)
(2014-2017)
K alinga University, Raipu r, C.G.
En r ol l me n t No. 1 5 0 3 1 0 1 4 ( K U0 0 2M MX I V0 2 0 10 7 6 2)

Abstract

The main o bject ive o f sales pro mot io n is to incr ease t he sales o f product s
in short t erm by influencing behaviour o f buyers. Sales pro mot io n met hods
are many and t hese are select ed as per t he t arget groups. For t his purpose, a
sales pro mot ion st rat egy is t o be prepared t o achieve t he o bject iv es
effect ively. Sales pro mot io n st rat egy dir ect s t he manager in select ion o f
part ies, met hods o f sales pro mot io n, imple ment at ion o f met hods and
measur ing effect iveness o f who le effort s regarding sales pro mot io n. I n t he
era o f hyper co mpet it io n, market toda y has beco me an arena o f pro mot io n
where product managers have t o face enor mous pressure t o boost sales
vo lume o f t heir product s.

Most of t he co mpanies depend on sales promot io n as it is co nsidered t o be

effect ive short -t erm sales t ool. Now a days S ales p ro mot io n t ools are
applied by major it y o f market ers may it be an producer s, dist r ibut ors,
middle men, ret ailer s or non-pro fit organisat io ns. Today, o n an average
FMCG co mpanies allocat e it s 74% o f all mar ket ing budget in sales
promot io n. Sales pro mot ion are genera lly more effect ive when used wit h
advert ising, perso nal selling and ot her promot io nal t ools. Sales pro mot io n
ma y inc lude many t ools, most of t he co mmo n and effect ive sales pro mot io n
tools ar e- Consumer Pro mot ion Tools, Trade Pro mot ion Tools and Busi ness

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Promot io n t ools. In t his paper an at t empt has been made t o analyze t he

effect of sales pro mot io n on consumer of FMCG co mpanies in I ndia.

1. Introduction

The t er m „Fast Moving Consumer Goods‟ (FMCG) is easy t o under st and but
hard to define. FMCG is by and large used in I ndia for product s which ar e
used in our day t o day life. I n general t hey are t hose goods which require
less shopping and decis io n making effort s and used direct ly by end
consu mers. It ma y inc lude any kind o f goods bought frequent ly. Now a
days it has beco me s yno nymo us for consumer goods. Consequent ly, t here is
a significant gap bet ween t he co mmo n use and t he concept ual co nnot at io n
of t he t er m FMCG. I n recent market ing t rends, major it y o f FMCG
co mpanies do consider sales pro mot ion being a n int egral part of t heir
overall market ing st rat egies. Fro m t he st udy it is apparent her e t hat
consu mers posit ively r espo nd t o t he sales pro mot ion campaign o f t he
co mpanies, but t here is st ill a group of loya l cust o mers who st urdily prefer
to att ach t o a brand name inst ead o f availing pro mot io nal benefit s.

Sales pro mot ion is a short t erm incent ive to be a magnet for t he purchase
or sale o f product s and ser vices. It includes all act ivit ies t hat are per for med
by t he producers or by dealer s or by businessmen t o boost it s sale o ver a
per iod o f t ime. Purpose behind sales promot io n is t o mot ivat e and persuade
t he consumer s t o buy a cert ain product and t o encourage repet it ive
purchase o f t hat ver y product . As Sales Promot ion is ext ensive t er m it
inc ludes;

 Consumer Or ient ed Sales Promot ion

 Trade Or ient ed Sales Pro mot io n

Fro m above pro mot io nal t ools Co nsumer Or ient ed Sales Pro mot ion is t he
focal ar ea for t his st udy. Gone are t he days when Sa les Pro mot ion was used
by market er for a short t erm benefit only, in moder n ev er changing

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market ing scenar io sales pro mot ion now is co nsidered as an int egral part of
promot io n st rat egic.

Alternative Types of Promotional Programs for FMCG 1

2 Objectives and Research Methodology

Objectives: The st udy o f t his t opic has been undert aken wit h fo llo wing
object ives:

a. To underst and t he concept of sales pro motio n,

b. To analyse t he scenar io o f FMCG market in I ndia.
c. To st udy t he effect of sales pro mot ion on FMCG cust omers.

Research Methodology:

It is always import ant t o be cr it ical o f t he infor ma t io n present ed in sources,

especially since t he mat er ial might have been gat hered t o address a
different problem area. Moreover, many seco ndar y sources do not clear ly
descr ibe issues such as t he purpose o f a st udy, how t he dat a has bee n
gat hered, analysed and int erpret ed making it difficult for t he researcher t o

1
Sonatakki, C.N; Marketing Management, Kalyani Publishers, 2011; p.663-674.

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assess t heir usefulness. In order t o address t his problem I have t r ied t o

t riangulat e t he secondar y dat a by using numerous independent sources.

The t opic for t he r esearch st udy is sales promot io n s t rat egy and t he nat ure
of t he t opic is t heoret ical and descr ipt ive. So t he conduct t he researc h
st udy t he t ype o f r esearch suit able is descr ipt ive resear ch only. T he dat a
are co llect ed fro m sales records, dealer s, cust omers and salesmen o f t he
co mpanies per for ming in FMCG sect or. The descr ipt ive research has met
t he requirement of resear ch st udy.

The research t ype is descr ipt ive resear ch. A dat a fro m respondent s was
co llect ed wit h t he help o f convenience sampling met hod. The sample has
chosen fro m select su per market of Delhi / NCR cit y. The dat a used was
direct fie ld sur vey dat a and jo ur nals refer ences. And was co llect ed wit h t he
help of t he int er view schedu les. It has t abulat ed, analyzed and int erpret ed
using suit able suit able t ools..

3. An overview of Indian FMCG Sector

Fast -Moving Co nsumer Goods (FMCG) is also known as Co nsumer

Packaged Goods (CPG). FMCG and CPG are product s which ar e so ld
swift ly and at co mparat ively low pr ice. Though t her e is low pro fit marg in
on FMCG product s yet ret ailers generat e more revenue as t hey ar e
generally so ld in large quant it ies. FMCG is a lso known as low margin and
high vo lume business. Some o f t he examples o f FMCG are; soaps and
det ergent s, nondurable goods like grocery, so ft dr inks et c. According t o
Nielsen report (Nov, 20 12) t wo growing shopper segment s „Low inco me
value explorer s‟ (L-I-V-E) and „fir st t ime moder n t rade shopper s‟ (F -T-M-
T-S) would add around 3billio n USD in FMCG sales in I ndia by 2015.

Major FMCG Companies in India are given as below:

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HUL 2

Hindust an Unilever Limit ed (HUL) is I ndia's leading FMCG Co mpany wit h

an exper ience more t han 80 year s in I ndia, on an average out of ever y t hree
Indians t wo use it s product in so me or other ways. FMCG o f HUL includes
soaps and det ergent s, skin care, shampoos, toot hpast es, cosmet ics,
deodorant s, packaged food & beverage, ice cream et c. Some of t he leading
brands o f t he co mpany are Lux, Lifebuo y, Sur f E xcel, Rin, Whee l, Fair &
Lovely, Po nd‟s, Vaseline, Lakmé, Dove, Clinic P lus, Sunsilk, Pepsodent ,
Close-up, Axe, Brooke Bo nd, Bru, Knorr, Kissan, Kwalit y Wa ll‟s and
Pureit .

ITC

ITC has r apidly increased it s presence in t he rea lm o f FMCG businesses

consist ing o f Branded P ackaged Foods ( Aashir vaad, Mint -o, Sunfeast
biscuit s, Candyman, Bingo, yippee et c.), Cigaret t es (Wills, Go l d Flake
et c.), Lifest yle Ret ailing ( Wills Lifest yle and John P layer s), Educat ion and
St at io ner y product s ( Classmat e, Paper Kraft , Colour Crew et c.), Persona l
Care product s (Fiama Di Wills, Vivel, Super ia and in per fumes - E ngage),
Safet y Mat ches and Agar ba t t i (S hip, i Kno , Aim, Mangaldeep et c.), in 2013
it crossed t he mark o f 7000 crore. 3

PROCTOR AND GAMBLE

Proct or and Gamble (P &G) is one o f t he largest and amo ngst t he fast est
growing FMCG manufact ur ing co mpanies in I ndia, co mpr is ing Beaut y &
Grooming, House ho ld Care and t he Healt h & Well Being segment . So me o f

2
http://www.hul.co.in/aboutus/introductiontohul/
3
http://www.itcportal.com/businesses/fmcg/index.aspx

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t he leading brands o f t he co mpany are Pant ene, Oral - B, Vicks, T ide, Ar ie l,

Whisper, Ambipur, Olay, Gillet t e, Pamper s, Head & S houlder s, et c. 4

DABUR INDIA LTD

Dabur I ndia Limit ed is t he wor ld leader in Her bal/ Ayur vedic product s and
t he fourt h largest FMCG producing Co mpany in I ndia wit h Proceeds o f
over Rs 6k Crore & Market Capit alisat ion o f 5b do llor s. it operat es in ke y
FMCG cat egories like Ho me Care & Foods, Healt h Car e, Hair Care, Ora l
Care, Skin Car e,. Some o f t he popular brands of t he co mpany ar e
Chyawanprash, Hajmo la Pudin Har a, Dabur Lal Dant Manjan and Dabur
Amla hair o il, Dabur Hone y et c. 5

GODREJ CO NSUMER PRODUCTS LTD (GCPL)

Godrej Co nsumer Product s Lt d (GCPL) is one o f t he largest FMCG

producer in I ndia, which aims at Household and per sonal car e. So me o f t he
co mmo n FMCG brands o f t he co mpany are E xpert hair die, GoodKnight ,
Hit , Cint ho l, Godrej No.1, Nupur, Fair glow face crea m, Ezee et c. It is
leader in hair die and ha ir co lours wit h t oilet soap s. Four of Godrej brands
GoodKnight , Cint ho l, Godrej No.1 and Godrej E xpert Hair Co lour have
been ranked amo ng t he „100 Most Trusted Brands‟ in I ndia ( Econo mic
T imes Brand Equit y 2012). 6

BRITANNIA

Br it annia I ndust r ies Lt d has been undoubt edly t he mo st rec ognized and
pio neer name in food indust r ies espec ially in biscuit indust r ies called
“Biscuit king”. The co mpany founded in 1892 and st ill successfully wit h
revenue o f Rs. 46.70 billio n as on 2011. Br it annia has made an ano malous
st amp in t he spat e of ot her co mpet it ive organisat ions engaged in t he same

5
http://www.dabur.com/default.aspx
6
http://www.godrej.com/godrej/Godrej-ConsumerProducts/aboutcp.aspx?id=381&menuid=2260

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indust r ies in I ndia as well as out side t he India. Provid ing always t he best
qualit y has been sparkling fact or of t he st alking jour ney o f t his co mpany.
Brands like Creamfruit Marr ie wit h ho ney and oat s, Mult igr ain T hins &
Roast y et c has provided t he cho ice o f co mbinat io n o f t ast e and healt h.

AMUL

Amu l is t he leading dair y product co -operat ive fir m in I ndia operat ed by

Gujarat Feder at ion since 1946. Amu l has been ver y much int eract ed t o t he
t hought s of a co mmo n man t hrough it s different and int erest ing
advert isement po licies. Amul milk, Amul cheese, curd are it s main FMCGs.

4. Effect of Sales Promotional

Abhinna Sr ivast ava and Vineet S ingh (2015) 7 ment io ned in t heir st udy t hat
sales pro mot io n campaign effort s c o mplement and reinforce advert ising,
yet co nsumer or ient ed sale pro mot ion may be called as t he „P lus ‟
ingr edient in t he market ing mix and it is indispensable ingr edient as it
benefit s t he producers, ret ailer s and consumer s; let ‟s have a look over
different percept io ns in t his regard:

i. Produ cer Perception s

No need t o say t hat sales promot ions incur high lo ng t er m cost s for
t he co mpany. Dur ing S ales pro mot io n o ffer s margins of t he product
always suffer t o cope up wit h such issues companies need t o analyze
it s cost -benefit before imp lement ing sales pro mot ion in order to
minimize cost of sales, in fact such promot io nal act ivit ies have a
posit ive co nsequences when it is enfor ced in an int erest ing manner.
Some people co nsider t hat sales pro mot ion usua lly creat es a negat ive

7
Abhinna Srivastava and Vineet Singh (2015), “Augmentation of Promotion Sensitivity
For FMCG in India”, International Journal of Advanced Research in Management , Vol 6,
No 1, , pp. 28-37

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impact on brand‟s personalit y and on brand image but realit y is t hat

t here is no such adver se impact on t he cont rar y brands preference
score goes up dur ing t his per iod.

ii. Retai ler Perception s

When Co nsumer Sales pro mot io n is on, sales vo lume beco me s almo st
double in co mpar iso n to t he pre -pr omot io nal per iod. Dur ing
promot io nal o ffer, a product ‟s brand pr eference count mount s up, and
consu mers pr efer a brand o ver non-pro mot ional brand if t hey found it
being int erest ing. Dur ing pro mot ional per iod, pref erred brand score
of a co mpany skip by 5 t o 6 per cent . Usua lly market leaders o f
FMCG ( like HUL, P &G, ITC

iii. Consu mer Perception s

Consumer or ient ed sa les pro mot io ns are craft ed for allur ing t hem t o
buy t he part icular goods and ser vices, it provide an incent ive t o t he m
– bot h cash and no n-cash. Dur ing pro motio nal o ffer, consumer s look
for so me adjust ment and refine ment in t heir spending even beyo nd
predet er mined budget . In fact t hese offer s provide consumer s
incent ives t o Swit ch. As per Nie lsen‟s surve y, almo st 41 per cent o f
glo bal consumer s are o f t he opinio n t hat a bet t er price persuade t he m
to swit ch brands, ser vice pro vider s or ret ailers, 26% advocat ed for
bet t er qualit y, while 15% believe in bet t er service agreement , on t he
ot her hand consumer s swit ching brand for bet t er select ion and bet t er
feat ures are 10% and 8% respect ive ly.

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Figu re 1: Incentive to Switch Brand

Source: Abhinna Sr ivast ava and Vineet Singh (2015) 8

5. Conclusion

It was found t hat most of t he FMCG co mpanies are spending good deal o f
mo ney for t he sake of consumer or ient ed sales pro mot ion. Most of t he m
benefit ed and so me o f t hem faced high long t er m cost s, In fact sales -
promot io n is a short -t erm device for quick result s, while at t ract ive pr ices
ma y at t he out set offer consumer s enough insp irat io n t o t ransfor m
allegiance t o a new product , it won‟t keep consumers for lo ng. It is like a
flash light , it flashes and disappear s. Dur ing Sales pro mot ion o ffer s
margins o f t he product always suffer t o cope up wit h such issues co mpanies
need t o analyz e it s cost -benefit before imple ment ing sales pro mot io n in
order to minimize cost of sales, in fact such pro mot io nal act ivit ies have a
posit ive consequences when it is enfo rced in an int erest ing manner.
Co mpanies need t o get right pr ice - value equat ion, for t his t hey ar e
suggest ed t o keep plent y o f product s in t heir st ock dur ing pro mot iona l
offer. Sales pro mot ion are more effect ive when used wit h advert ising,

8
Abhinna Srivastava and Vineet Singh (2015), “Augmentation of Promotion Sensitivity
For FMCG in India”, International Journal of Advanced Research in Management , Vol 6,
No 1, , pp. 28-37

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personal selling and ot her promot ional t ools This is also suggest ed t o offer
a pro mis ing shopping exp er ience t o consumer s t o ensure lo ng - last ing
cust omer lo yalt y.

6. References

1. Abhinna Sr ivast ava and Vineet S ingh (2015), “ Augment at io n o f

Promot io n Sensit ivit y For FMCG in I ndia”, Int ernat ional Journal o f
Advanced Research in Management , Vol 6, No 1, , pp . 28-37

2. ht t p://www.dabur.co m/default .aspx

3. ht t p://www.godrej.co m/godrej/Godrej-
ConsumerProduct s/about cp.a spx?id=381&menuid=2260

4. ht t p://www.hul.co. in/about us/ int roduct io ntohul/

5. ht t p://www. it cport al.co m/ businesses/ fmcg/ index.as px

6. Majeed & Jasmeene (2016), “A St udy on T he E ffect s o f S ales

Promot io n Too ls on Brand Swit ching o f FMCG I n Kerala”, EPRA
Int ernat ional Jour nal o f Eco no mic and Business Review, Vo l4 No.7,
pp. 52-59.

7. Mit t al, M., & Set hi, P. (2011). The E ffect iveness o f Sa les Pro mot io n
Tools amo ng I ndian Co nsumers: An E mpir ical St udy. Jour nal o f
Promot io n Management , 17(2), 165 -182.

8. Rao, Venu Gopal. "E ffect of Sales Promot io ns o n Consumer

Preferences-T he Moderat ing Ro le o f P r ice Per cept io ns and Dea l
Proneness ( A St udy o f FMCG Product s)." Vilakshan: T he XIMB
Journal o f Management 6.1 (2009).

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9. Sonal, Kureshi, and Vyas Preet a. "An explorat ory st udy o f sales
promot io n act ivit ies in t oilet soap cat egory: An insight int o
consu mer and ret ailer percept io ns. " IIMA WP 2002 -07 (2002).

10. Sonat akki, C.N; Market ing Management , Kalyani Publisher s, 2011;
p.663-674.

11. Vyas, Preet a H. "Measur ing consumer preferences for sales

promot io n schemes in FMCG sect or in an emerging market : India. "
(2005).

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