The Effectiveness of Sales Promotion Tools among Indian Consumers:

An Empirical study
Manish Mittal* Poojae Sethi**
Sr. Lecturers
Daly College Business School
Residency Area, Daly College Campus
Indore (M.P.)-452001
Ph.No. (00)91-731-702882
manmittal1969@rediff.com *
poojae@gmail.com / Poojaesethi@dcbsindia.org **
Ph.No. +91-731-702882

In the recent years with the influx of foreign companies in India, sales promotion has

been playing a very important role in Rs. 48000 crore FMCG industries (Economic

Times). Sales promotions are securing a greater portion of the promotion budget due to

increased competition, declining brand loyalty and consumer awareness, especially in

FMCG, because it is the value for money that is the deciding factor for the purchase and

not the aspiration value as created by advertising of goods. In today’s competitive

market, companies view sales promotion as being immensely helpful in sustaining the

tough period. The fact is vindicated by the statistics that 30% of TV advertising is

accounted for by the consumer promotion advertising (Singh, 2003). The rise in

frequency of sales promotion as a marketing tool in the recent years can be attributed to

the fact that sales promotion clearly generates sales response that is sizeable (Putsis,

1998).

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Customers make three major purchasing decisions. What to buy? 2. How much to buy?

What brand to buy? (Gilbert and Jackaria, 2002). Sales promotions can have an impact on

all three broad decisions (Gupta, 1988). The various advantages that companies seek to

achieve through promotions apart from the immediate boost of sales are - retaining

customers, introducing new product, encouraging brand switching, conquering

competitive products, maintaining sales of seasonal products and category expansion etc.

But some researchers feel that their effectiveness is limited in the sense that the sales

increments induced by various promotional activities are only temporary and tend to

bounce back to their previous level once the sale promotion campaign is taken off. They

believe that sales promotions are a Zero sum game as they simply shift purchase from

one period to another (purchase acceleration) from one brand to other (brand switching)

(Putsis, 1998). While the sales promotions can generate incremental sale of individual

brands, for the category as a whole they are not as effective.

This paper investigates into effectiveness of various sales promotion techniques in

inducing the desired sales response. The sales promotion techniques studied in this paper

are – price discounts, coupons, Bonus Packs, buy one and get some free and scratch

cards, while the behavioral responses selected are brand switching, purchase acceleration,

stock piling, product trial and spending more. The paper is divided into 6 sections. After

this introduction section, the next section of this paper reviews the relevant existing

literature on effectiveness of sales promotion tools. The research design, data and

methodology are discussed in Section III and Section IV is for results and discussions.

Section V provides limitations and scope for further research. Section VI concludes.

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 Section II

Conceptual Framework

Sales promotion has been defined as ‘a direct inducement that offers an extra value for

the product to the sales force, distributors or the final consumer with the primary

objective of creating an immediate sale’ (Haugh, 1983). Gilbert and Jackaria (2002)

define sales promotion as the offer of an incentive to induce a desired sales result.

Blattberg and Neslin (1990) define sales promotion as ‘an action-focused marketing

event whose purpose is to have an impact on the behavior of firm’s customer.’ Several

important implications may be drawn from these definitions. First, sales promotion

means an inducement provides an extra incentive to buy which is additional to the basic

benefits provided by the product or the brand (Schultz and Robinson, 1982; Strang, 1983;

cited in Laroche et.al, 2003). They are the acceleration tools which speed up selling

process and maximize sales volume (Neslin, Quelch, Handerson, 1984). Sales promotion

adapts short term, non-recurring method to boost up sales by offering incentives which

increases the perceived value of the product. These offers are not available through the

year.

Sales promotions can be classified as active or passive. Active promotions, like coupons,

require customer to undertake an active search for the promotional offers. Passive

promotions like, one-for-one, involve a limited search restricted to the store environment

(Schneider and Currim, 1991). Lichtenstein et. al. (1995) classifies sales promotions into

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price and non price category. The benefit of the price promotions is that the customer gets

the same product at a lesser price (e.g. Price offs, coupons) while the other non price

promotions tend to increase the value for money (e.g. Premium, Bonus packs). Certain

promotions like scratch cards can provide either of the benefits. The various sales

promotion tools that are chosen for study are:

1. Price Discounts/ Price off offer: In price discount offers the products are sold at

a price lower than the original price e.g. ‘Rs. 2/- off on purchase of Lifebuoy

soap’.

2. Coupon-In coupon promotion manufacturers retain the original price of the

product and offer discounts to the holder of the coupons. These coupons are

issued either in the packet of the product itself or through an ad in the

newspaper / magazine. Customer must keep a track of coupons and produce

them at purchase.

3. Bonus Pack offer: Under this the manufacturers offer the customers an

increased quantity of the same product. e.g. “Get 20% extra” or get 125 grams

cold cream at the cost of 100 grams.

4. Premium (Buy one and get some free offer): Here either the same product or

another product is offered free with the purchase of existing product. E.g. “Buy

toothpaste and get tooth brush free” or “buy one pack and get another pack of

talcum powder free.”

5. Scratch Cards: Under this scheme customers scratch the particular marked area

on the packet and get the reward according to the message written there.

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Many researches have suggested that different types of sales promotions trigger different

promotional responses (Schneider and Currim, 1991; Henderson, 1987; cited in Laroche

et.al., 2003)). A smart shopper might go for an active search and hence may be coupon

prone while an impulsive buyer might lead to be display prone (Blattberg and Nelson,

1990). Following this rationale, we have selected the following buying behavior

responses for our study.

 Brand Switching (Buy another Brand) - the extent to which the customer can be

motivated to buy the brand he usually does not buy.

 Purchase acceleration (Buy Earlier) - the extent to which the customers are

motivated to buy the item earlier than required because of the sales promotion

scheme available at the time of purchase.

 Stock Piling (Buy More) - the extent to which sales promotion tools motivate the

customers to buy more than their immediate requirements.

 Product Trial (Buy another Product) - The extent to which sales promotions tools

are effective in motivating customers to buy a new product which they have never

used earlier.

 Spending More (than the Budget) - The effectiveness of sales promotion tools to

induce people to spend more than their monthly budget.

Section II

Literature Review

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There have been many attempts in the past to study the effectiveness of sales promotion

tools. According to Ndubisi and Moi (2005) sales promotion tools used strategically not

only increase brand awareness but also encourage consumers to buy new product. There

is substantial evidence that sales promotions are associated with increased purchase

quantities and shorter inter purchase times (Neslin, Henderson and Quelch, 1984).

Gardener and Trivedi (1998) have found premium offers effective as more of the product

is included at no extra cost, they found, that the consumers can easily be persuaded to buy

the product. Shimp (2003) and Fill (2002) have documented a link between the price

promotion and product trial. According to Gilberth and Jackaria (2002) pack with buy

one and get one free offers facilitate Brand recognition and Brand recall for future

purchases. They also suggested that the price discounts are effective in inducing purchase

acceleration and product trials. Blackwell et. al. (2001) showed that coupons encourage

consumers to try new flavored product than the same flavor they would normally buy at

full price. Coupons are easily understood by the consumers and can be highly effective in

trial purchase (Cook 2003). Robinson and Carmack (1997) found that Coupons could

induce new product trial.

Effectiveness of sales promotion varies across the product categories and Brands.

Chandon (1996) demonstrated that there are important differences across categories.

Promotional packs leads to faster consumption for fruit juices and biscuits but not for the

laundry detergents. Research findings suggest that promotions induce switching across

the brand in asymmetric fashion and that the weaker brands find it difficult if not

impossible to steal share from the stronger brands (Blattberg & Wisniewski 1989,

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Allenby & Rossi 1991). More recent research suggests that this asymmetry can be

reversed if the weaker brand has advantage in terms of price relative to quality

(Bronnenberg & Wathieu, 1996).

Positive after-effects from promotions could occur if promotions attract some new

consumers who would repeatedly buy later. However the evidence suggests no long-term

favorable effects on brands. The reason being sales promotion attracts mostly existing

infrequent buyers and a small number of new buyers have the propensity to re buy

(Ehrenberg et al 1994). The moment sales promotions are taken off the customers switch

to their preferred brands rather than buying the promoted brand at full price. Research

evidence suggests that gains of a promoted brand are primarily at the expense of other

brands due to brand substitution. Gupta (1988) showed that out of the total increase in

sales due to promotion 84% is accounted for by brand switching. He concluded that the

impact of sales promotion is limited on the purchase time and purchase quantity, which

account for only 14% and 2% of the increased sales. In a similar research Bell et. al.

(1999) studied 13 different product categories and found that an average 75% of the

short-term effect of price promotion was Brand Switching and 25% was purchase

acceleration. Papatla & Krishnamurthy (1996) suggest that sales promotion reduce the

likelihood of repeat purchases.

There is overwhelming evidence that consumer sales effect is limited to the time period

of the promotion itself. Sales promotion causes sales to increase but once the promotion

stops it returns to the original level. The promotions produce what Neilson calls

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’mortgaging’ effect by bringing forward sales from later period (Jones, 1990). Promotion

also fuels the flames of competition retaliation. Though the cost incurred on promotions

do not yield significant benefits in terms of enduring sales growth, yet it’s a catch 22

situation for companies. “If you do not some one else will and there goes the consumer”

says Hoshedar K Press, President of Godrej Consumer Care (Economic Times, 2006).

The long-term result of such retaliation would be elimination of all profits from total

market categories. The laundry detergents in Denmark during the ’60s and fruit

concentrate market in Britain had the similar fate (Jones, 1990). Promotions are also said

to devalue the image of the promoted brand in consumer’s eyes. This evidently happened

in the late 1970’s and the early 1980 when Burger King became locked in a promotion

war with Mc Donald’s (Jones, 1990). Kahn & Louie, 1990 found that promotion resulted

in lower purchase rates from loyal customers.

Sales promotion varies across countries too. According to Hallberg (n.d.) in the US, the

most promotionally developed nation, there is a striking imbalance between the price

buyers & the brand loyalist virtually across all the categories. The ratio is greater than

2:1! The price buyers will go in for any brand as long as it is the cheapest, as against

brand loyalist who would consider purchasing only one (their) brand. On the other hand

in Germany where price promotion is not only very recent but also limited the ratio is

4:3. In the developing country like India the situation is just reverse. Brand loyalists

outnumber price buyers by a margin of greater than 2:1. In the recent years sales

promotions have emerged as a very prominent and effective means to attract consumers.

30% of television advertisement in India can be classified as sales promotion

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advertisements. Even in print media there has been a 25% increase in the sales promotion

advertising from 2004 – 2006 (AdEx, India, 2006) (Fig. 1). There has been an increase in

the advertisement spent on all types of promotional activities except the volume

promotions (AdEx India, 2006) (Fig. 2). The increase in advertisement volumes suggests

that marketers feel that the sales promotion tools are effective way to market products in

a developing country like India. While there have been numerous researches done abroad

Fig. 1: Trend of Sales promotion advertising in the print media in India.

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Fig 2: Growth in advertisement volume for different sales promotion tools in India.

which have provided insight into effectiveness of sales promotion, none of these have

focused on Indian Consumers. This is the reason why we have chosen this as the topic of

our research.

Section 3

Research Design, Data and Methodology

The objective of the research is to study the effectiveness of various sales promotion tools

in inducing different buying behavior responses amongst Indian consumers. It is based on

primary data collected through structured questionnaire. The respondents were residents

of Indore city. The questions were designed aiming at estimating the consumers’ five

different sales promotion tools generally used by marketers in India. The five point Likert

Scale was used to collect the responses (1-Strongly agree to 5- Strongly Disagree).

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The second part of the questionnaire obtained basic demographic information about the

respondents. A pilot test was carried out with a sample size of 35 respondents. A Hindi

(National Language) version of the questionnaire was used to get the response from

people not comfortable with English. Convenient sampling was employed to select the

sample. The final sample size was 364.

The effectiveness of promotional tools was analyzed in two different ways. Firstly, the

five different buying behavior habits induced by promotional tools were compared.

Through this comparison the five different behavior responses for each of the five tools

were ranked. Secondly, we compared effectiveness of the promotional tool in inducing

individual buying behavior. For each behavior, five promotional tools were ranked for

their effectiveness. This helped in identifying which tool is most effective in inducing a

particular buying behavior. Friedman related sample test was used to compare the

variables. The analysis was carried out using SPSS (Statistical Package for Social

Sciences).

Section IV

Results and Discussion

The total number of questionnaire administered were 550 out of which 364 questionnaire

were complete and capable of further analysis. Thus, the response rate was 66.18%.

Among 364 respondents, 176 were men and 188 were female. 82 had family income less

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than Rs.10, 000. 98 had family income between Rs.10, 000 – Rs.20, 000. Another 88 had

family income Rs. 20, 000 – Rs. 30, 000, and 88 of the respondents had family income

greater than Rs. 40, 000. There were 8 respondents who did not disclose their family

incomes.

Table1: Demographic Profile of the respondents

Frequency Percent
Gender Male 176 48.4
Female 188 51.6
Total 364 100.0
Family Income Less than Rs.10000 82 22.5
Rs. 10001-20000 98 26.9
Rs.20001-40000 88 24.2
More than Rs.40000 88 24.2
Missing 8 4.2
Total 364
100
Occupation Business 30 8.2
Service 132 36.3
Housewife 44 12.1
Student 122 33.5
professional 34 9.3
Other 2 .5
Total 364 100.0

Educational Qualification H.Sc. 104 28.6

Graduate 148 40.7
Postgraduate 112 30.8
Total 364 100.0

Regarding the educational qualification graduates were the largest in number, 148

(40.7%) the post graduates were 112 (30.8%) and 104 (28.6%) respondents were Higher

Secondary pass. 30 (8.2%) respondents described them selves as business people, 34

(9.3%) as professionals, and 132 (36.3%) as salaried employees and 122 (33.5%) as

students and the housewives were 44. The details are given in table 1.

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The Cronbach Alpha Coefficients were 0.7182 for Price discounts, 0.5127 for Coupons,

0.7586 for buy some and get some free offers, 0.7151 for Bonus Packs and 0.8268 for

Scratch Cards.

The effectiveness of various promotional tools are discussed as follows

Price Discounts

Friedman test was carried out to compare the five behavior responses to price discounts.

The result indicates significant differences among the five buying behavior responses as

induced by price discounts (Significance level 0.00) at 1% significance level as shown in

the table 2. From the table it can be inferred that the behavioral response to price

Table 2: EFFECTIVENESS OF PRICE DISCOUNTS AS SALES PROMOTION TOOL

Std.
Mean Rank Mean Deviation Sig.

Price Discount- Buy Another Brand 2.85 3.1987 1.38574

Price Discount- Buy earlier 2.75 3.0662 1.25256

Price Discount- Buy more 2.72 3.0132 1.27010

Price Discount- Buy new product 2.96 3.2715 1.28548

Price Discount- Buy More than monthly Budget 3.73 3.8742 1.29257 0.000

discounts can be divided in two groups. Price discounts are found to be more effective in

inducing people to go for Stock Piling, Purchase acceleration, Brand Switching and New

product trial in that order, but are not effective enough to induce people to spend more.

Coupon Schemes

The behavioral responses to the coupon schemes are tabulated as shown in table 3. The

Friedman test indicates that people do vary in their behavioral responses to Coupon

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Table 3: EFFECTIVENESS OF COUPON SCHEME AS SALES PROMOTION TOOL

Std.
Mean Rank Mean Deviation Sig

Coupon Scheme- Buy another Brand 2.87 3.4768 1.31065

Coupon Scheme- Buy earlier 2.81 3.4305 1.18045

Coupon Scheme- Buy more 2.75 3.3841 1.26944

Coupon Scheme- Buy new product 2.96 3.6093 1.19428

Coupon Scheme- Buy more than monthly budget 3.61 4.3642 3.51470 0.000

schemes (Sig. 0.00). The mean ranks obtained by the different responses indicate the

Coupon Schemes are particularly effective in inducing people to Stock Piling. They also

induce people for purchase acceleration and Brand switching and to some extent new

product trial. They as Price discount are not effective to make people spend more.

Premium Offer (Buy one and get one free)

People respond differently to Buy one and get one free offer and the difference is found

to be significant as per the Friedman Test (Sig. 0.00). Buy one and get one free offer is

found to be particularly effective in inducing Brand switching. They are also found to be

effective in purchase acceleration and new product trial but are ineffective as a medium

Table 4: EFFECTIVENESS OF PREMIUM (BUY ONE GET SOME FREE) OFFER AS SALES
PROMOTION TOOL

Mean Std.
Rank Mean Deviation Sig
Buy and get some free- Buy another brand
2.33 2.6821 1.48491
Buy and get some free- Buy earlier
2.86 3.0265 1.31122
Buy and get some free- Buy more
3.05 3.2185 1.26961
Buy and get some free- Buy new product
2.88 3.1523 1.31021

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 Buy and get some free-Buy more than monthly Budget 3.87 3.9603 1.28520 0.000

for stock piling and spending more. The results are shown in table 4.

Bonus Pack

People’s responses to Bonus Packs are given in the table 5. Bonus packs are found to be

effective to induce brand switching, purchase acceleration new product trial and stock

piling. Like all the other sales promotion tools we have studied so far they are ineffective

to motivate people to spend more. The differences are between the various behavioral

responses are found to be significant as per the Friedman test (Sig 0.00).

Table 5: EFFECTIVENESS OF BONUS PACKS SCHEME AS SALES PROMOTION TOOL

Std. Sig.
Mean Rank Mean Deviation
Bonus Packs- Buy another Brand 2.68 3.0795 1.49454
Bonus Packs- Buy earlier 2.76 3.1060 1.22829

2.92 3.2384 1.26337

Bonus Packs- Buy more
2.88 3.2715 1.28028
Bonus Packs- Buy new product
3.75 3.9205 1.27291
Bonus Packs- Buy more than monthly budget 0.000

Scratch Card

Scratch Card induces the behavioral responses like Brand switching and purchase

acceleration and are found to be ineffective to respond people towards stock piling, new

product trial and spend more than the monthly budget. The Friedman test result shows

that these responses differ significantly. The results are depicted in table 6.

Table 6: EFFECTIVENESS OF SCRATCH CARDS AS SALES PROMOTION TOOL

Std.
Mean Rank Mean Deviation Sig

Scratch Card- Buy another Brand 2.69 3.490 1.4508

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Scratch Card- Buy earlier
2.70 3.4172 1.31330
Scratch Card- Buy more
3.06 3.7086 1.18653
Scratch Card- Buy new Product
2.99 3.6424 1.28760
Scratch Card- Buy more than monthly Budget
3.57 4.1391 1.14914 0.000

The second part of our analysis focuses on comparing the effectiveness of the five

promotional tools in inducing individual buying behaviors. The five tools were ranked in

terms of the behavior induced by each. This highlights which tools are most effective in

inducing one specific behavior.

Brand switching (Buy another Brand)

To find out which promotional tool is more effective in inducing Brand Switching,

Friedman test was performed and the results are as given in the table 7. Premium (Buy

one and get some free offers are most effective in inducing Brand some free offers are

Table 7: EFFECTIVENESS OF VARIOUS SALES PROMOTION TOOLS IN INDUCING BRAND

SWITCHING

Std.
Mean Rank Mean Deviation Sig.
Price Discount- Buy Another Brand
3.05 3.1987 1.38574
Coupon Scheme- Buy another Brand
3.31 3.4768 1.31065
Buy and get some free- Buy another brand
2.44 2.6821 1.48491
Bonus Packs- Buy another Brand
2.84 3.0795 1.49454
Scratch Card- Buy another Brand
3.36 3.490 1.4508 0.000

most effective in inducing Brand switching followed by Bonus Packs. But other

promotional tools such as price discounts, Coupon Schemes and Scratch cards do not

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provide enough motivation for brand switching. The Freidman test shows that there exist

significant differences among different promotional tools with respect to their

effectiveness in inducing Brand switching behavior.

Purchase Acceleration (Buy earlier)

Do sales promotion tools induce people to buy earlier than required? To know the answer

Friedman test was performed and the results are given in table 8. From the mean Ranks

obtained by different promotional schemes one can say that to induce purchase

acceleration the marketers should prefer Bonus Packs Schemes but they also have other

choices such as price discounts and Buy one and get some free offer. Coupon schemes

and Scratch card are not the right choices for purchase acceleration.

Table 8: EFFECTIVENESS OF VARIOUS SALES PROMOTION TOOLS IN INDUCING PURCHASE

ACCELERATION

Std.
Mean Rank Mean Deviation Sig
Price Discount- Buy earlier
2.83 3.0662 1.25256
Coupon Scheme- Buy earlier
3.26 3.4305 1.18045
Buy and get some free- Buy earlier
2.86 3.0265 1.31122
Bonus Packs- Buy earlier
2.81 3.1060 1.22829
Scratch Card- Buy earlier
3.24 3.4172 1.31330 0.001

Stock piling (Buy more)

The effectiveness of different promotional tools to make people go for stock piling is

Table 9: EFFECTIVENESS OF VARIOUS SALES PROMOTION TOOLS IN INDUCING STOCK PILING

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 Std.
Mean Rank Mean Deviation Sig
Price Discount- Buy more
2.64 3.0132 1.27010
Coupon Scheme- Buy more
3.11 3.3841 1.26944
Buy and get some free- Buy more
2.92 3.2185 1.26961
Bonus Packs- Buy more
2.93 3.2384 1.26337
Scratch Card- Buy more
3.41 3.7086 1.18653 0.000

summarized in table 9. From the table one can conclude that Price discounts are most

effective tool for stock piling followed by buy one and get some free and Bonus Packs

offer.

The other tools i.e. Coupon Scheme and Scratch Cards are not as effective in motivating

people to go for Stock Piling. The difference between different tools is found to be

significant at 5%.

New Product Trial

Many companies use sales promotion tools to motivate people for new product trial. The

consumers’ responses to different tools with respect to the motivation provided by them

for new product trial are tabulated in table 10.There exist significant differences between

Table 10: EFFECTIVENESS OF VARIOUS SALES PROMOTION TOOLS IN INDUCING NEW PRODUCT
TRIAL

Std.
Mean Rank Mean Deviation Sig.

Price Discount- Buy new product 2.86 3.2715 1.28548

Coupon Scheme- Buy new product 3.26 3.6093 1.19428

Buy and get some free- Buy new product 2.71 3.1523 1.31021

Bonus Packs- Buy new product 2.85 3.2715 1.28028

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 Scratch Card- Buy new Product 3.32 3.6424 1.28760 0.000

the various sales promotion tools with respect to their ability in inducing new product

trial behavior. Buy and get some free is the best motivator of the tools studied for making

people to go for new product trial. The other promotional tools the marketer should

consider for new product trial are price discounts and Bonus Packs offer.

Spend More

The study reveals that Sales promotion tools are not very effective alternative to motivate

people to spend more than the monthly budget. The different sales promotion tools do not

differ significantly in terms of their effectiveness in inducing people to spend more at 5%

significance level. The results of analysis are shown in table 11.

Table 11: EFFECTIVENESS OF VARIOUS SALES PROMOTION TOOLS IN INDUCING MORE

MONTHLY SPENDING

Std.
Mean Rank Mean Deviation Sig.
Price Discount- Buy More than monthly Budget
2.85 3.8742 1.29257
Coupon Scheme- Buy more than monthly budget
3.06 4.3642 3.51470
Buy and get some free-Buy more than monthly
2.93 3.9603 1.28520
Budget
Bonus Packs- Buy more than monthly budget
2.95 3.9205 1.27291
Scratch Card- Buy more than monthly Budget
3.21 4.1391 1.14914
0.064

To study the Overall effectiveness of the various Sales Promotion tools the responses on

all the behaviors were summed and the Friedman test was applied on the sum and the

results obtained are given in table 12.

Table 12: EFFECTIVENESS OF VARIOUS SALES PROMOTION TOOLS

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 Std.
Mean Rank Mean Deviation Sig
Price Discount
2.84 16.4238 4.45037
Coupon Scheme
3.25 17.9934 4.37492
Premium (Buy and get some free)
2.67 16.0397 4.75938
Bonus Packs
2.75 16.6159 4.48235
Scratch cards
3.48 18.3974 4.92623 0.000

The results of the test reveal that the different sales promotion tools differ significantly

with respect to their effectiveness as Sales promotion tools. Buy one and get some free

emerged as the most effective tool of sales promotion while the scratch cards are the least

effective. Bonus Packs is ranked second while Price discounts are ranked third in terms

of their effectiveness as sales promotion tool. Coupon schemes and scratch cards were

not found very effective sales promotion tool. The table below summarizes the

effectiveness of the selected sales promotional tools in inducing various buying

responses.

Table 13: Effectiveness of Sales Promotional tools in inducing behavioral response

Promotional Price Coupons Premium Bonus Scratch

Schemes discount Offers Packs cards

Effective Stock Stock Piling Brand Brand Brand

Piling/ Switching Switching/ Switching/
Purchase Purchase Purchase
Acceleration Acceleration Acceleration
Moderate Brand Purchase Purchase New New
Switching/ Acceleration/ Acceleration/ Product Product
New Brand New Product Trial/ Stock Trial
Product Switching Trial Piling
Trial

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Ineffective Spend More New product Stock Piling/ Spend More Stock
Trial/ Spend Spend More Piling/
More Spend More

Section 5

Limitations and Scope for future research

The Scope of this study was limited only to one city (Indore) of Central India. An

extended study encompassing more cities would enrich it further. Secondly, the customer

responses to the various sales promotions can vary across the product categories and

product prices. A further research is recommended to examine whether the observed

effects can be generalized across the product categories and product values. We limited

this study to only five promotion tools a further study may be undertaken to understand

the impact of other sales promotion tools like in–store displays, contests, refunds etc.

The sample size (364) and the sampling method (Convenient) were the other limitations

of study. A study with more number of respondents done with probabilistic sampling

technique can give better insight to the Indian customer.

Section VI

Conclusions

This research investigated the effectiveness of the sales promotion tools to induce

different buying response among the Indian Consumers. The study revealed that the

Premium (Buy one get some free) offers are the most effective tool of sales promotion in

India. Bonus packs and Price discounts have also been found effective, occupying the

Authored by Manish Mittal & Poojae Sethi 21

second and the third places respectively. Coupons and Scratch cards are not as effective

as the other tools mentioned above, with scratch card being the least effective. The reason

may be because the top three promotional tools are easy to use and provide transaction

utility at the time of the purchase itself. For a country like India where the consumers are

less educated and are more concerned about the ‘value for money’ this argument seems

valid. Another point which our results suggests is that the Indian consumers by and large

favor passive promotions rather than active promotions like coupons and scratch cards

because they find it inconvenient to undertake an active search before taking the buying

decision.

Premium offers were found to be the most effective tool. As from the previous shopping

experience the consumer has an understanding of what the fair price of the product is.

When they realize that the effective price of the same product is much less than the fair

price they are most likely to respond to it quickly. They do not mind buying more than

the immediate requirement if they feel that they can use the product sometime in future.

The same hold true for Bonus packs as well. Price discount are more easy to understand

and does not result in buying more than the immediate consumption but are not as

effective as the premium offers because most of the price discounts are very low

(maximum in most cases is 25%) and hence the utility derived from them is lesser than

that derived from the premium offer where the effective price is 50% (or less) of the fair

price.

The study suggests that Coupons and scratch cards are not very effective tools of sales

promotion in a developing country like India because they involve active search which

the Indian consumers find inconvenient. With coupons, the Indian consumers are not

Authored by Manish Mittal & Poojae Sethi 22

comfortable as they find it niggling to collect them, remember to bring them along at the

time of next purchase and buy something they do not intend to consume immediately.

The coupon deals also tend to be insignificant in providing the transaction utility because

of the fact that there is a time lag between the purchasing decision and enjoying the

benefit of the deal. Though the scratch cards are very popular they are least effective

possibly because of its overuse. Many supermarkets and small shoppers have used the

scratch cards as the promotional tools. These scratch card schemes promises very high

returns to attract the consumers but the consumers feel cheated when they get very

nominal actual returns/gifts. Other reason being that in all other promotional tool there is

an assured return but in the case of scratch cards the probability of returns/gift is very

low.

Companies have a specific goal when they choose to use any promotional tool. The study

revealed that Premium offers (Buy one and get some free) were particularly effective in

inducing brand switching and new product trial. Price discounts were found to be useful

in inducing stock piling and to a certain extent category expansion, while Bonus packs

are helpful in purchase acceleration among the Indian consumers. The promotional tools

were found to be effective for Brand switching, Purchase acceleration, Stock piling and

new product trial but are ineffective in motivating the consumers to spend more than their

monthly budget. The research validates that the sales promotions are a zero sum game.

Authored by Manish Mittal & Poojae Sethi 23

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