A Sales promotional strategy is a set of related actions that managers take to increase their company’s performance. For most companies, achieving superior performance relative to rivals is the ultimate challenge. If a company’s strategies result in superior performance, it is said to have a competitive advantage. An organization pursues strategies at different levels to achieve superior performance and to provide it with a competitive advantage. Managers in an organization formulate strategies at different levels of an organization to launch various products and services to achieve superior performance and competitive advantage. In quest of showing how strategies taken by an organization works in consistent with its superior performance and sustainable competitive advantage, we have conducted a study on agricultural marketing company ltd. (AMCL), one of the major players in food and beverage industry of our country. In this study, we have taken-“Pran Mango Juice”, one of the products of AMCL. Our objective here is to show what strategies AMCL has taken in launching this product and how these strategies helped AMCL in building its competitive advantage by launching Pran Mango Juice. In this study, we have focused on functional level strategies which includes various strategies to ensure-quality, efficiency and customer responsiveness. We have also showed here whether AMCL took cost leadership and differentiation strategy in producing and launching this product. As AMCL exports its product n abroad, here we have also showed what was AMCL’s global strategy and entry mode in expanding Pran Mango Juice globally. Finally, and most importantly, we have showed here, the corporate level strategies, taken by AMCL to produce and launch Pran Mango Juice to ensure superior profitability and sustainable competitive advantage.
In our country many organizations are performing a lot of activities to make efficient and effective their working condition or make the organization profitable through marketing and taking so many challenges. Along with this they are also very much concerned about their promotional activities. The PRAN Agricultural Marketing Company Limited is one of them who are performing their marketing strategy very effectively.
Origin of the Report
This report has been authorized by Md. Mamin UllahSupervisor, Asa University Bangladesh, Shyamoli, and Dhaka. This assignment is a part of “Integrated marketing communication)” course under the BBA curriculum. It has been submitted on December31, 2011.
Significanceof the Report
Every project has specific purposes or objectives. Sothe main objective of this project is follows:
- To acquire the practical knowledge of Sales promotional Strategies or activities of PRAN Agricultural Marketing Company Limited (AMCL).
Scope and Limitation
This paper includes marketing mix, Sales promotional activities about Pran mango juice and present situation of the company.
Because of the lacking of sufficient data and keeping the information secret by the company, we have not been enabled to cover all the parts very clearly and perfectly.
To prepare the report, supportive information is gathered from the following sources:
Primary Sources: When any information collects from the main source directly that is called primary method.
Primary sources mostly include
- Company records and Face to face conversation With Marketing Executive.
Secondary Sources:When any information collects from via some source and not directly from main source it is called secondary method;
For this project work I am collecting information as secondary data from many sources, such as:
- Annual Reports of “PRAN”.
- Website of the observed company – www.pranfoods.net.
An Overview of Agriculture Marketing Company Limited
History of Agricultural Marketing Co. Ltd
PRAN stands for Program for Rural Advancement Nationally. “PRAN” is currently the most well known household name among the millions of people in Bangladesh and abroad also. Since its inception in 1980, PRAN Group has grown up in stature and became the largest fruit and vegetable processor in Bangladesh. It also has the distinction of achieving prestigious certificate like ISO 9001:2000, and being the largest exporter of processed agro products with compliance of HALAL & HACCP to more than 70 countries from Bangladesh.
PRAN is the pioneer in Bangladesh to be involved in contract farming and procures raw material directly from the farmers and processes through state of the art machinery at our several factories into hygienically packed food and drinks products. The brand “PRAN” has established itself in every category of food and beverage industry and can boost a product range from Juices, Carbonated Drinks, Confectionery, Snacks, and Spices to even Dairy products.
Today, “PRAN” its authentic refreshing juice drinks products, but also for its mouth watering quality confectionery products with high visual appeal and exciting texture. We intend to expand our presence to every corner of the world and strive to make “PRAN” a truly international brand to be recognized globally.
“Poverty and hunger are curses”.
To generate employment and earn dignity and self-respect for our compatriots through profitable enterprises.
- To earn an annual Return on investment (ROI) over next years of 21.31 million after tax.
- To provide dividend @ 28% to the shareholders for the year 2009-2010.
- To occupy the market as a market leader through creating brand equity.
- To earn customer satisfaction and build positive image by maintaining the quality of product and transparency in dealings with high quality of service.
Structure of the Company
Agricultural marketing company ltd. (AMCL) has divided its total works into smaller component parts. The parts are
The process of grouping jobs according to some logical arrangement, AMCL is grouping its job involving the following activities by the functional departmentalization. Organizational level of the Organization has been described below in brief:
Board of Directors: Well established and reputed professionals and business person of Bangladesh. They are the followings:
Chairman: He is the well known business person in Bangladesh.
Managing Director: The member selected by other members who set up the organizational mission, set higher quality product and dominant in the world marketing company.
Deputy Managing Director: He is a member of the board of Director. He selects the organizational goals and plan. Now he rolled in planning and production
General Manager: The function of General Manager is to make quality production, setting goals. He also emphasizes the Maintenance Department.
Assistant General Manager: He sets the plans for other departments as per making of production. The functions also are to make higher quality production, increase productivity and cost control.
Financeand Accounting Department
The department pays salaries, wages and calculates company’s financial statement.
Markets over the world are controlled by their accumulated decision. Right time advertisement, control taxes and vat, clearing and forwarding is the object of export department. Import department purchases raw materials and other equipment’s as per production schedule. This department also takes so many promotional activities for promoting the product.
It describes the company’s overall position comparing with others. It also tells what kinds of benefits the company enjoying and what are its limitations and how it can overcome these by taking corrective measures. The following things can be done for analyzing AMCL.
Marketing mix is the set of marketing tools that the firm uses to pursue its marketing objectives in the target market. This marketing tool involves 4 P’s of marketing: Product, Price, Place and Promotion. The particular marketing variables under each P are shown below:
The company has so many different products. These are given below:
Table 02: Product Categories of PRAN
Various size of Pran Mango juice:
The deliciously natural and sweet taste fruit juice is derived from the local orchard during the harvest to ensure the freshness and quality of the juice. It gives natural pulp squeezing fresh fruit, vitamins; mineral and other ingredients make the juice refreshing, natural and nutritious.
Table 03: Various size of PRAN Mango juice
Refundable glass bottle (1)
Tin canned (4)
|Non-returnable glass bottle (5)|
Mango juice, green Mango juice
PRAN mini juice (65ml), PRAN junior juice (125ml),
PRAN juicepack (125ml), PRANpremium (200ml), PRANclassic(200ml),
PRANpremium juice (250ml), PRAN classic juice (250ml),
PRAN premium juice (1000ml), PRAN classic juice (1000ml)
Fruit cocktail, mango, orange, mango 100ml
Fruit cocktail, pineapple. mango, tamarind, orange, banana, guava, coconut
Banana, fruit cocktail, guava, mango, orange, pineapple
Price Categories of Different PRAN Mango Juice Based on Size
Table 04: price categories of different PRAN mango juice
|Name of the items|
|PRAN mango juice pack|
|PRAN mango juice pack|
|PRAN mango juice pack|
|PRAN mango juice pack|
|PRAN frooto pet bottle|
|PRAN glass bottle|
|PRAN tin canned|
|PRAN non-returnable glass bottle|
The AMCL has already captured all over the country. It has distributed it’s product from urban to rural area. All people are also habituated with that product. As it is a consumer products so every people needs it. From child to old, each person feels its necessity. So it’s coverage all over the country and all kinds of people. And finally it has also enabled to do that. Almost it follows mass segmentation.
The importance of consumer sales promotion in the marketing mix of the fast moving consumer goods (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 consumer’s perceptions regarding sales promotion. 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 and convenience as well as hedonic benefits such as entertainment, exploration and self-expression.
Broadly speaking most of the companies using Marketing Mix which includes…
- Place (Channel of Distribution)
These are the four basic pillar of marketing mix. Most of the marketing strategies are built on the basis of these criteria.
Promotion is one of the important elements of marketing mix. There are so many elements of promotion such as …
- Direct Marketing
- Public Relations
- Sales Promotion
Traditionally, sales Promotions have been used by marketer to increase sales in the short term. However, in the last few decades this communication tool has evolved and now is considered from a strategic point of view. For this reason, it is necessary to realize new studies in this area and study how consumers evaluate sales promotions.
Sales promotions have grown in both importance and frequency over the past few decades. Although an accurate estimate for total sales promotions expenditures does not exist, we can be sure that the trend is up.
Sales promotion serves three essential roles: It informs, persuades and reminds prospective customers about a company and its products. 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 as ultimate consumers about the attributes and availability of his products. The second purpose of promotion is persuasion. The cut throat competition among different products puts tremendous pressure on their manufacturers and they are compelled to undertake sales promotion activities. The third purpose of promotion is reminding consumers about products availability and its potential to satisfy their needs.
From these elements Sales Promotion is the element which is in the focus of this project. Further Sales Promotion is quite broad term it includes …
Consumer Oriented Sales Promotion
Trade Oriented Sales Promotion
1Consumer 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 includes Sampling, Couponing, Premiums, Contest, Refunds, Rebates, Bonus Pack’s, Price-off, Event marketing etc.
For the purpose of this study, following definitions of sales promotion were kept in mind.
Kotler defines sales promotion as: “Sales promotion consists of a diverse collection of incentive tools, mostly short-term designed to stimulate quicker and/or greater purchase of particular products/services by consumers or the trade.”
Belch and Belch has given a more simplistic definition i.e. “sales promotions are short-term incentives to encourage purchase or sales of a product or service.”
Hence, any forms of incentives (price cut or value added nature) offered for short period either to trade or consumers are considered as sales promotion activities.
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 factor that can influence products availability and pricing
Marketer’s 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
3.2 Tools of Consumer Oriented Sales Promotion:
There are so many tools or technique available to the marketers for achieving objective of sales promotion. These tools should be used considering all other factors affecting such as cost, time, competitors, availability of goods etc. These tools are as under…
- Scratch Cards
- Lucky Draws
- Bundling Offer
- Extra Quantity
Let’s have look at each tool…
Coupon is the oldest and most widely used way of sales promotion. Coupons have been used since 1895. It is mostly used by packaged goods. It is worthwhile to use coupon as a promotion tool because data shows that market for packaged goods increased from 16 billion in 1968 to 310 billion in 1994. To boost up the sales not only manufacturers but also retailers personally use coupon. A coupon leads to price reductions so as to encourage price sensitive customers. Non users can try a product which may leads to regular sales.
A price-off is simply a reduction in the price of the product to increase sales and is very often used when introduction a new product. A reduction in price always increases sales but the use of this technique should be carefully considered in the current market situation.
Price-off is the most preferred sales promotion technique because consumers response very positively to this scheme. Not only that but it also cause large increase in sales volume. Price-off reductions are typically offered tight on the package through specially marked price packs.
Freebies are a popular form of modern marketing and are some of the best things about the internet. The definition of freebies is products or services given away for free at no cost to the consumer. Well that’s the definition we came up with. I am a bargain freebie shopper, pretty much going for any free product and informing everyone about it.
At different times, big and small companies often give away prizes and money which is too good to be true. Often it’s in the pursuit of more customers or a larger fan base and it often works.
4. Scratch Cards
A scratch card (also called a scratch off, scratch ticket, scratcher, scratchie, scratch-it, scratch game, scratch-and-win or instant game) is a small token, usually made of cardboard, where one or more areas contain concealed information: they are covered by a substance that cannot be seen through, but can be scratched off.
5. Bundling Offers
Product bundling is a marketing strategy that involves offering several products for sale as one combined product. This strategy is very common in the software business (for example: bundle a word processor, a spreadsheet, and a database into a single office suite) and in the fast food industry in which multiple items are combined into a complete meal. A bundle of products is sometimes referred to as a package deal or a compilation or an anthology.
There are also three types of sales promotion strategies:
- A push strategy
- A pull strategy or
- A combination of the two
A Push Strategy:
A ‘push’ sales promotion strategy involves ‘pushing’ distributors and retailers to sell your products and services to the consumer by offering various kinds of promotions and personal selling efforts. What happens here is that a company promotes their product/services to a reseller who in turn promotes it to another reseller or to the consumer. The basic objective of this strategy is to persuade retailers, wholesalers and distributors to carry your brand, give it shelf space, promote it by advertising, and ultimately ‘push’ it forward to the consumer. Typical push sales promotion strategies include; buy-back guarantees, free trials, contests, discounts, and specialty advertising items.
A 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 ‘pull’ or purchase the product/services directly from the company itself. This strategy targets its marketing efforts directly on the consumers with the hope that it will stimulate interest and demand for the product. This pull strategy is often used when distributors are reluctant to carry or distribute a product. Typical pull sales promotion strategies include; samples, coupons, cash refunds or rebates, loyalty programs and rewards, contests, sweepstakes, games, and point-of-purchase displays.
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.
Factors Influencing Consumer Oriented sales promotions:
Mainly four factors should be taken into account while determining the sales promotion program.
- Target market
- Nature of product
- Stage of product life cycle
- Budget available for promotion
1. Target Market:
While doing sales promotion, marketer must know who their target market is; otherwise there is no use of all effort because it leads to nowhere. A target market can be in any of the stages of buying hierarchy i.e. awareness, knowledge, liking, preferences, conviction and purchase. Each stage defines a possible goal of promotion.
2. Nature of the product:
There are various product attributes which influence sales promotional strategy. When the unit price is low the manufacturer as well as the customer has low risk but he can get the benefit of mass marketing. Therefore, mass marketing requires mass sales promotion schemes. Sales promotion scheme differ for products like its durability, perishable goods etc.
3. Stage of product Life Cycle:
Sales promotion strategies are influenced by the life cycle of a product. When a new product introduced, prospective buyers must be informed about its existence and its benefits and middlemen must be convinced to stock it. Later, if a product becomes successful, competition intensifies and more emphasis is placed on sales promotion to increase its sales.
4. Budget Available for Promotion:
The funds available for promotion are the ultimate determinant of the promotional program. A business with ample funds can make more effective use of sales promotion program than a firm with limited financial resources. The budget for sales promotion can be prepared by the following methods…
- Percentage of Sales
- Fixed funds available for sales promotion
- Following the competition, and
- Budgeting by objective
Sales Promotion from the Consumers point of view
Willingness to buy on sales promotion offer:
Sixty per cent of the sample did not show willingness to buy a brand due to promotion while 30% showed willingness and 10% were not sure. This indicates that when 30% showed willingness and 10% consumers who were not sure, these groups might be lured through innovative and lucrative sales promotion offer.
Ability to induce trial:
Forty per cent of the respondents had said that sales promotion had the ability to induce trial which reinforces the above inference.
In order to understand ability of the promotions to increase long-term sales, respondents were asked about continuity of purchase of a brand after the withdrawal of promotion. Eighty per cent of the respondents indicated that they would not continue. But 20% said they would. Thus, it could be inferred that promotions in this category (low involvement products) might encourage trial and brand switching but not long term loyalty.
Preference of Schemes:
Price off was the most preferred type of scheme. Maximum customers’ ranked price-offs as number one or two.
Majority of respondents had a perception that the quality of the promoted brands remained the same during promotion, while some of them felt that it was inferior to before. It can be inferred that promotions were not leading to negative brand quality perceptions. It is found that some customer strongly preferred to buy their regular brand and said that sales promotion would not weaken their loyalty towards the brand.
Perceptions regarding underlying company motivations:
On tapping perceptions’ regarding underlying company motivations for sales promotion, “to increase sales” was ranked highest followed by “to attract switchers” and “to sell excess stocks”. While providing value to customers” and “To reinforce company image” were ranked lowest. This indicates that consumers believed that companies were undertaking 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’ perceptions about consumer preferences). Since retailers observe consumers in store behavior were 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 the consumer survey which showed that recall in case of heavily promoted schemes on TV was found to be very high.
Trade Oriented Sales Promotion
Trade Oriented Sales Promotion aimed to motivate channel member of the company and to encourage them to push company’s product. Trade Oriented Sales Promotion includes dealer contest and incentives, trade allowances. Point-of-purchase displays, sales training programs, trade shows, cooperative advertising, and other programs designed to motivate distributors and retailers to carry a product and make an extra effort to push it to their customers.
Trade Oriented Sales promotion from the retailer’s point of view:
Perceptions on Scheme Preference:
It was found that retailer perceived price offs as a better form of sales promotion activity. Price offs in their opinion had relatively a greater impact compared to any other form of sales promotion activity like Bonus packs, Premium, Contests etc. Retailers preferred price offs the most, then bonus pack, premium, contests, in order of importance.
Perceptions about Buying Roles:
Retailers viewed that the person who came to the shop (who may be a maid, son, daughter, daughter-in-law and child) was the decider of a toilet soap brand and not the Income provider (e.g. head of the family). It could be inferred that visibility of information about the sales promotion activity at the point of purchase could result into the purchase of a promoted brand.
Perceptions about their role in decision-making:
Retailer had relatively very low influence in affecting choice. It could be inferred that visibility and awareness about the scheme were the critical success factors so that pull could be created.
Perceptions about Response to Sales Promotion Offers:
They believed that younger age-groups were more experimental in nature, amenable to trying new brands, and sought/looked for or asked whether there were any) sales promotion schemes running on any toilet soap at the time of purchase.
Perceptions about Communications of Sales Promotion Schemes:
Retailers perceived that role of word of mouth and television advertising played an important part in providing information inputs to consumers regarding sales promotion activities.
Variations in Information Flow:
Smaller (non-supermarket, small format store) retailers received relatively less support compared to supermarkets in terms of servicing, margins, information about sales promotion activities from the dealers. Many a times small retailers were only informed verbally about sales promotion schemes by the dealer salesmen during the scheduled weekly visits.
At the time of sales promotion activities, dealers had tendency to push unwanted stocks onto the smaller retailers. In fact these retailers preferred to stock variety of brands and wanted payment for shelf and window display to increase traffic into their store. However, supermarkets and big retailers were pampered and given special services and given better margins and better allowances.
It was found that in sales promotion schemes margins varied from 6 to15% depending of the size of the retail outlet, bargaining power of a retailer, quantity ordered by him etc. Mostly margins were linked to size of the volumes that were ordered.
Perceptions about terms and conditions:
Retailers were not found to be happy with sales promotion schemes where their margins were cut on the pretext of just fast movement of inventory of the brand being promoted. Also if additional incentive was offered it was subject to minimum performance requirement.
Nature of POP:
Retailers indicated that most of the POP (Point of Purchase) materials were meant for brand advertisement and not for giving information regarding the schemes. Thus it could be inferred that company’s follow up was not adequate.
Servicing during duration of Scheme:
In stock-out situation during the running of the sales promotion schemes, smaller retailers had to wait for replenishment of stocks till the next scheduled weekly visit by the dealer salesman but big retailers were serviced on telephonic request for replenishment of stocks. This clearly indicated the disparity in treatment.
Problem of left-over:
A leftover stock at the end of any scheme was required to be sold by the retailers before they ordered fresh stocks. In case of bonus packs scheme, leftover stock was often dismantled (cut open buy one get one free) and sold them individually as a regular soap. This approach of the company leads to misappropriation which in turn could result in adverse brand image.
Gifts for Retailer motivation:
Companies at times were rewarding retailers by giving free gifts like thermos flasks or clocks if they sold more than certain quantity in a given period. Companies were making a half-hearted effort to motivate retailers.
Perceptions about mass media announcements:
Retailers viewed that whenever sales promotion scheme was announced on TV, it created pull and they were more than willing to stock such brands..
Post Promotion Behavior:
Retailers observed that in most cases sales promotion scheme on a brand might encourage a buyer to switch a brand temporarily but he would revert back to original brand after promotion.
Many a time’s retailers had to handle various sales promotion offers simultaneously in a category and also across categories and there was no formal communication planning either from the dealer or the company. Remembering each offer and handling was a problem especially for a small retailer which was often an as one-man show.
The Short term Impact of Promotions:
Let’s have look at the impact of promotions on purchase behavior during the promotional period i.e. the week or the month when the promotion was being run. The majority of the empirical studies have focused on the impact of promotions in the short term. The key findings across the studies are discussed below.
Temporary price reductions (price off) substantially increase sales:
There is ample evidence to show that promotions lead to dramatic increases in sales of promoted brand in the short term. Studies have consistently reported high sales effects and high price elasticity of brands which are on promotion. The economic rationale for the promotional response is clear – temporary price cuts increase the value of the product to the consumer and it leads to immediate action. Sales boost can be quantified on the basis of brand switching, primary demand expansion and consumer stockpiling during a promotion.
Sales Promotion leads to brand substitution with the product category:
The sales ‘bump’ during the promotional period into sales due to brand switching, purchase time acceleration and stockpiling. Studies on brand switching have shown that brand switching effects within a category are asymmetric such that promotions on higher quality brands impacts weaker brands disproportionately. During a promotion, higher quality brands induce a large number of consumers to switch to them as compared to lower quality brands. One explanation advanced for this finding by researchers is that large share brands have higher brand equity and attract switchers more than low share brands.
Sales Promotions affect sales in complementary and competitive categories:
From this project it is found that promotion not only increases sales of main product but it also lead to increase in sales of complementary categories. Found strong cross relationships between products of the promoted product category indicating brand substitution behavior. They stated that retail price promotions work as a form of implicit price bundling whereby the consumer surplus is transferred from the promoted item to non promoted items. Also found that retail price promotions create significant complementary and substitution effects within the store.
Sales Promotion leads to primary demand expansion for a category:
While it was traditionally assumed that consumption rates remain fixed during and after a promotion, but from this project I came to know that promotions also have a primary demand expansion effect. When a primary demand expansion occurs, promotion induced increase in purchase quantities does not significantly extend the time till the next purchase in the category occurs, thus indicating that there has been an increase in consumption promotions induced consumers to buy more and consume faster. It is found that promotion induced inventory temporarily increased consumption rates within the category e.g. in categories such as bacon, salted snacks, soft drinks and yogurt exhibited primary demand expansions as a result of promotion while bathroom tissue, coffee, detergent and paper towels exhibited stockpiling only.
Sales Promotion leads to purchase acceleration/stockpiling effects:
In response to a promotion, consumers may buy more quantity of the product category or buy at an earlier time than usual (purchase acceleration effect). If consumers buy extra quantity during a promotion or earlier than normal, then they are not in the market to buy products once the promotion is over. Thus purchase acceleration is demonstrated through
A lengthening of inter purchase times after a promotion. Purchase acceleration was more likely to be exhibited in increased purchase quantity than in shortened inter purchase times. Results showed that consumers mostly made up for the large quantity purchased by waiting longer until purchasing again. Results indicated that heavy users tended to accelerate purchases more than light users. There was negligible difference in the acceleration propensities of high versus low income groups.
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. Let us see impact of promotions effort and study the impact 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 brand’s sales or repeat buying loyalty. The extra sales of a brand while promoted came virtually all from the brand’s existing long-term customer base for which the experience of buying the promoted brand was nothing new.
It is found that although the short term effects of promotions are strong; these promotions rarely exhibit long term effects. It is observed that each sales component generally lacked a permanent effect and the effect of promotion was short lived and increase in promotions affected consumers’ stockpiling decisions in the long run. They found that the combined short and long-term elasticity of promotions was zero.
Why do Sales promotion schemes affect sales?
There are three mechanisms behind these facts. It is Purchase quantity, Brand switching and Category expansion.
First, consumer can increase the quantity they buy just because the product is on sale.
Second, consumers are inducing to purchase another brand different from the one they would have purchased when there is no promotional incentive.
Finally, consumer’s total consumption of the product category is increased by the promotion. However, in the long term this positive effect may be diluted because a promotional campaign has no permanent effect in the sales of the firm.
Sales Promotional Strategy of Pran Mango Juice:
AMCL undertake a number of promotional activities and marketing strategies attract the customers and to eased contribute to established a strong brand image on reproductive beverage service. For this reason they use several promotional tools like, the advertisement in the print and electronic media. To capture the market they also communicate with the clients directly through their door to door services. Now some of the promotional activities we briefly discussed below
Promotion is the direct inducement that offers an extra value or incentive for the product to the sales force, distributors or the ultimate consumers with the primary objective of creating an immediate sale. Through applying sales promotion, advertising, sales force, public relations, and direct marketing, the communication between customers and buyers becomes static which is very effective for the upgrade marketing of the PRAN mango juice.
Consumer Oriented sales promotion
The AMCL offers several types of program for the promotional activities of consumers
AMCL offered this program long ago. It got huge public popularity. The linear program was like this-after buying a bottle of Pran the consumer had to collect the linear and open it. There were something printed inside of the linear. There could be some figure of money, some gift item like opener, glass etc. Only the lucky person got that linear. They give the linear to the nearest retailer shop. Pran offered a car or offer a ticket in that linear based program.
Pran Company introduced this program. The rule of this program was if a consumer drinks 5/6 bottles of he or she would receive a glass from Pran Company through the retailer. This program is frequently use for both consumers and retailers. AMCL also practices this glass program
There are some other types of incentives given by different AMCL. They are given as bellow:
Buy one liter Pran and get a Frisbee.
AMCL some times offers different food item with their liter bottle. They also give Cricket bat, ball, and pad etc.AMCL some time gives a little amount discount with every one-liter bottle.
Consumers are given some quantity of a product for no charge to induce trial. This process is very effective in case of new product promotion but very costly. Products are relatively low unit value, sample does not cost much. As for example, PRAN mango juice of 65 ml, 125 ml, 200 ml. are very attractive for their own low unit value. Products are divisible that means product can be made in smaller sample and sample can demonstrate the overall features of the product. As for example, PRAN mango juice has different categories of products varying from their small size to bigger size glass bottled and pet bottled orientations to the consumers. Purchase cycle is relatively short, so that consumers will consider an immediate purchase or will not forget about the brand before next purchase.
There are various types of sampling methods which are given below:
- Door to door sampling: Product delivered directly to prospect’s residence. Very costly but effective. Newspapers are widely used for door-to-door sampling.
- Mail Sampling: Appropriate for small, lightweight, non-perishable product. Postal restrictions and increasing postal rates are the two main drawbacks of this system.
- In store sampling:Marketers hire temporary demonstrator who set up a table or booth and offers sample to passing by shoppers. Very effective for food products.
This is the oldest, most widely used and most effective sales promotion. It encourages repurchase. It is effective for consumers who are very price sensitive. Newspapers are widely used to distribute coupon. FSI (Free standing Insert) through newspaper is also widely used. Coupon helps company to achieve sale through “PULL” strategy and reduces the dependability on retailers which is authentically followed by the PRAN Company.
The following coupon strategies are followed by the company when it is tending to increase its sales promotion:
- Bounce Back Coupon: This is attached (engraved) to the package of a particular brand and helps to achieve repurchase of the same brand.
- Cross ruff Coupon: This is attached to the package of different brand.
- Instant Coupon: This is attached to the outside of the package and consumers can instantly rip off and get the product immediately.
- In store coupon: Normally distributed in the store. Can be distributed by persons or “Coupon Dispenser Machine”.
- The following bullets are different practiced methods effective for promoting sales in PRAN Company:
- This is a promotional tool where consumers compete for prizes or money on the basis of skills or ability. Consumers have to fill up some forms for entry into the competition and needs to show some proof of purchasing the product. It is widely practiced in Bangladesh by newspaper companies during World Cup Cricket and in the time of various traditional festivities of Bangladesh.
Here winners are determined purely by chance. It’s a kind of game. Example: “Scratch card in PRAN mango juice”
There are other kinds of consumer sales promotion; like the following bullets:
- Bonus pack: Offering extra amount of product at a regular price.
- Price off: Reducing price of the brand for a short duration. Can influence consumers very strongly at the POP when price comparison is made.
- Event Marketing:A type of promotion where a company or brand is linked to an event (Fantasy Kingdom).
In this case, the retailers consider all the beverage companies in the same way who offers more discount retailer wants to sell his product more. That is why AMCL occasionally offer discount.
Trade Oriented Sales Promotion:
This opportunity is basically given to the retailers and distributors. This is done to increase company sales through “PUSH” Strategy; which is done by the PRAN Company for their sales promotion.
There are some kinds of Trade Promotion as the follows:
- Contest and Incentive.
- Trade allowance (buying allowance, promotional allowance, slotting allowance)
- Sales Training
- Others (financial support, decoration of the store etc)
By the by, Public Relations is one type of promotional tools to increase its sales to the market and to position the market leadership of the total market in the country aspect. PRAN has very strong public relations through initializing its socio-economic activities like: concert drawn for donating to the helpless of the society, giving scholarship to the poor meritorious students, for incepting plantation program throughout the country in a medium-large scale.
- Public relations or PR is an organizational activity involved with fostering “good will” between a company and its stakeholders.
- Company’s stakeholders include suppliers, distributors, consumers, govt., pressure groups, share holders, employees etc.
The dealer and retailer are same in AMCL marketing system. So it takes same activities for dealer and retailer to promote sales.
Some time AMCL give extra free products. For example, a dealer or retailer may get 2 bottles free with every case.
AMCL gives refrigerator to the dealer and retailer against a minimum amount of security money. Dealer and retailer get free servicing for refrigerator.
AMCL has corporate agreement with some renowned hotels, restaurants, bars, fast food, shops etc. to sell Pran products only. For this kind of dealer and retailer AMCL give extra discount along with the commission.
Inject promotion is a promotion tool that is used to promote the retailers .This tools is only applicable for refillable glass bottle (RGB). In this process retailers get only the liquid but not the RGB as extra if one can fulfill some criteria’s. If a retailer takes 1 crate that mean 24 bottle of 250ml. including RGB then he will get 250*10 ml. liquid free.
AMCL sometime offers T-shirt to the traders. T-shirt is also a good advertising media.
Free Bottles/ Discount of money
These two promotional activities have very close relationship with each other. AMCL companies always give free bottles in lieu of discount of money.
Pran first started this promotional activity, AMCL using this technique very effectively. This is a very costly promotional activity.
For Distributors Strategies:
Some of the activities of AMCL for the distributor to promote there sale are discussed down below
AMCL gives cash discount if any distributor can fulfill some criteria. There are some sales ranges for getting discount. If a distributor gives an order of 1000 to 3000 bottles of Pran mango juice, he gets tk. 3 cash discount for per case. Tk. 5 discounted for 3000 to 5000 bottles. And distributor gets discount of tk. 6 for bottles 5000 and above. Distributors have to give that order with in a specific time period.
Give technical and financial help
Sometimes an individual may take promotional activities for his own area. Then AMCL gives technical as well as financial help to the particular distributor for the activities those are taken.
AMCL always does the market research activities and collects the information about market demand. AMCL then informs all the distributors about the market. AMCL gives the information to the distributors when the demand will rise or fall.
The retailers informed that every company follows the same distribution channel process for soft drinks distribution. The distribution channel followed by the beverage companies is:
Dealers or Retailers
Selling System of Beverage Products
The total sample size of retailers informed that they received the soft drinks bottle from the beverage companies van. e.g. Pran company serves Pran, Maxx Cola, Cloudy Lemon, Clear Lime and other products by own delivery vans.
In any organization price is foremost factor. AMCL set their product price on the basis of their expenditure and competitors pricing strategy. They try to set their price at a lower level that every class of people can afford to take their services also they give all kinds of family planning services at a free of cost.
AMCL always try to reduce their product cost & selling price. For Pran, the distributors make profit of 14 TK crate and 0.58 TK bottle. The retailers make profit of 50 TK crate and 2.08TK bottle. The distributors make profit of 15 TK crate and 0.63 TK. bottles. The retailers make the same profit like Pran of 50 TK crate and 2.08 TK bottle. Here Pran distributors gain 0.05 TK bottle and 1.2 TK crate more then the distributors of Pran
The retailers informed that none of the beverage producers offer them any credit facility. It means the beverage companies never proposed credit facilities to them. But AMCL is thinking about the credit facilities to retailer.
Pran Company does not make sales budget for one year but divides a year into four parts. Sales budget is made for each single part. So as AMCL has to follow that Strategy. For every three months an amount of sales is targeted.
For every three months targeted sales is fixed. If the budget of a part fails for any reason then the remaining portion of that budget is added with the sales budget for next part. The company takes necessary steps to sell the targeted sales with the additional sales.
According the Coca colas policy AMCL divides a year into two parts as pick season and off pick season.
Pick season: March, Arial, May, June, JULY, August, Septemberand October.
Here July is included in pick season because in this time in our country natural fruits very much available & cheap.
Off Pick: January, February, November, December.
From March to October the atmosphere of our country is to hot. So people like more cold drinks.
Huge Advertising Budget
Advertisement is one of the major activities for marketing any product. And for beverage industry its importance is beyond of discussions. A huge advertising budget is set every year. Pran spends the highest amount of money for advertising among all other local companies.
Standard of Advertisement
Among all other advertisements TV advertisement is the most effective tool. As Pran spend huge amount of money for advertisement they hire the highly professional ad Makers & models in the world. They make high standard advertises for all over the world. Pran is very much concern about the quality of their advertisement. They make extra allegiant advertises for other forms of advertisement like internet, radio, newspaper, banner, bill-board etc.
Sponsorship is the most effective and efficient tool for marketing. Pran give sponsorship for on many events or programs globally like sports, concert, music, charity show etc. By giving sponsorship Pran want to get closer to the customers.
Sponsoring on sport events
So many international and local sports events or tournaments are sponsored by Pran. Especially in the game of cricket they give more emphasis about sponsorship. Quite a few international & local cricket tournaments are sponsored by Pran. They also give sponsorship on other forms of sport
Sponsoring on sport teams
As a Local company Pran give sponsorship on few sport teams like cricket, football, hockey etc. Now a day’s cricket is the most popular form of sport. Sometimes local teams like Abahani, Mohamedan etc. are also sponsored by Pran.
AMCL launce 250ml bottlebecause the consumers informed the following things about the brand preference of the beverage products-
Consumers like Pran250 ml and 1000ml bottles both. The same result goes in favor of AMCL.
Consumer Group Survey
The consumer group was divided into four categories. They were
- People over 35 years
All the above four categories were the consumer of AMCL. Its launch its product to consider all ages people.
Display of Crates and Bottles
The retailers informed that arranged the display of the bottles and crates themselves, according to the size of their shop. Company people never forced them to adopt any particular style of display unless the retailers were said to do so.
Among the rest 64% signboards, 28% signboards were found of Pran, 16% Pepsi, 9% R C, 7% Frutica and 4% of each for Sun crest and PRAN signboards were found. As signboards is a very useful media of Advertisement for the beverage companies
Cooler Position & Deposit System
The retailers informed that 45% of them had their own refrigerator. 22% Pran cooler was found and 16% Pepsi, 9% R C, 5% mojo and 3% Sun crest cooling system were found.
The retailers informed the Retailers had to deposit TK. 5000 for the refrigerator of Pran. As company cooler was an important and useful advertisement for AMCL.
AMCL gives more emphasis on creating the public demand. The retailers give preference to public demand, because their profit mainly depends on consumer choice. Retailers sell that brand is soft drinks more, which the consumers like most. Based on public demand they keep more bottles of Pran.
AMCL gives various types of gift to retailer. Because The retailers always give priority to those brands who give them gift items like opener, T-shirts, glass, wall clock etc. the company, which gives the retailers gift items were more preferred by them, and they like to keep more bottles of that brand.
Media Wise Advertisement Ratio of Beverage Products
This was the most vital part of our report to gather the information about the advertisement budget and its ratio. However, it very sensitive information for all beverage companies, so the AMCL gave me the approximate data about the advertisement and its ratio. There are different media is used for the advertisement. Those are press, out door, T V and different events.
AMCL emphasize on TV media and some focused on the sports events. The companies most frequently use this two medium.
The retailers always give priority to free bottles that they receive from the company. When the retailers manage to sell a particular number of bottles, AMCL gives them some free bottles for their encouragement, so that they give more preference in selling the products of the specific brand.
AMCL maintains their enlisted add agency for taking add services. M.S. published tender and against those tender agency submit their question. According to the systematic rule an agency can be selected and then M.S. gives them work order. An agency can claim bill through work order.
AMCL gives gifts such as calendar, pad, and pen, index etc. on the basis of two times in a year to their referrers to motivate and encourage them to work for their clinics. AMCL gives some referrals fees of their motivation.
Most Preferred TV Channel for the Advertisement
In Bangladesh, we have four private and national T V channels. Only one of them is government owned. TV advertisement is a very powerful communication medium between companies and retailers and mostly with the consumers. According to the retailers, E TV is most preferred medium for them. 66% liked E TV, 25% B TV, 6% liked Channel I and others liked A T N Bangla. AMCLs also advertise on these channels.
The influential factors are taste, brand, advertisement, friend’s influence and one of the vital factor availability. The result had shown that 67% taste, 13% brand, 10% advertisement, 7% friend’s influence and 3% availability influence the consumers to buy or have the beverage product.
From the analysis of Sales promotional strategies of AMCL, there are some findings which are given below:
- The company follows the narrow span of control.
- The company produces a wide range of juice, beverage, confectionary, culinary, snacks and dairy products. Each item is called a batch.
- It provides huge advertisements.
- The company is too much concerned about the quality of the product.
- It also tries to offer a reasonable price which can be acceptable by the customer.
- The current position of the company is remaining a successful condition.
- The net income of the company has increased significantly. It also indicates the company’s strengths over the year.
The following recommendations can be utilized to improve the performance of AMCL.
- The company is running with too much of capacity. It should immediately go for expanding the demand through diversification of the market and utilize its full capacity.
- The company should aim to achieve economies of scale in the production and introduce experience curve as soon as possible.
- The company should give utmost emphasis to go for exporting their world class quality products to the neighboring and other countries.
- It should follow well-defined costing system.
- The company should prepare work sheet before preparing financial statement
- The quick ratio should increase simultaneously.
- Adequate care should be taken for selecting the advertising media.
An organization pursues strategies at different levels to achieve superior performance and to provide it with a competitive advantage. Managers in an organization formulate strategies at different levels of an organization to launch various products and services to achieve superior performance and competitive advantage. By analyzing all the strategies taken by the company, we have found that the Sales promotional strategies taken by AMCL works in consistent with its attaining superior profitability and sustainable competitive advantage. These strategies, lead AMCL one of the country’s most diversified conglomerates with interests ranging from agro-processing, food, beverages. The company has been swamped by increased demand for a range of products including soft-drinks, juices and mineral water. The company is still in the leading position in the market but in future any strong competitor can emerge. So, to face this competition, the company should enrich its backward integration with sugar producer and packaging materials suppliers. Also, it should focus on forward integration with large retailers like agora, Nondon for better serving the customers and attaining superior profitability.
PRAN mango juice is one of the most popular brands in the country. Over the years, though it’s hard work and efficient operations and marketing efforts, KAML has established itself as one of the major foods company in Bangladesh Now its position is the market leader of the country. And it has covered the maximum market share of the country in respective to the field.
At the end, it can be said that although AMCL is recognized as a most promising sector in Bangladesh, there is still scope for further improvement.