Brand building and sales promotion are two essential building blocks of an enterprise. Brand construction is a continuous process and is carried out through various exercises to create, maintain or propagate the company’s visibility in the market. Sales promotions, on the other hand, are employed either as a weapon to weed out competitors or to retain sales in bad economic weather. They are conducted to give customers reason to remain loyal to a brand in tough times or switch over from one brand to the other.
By Saurabh Sharma
Sales promotion, too, is a crucial facet of marketing. It represents the extra benefits that are proffered to customers along with the product, such as extra warranty, credit period, discounts, freebies, etc. When the demand for products is low in the market, sales promotion activities can bail one out by actuating good sales.
Budget for promotion
Companies must consciously segregate brand building and sales promotion and should not confuse the two, so that adequate emphasis is laid on both activities. Digital Promoters Pvt Ltd, a hub for test, measurement, control and calibration, has wisely divided its budget for these two exercises in a 50:50 ratio. While Digital Promoters invests 7-10 per cent of its total revenue on promotion, Advance Tec Services spends 8-12 per cent, Novoflex Marketing 5 per cent, Adinath Electronics 8-10 per cent and Graftec India 1-2 per cent. Firms must also remember that both strategies go hand in hand and one should apply both to get the best results.
Companies can determine the most appropriate investment ratio (between sales promotion and brand building investments) once they decide upon how they want their brand to come across to consumers. They must determine whether they want to portray themselves as a customer friendly or a profit oriented organisation, which only wants to make its stakeholders happy. Or do they want to appear to be a business dedicated
to innovation and quality? Enterprises must be consistent in all their business practises and endeavours to avoid confusing customers and to create a coherent and distinct image for their brands.
Most companies lay more stress on brand building than sales promotion. Anil Sood, director, Digital Promoters, says, “We spend more on brand establishment than on other activities as the former offers higher returns that last longer.” Major channel partners like Avnet Inc, Arrow Electronics and Future Electronics have disseminated various brands across the world through appropriate usage of consistent strategies and quality services, proving the power of channel partners.
Let’s explore some of the measures channel partners can take to market their principals’ brands.
Building a brand
Nearly all firms launch some or the other strategem to strengthen awareness of their brands. However, the power of the strategy lies in creative implementation. We see a multitude of advertisements on national television but do not remember all of them. The ones that we detain in our memories are the ones that appeal to us or catch our attention for some reason.
A company’s marketing manoeuvres should appeal to its target audience. Only then can they have the desired effect. The water bottles at the Componex Nepcon India exhibition held at Pragati Maidan in February 2009, were sponsored by Advance Tec Services Pvt Ltd, an eminent provider of soldering and desoldering equipment and other electronics components, as a marketing ploy. “We advertise through print media, participate in exhibitions and are registered with various search engines to ensure that our presence in the market is felt prominently,” states Ajay Gupta, director, Advance Tec.
Gupta adds, “When most companies were shying away from spending money on promotions due to recession, we realised that it was the opportune moment to heighten our market presence. Thus, we came up with the concept of sponsoring water bottles at the Componex fair.” Such initiatives are helpful in acquiring the attention of consumers.
A company should choose the mode of advertising depending on the sources its target customers refer to. It should consider various issues seriously—where do its customers look for suppliers? Do they use the Internet or opt for business magazines? Do they frequent exhibitions? Alka Vajpayee, group manager, Graftec India, a leading provider of electronics components, states, “We only participate in electronics exhibitions like Componex, Elcomp, etc, as we meet our potential clients there.”
Slick Strategies channel partners are following
- Advertising periodically through national print, electronic, new media……..to make one omnipresent
- Choosing medium of advertising after determining the source customers refer to most……..to avoid waste of effort
- Participating in exhibitions………to make new clients
- Registering with various search engines……….to increase visibility
- Maintaining quality standards………so that customers keep coming back for more
- Sponsoring an event or a product……….to get noticed
- Trying to be consistent in all business practises and promotional activities…….to avoid confusing customers and to create a distinct image and niche for the brand
- Allowing flexible order quantities…………nobody wants to be bound by a number, especially not when most companies have no minimum order limit
- Allowing flexible payment terms, after checking repute of buyer……..to play safe during recession
- Providing efficient customer support and after sales services……….to prove to customers that they care for them even after sale of product
- Extending warranty period……….to offer that something extra to customers
- Reducing cost of products…………to induce bulk buying
- Ensuring ample stock holding capacity……….to house a wide range of products for customers to choose from
- Offering credit……… because most companies are not—making a brand unique and attractive to customers
- Offering discounts and freebies……….these ploys rarely fail to spur sales
The best way to build a brand is to make one’s presence felt at regular intervals so that the company and its products make a permanent impact on the minds of customers. The brand should always emerge as one of the brands the customer considers when he/she is contemplating the purchase of a particular product. Dinesh Banka, director, Novoflex Marketing Pvt Ltd, a manufacturer and distributor of cables, shares, “By maintaining the quality standards of our products and regular advertising through national print media, we ensure that the image of our products stays alive.”
A brand name is the biggest asset of a company but the dividends take a long time to arrive, as it involves time and effort to establish. “We have engendered an excellent image for our company, under which, we sell multiple brands. Our clients have had faith in us for more than 28 years and Team Graftec is very supportive towards its clients in all aspects,” remarks Vajpayee.
The chief concern of enterprises in today’s recessionary times is to boost sales or at the least stop them from plunging, and efficient sales promotion strategies have become the need of the hour.
A majority of channel partners have multiple principals—Digital Promoters has six principals, whereas Advance Tec has 12, and so on. Partners must formulate strategies which cover products of all principals. Furthermore, the strategies shouldn’t influence negatively the sales of products of the partners’ other principals.
“Boosting sales is a technique which converts a negative psyche into a positive one. It enhances the confidence of customers through provision of better deals,” comments
Gupta. Companies have resorted to various business sustaining moves. Graftec has shifted its attention to the government sector as demand there is usually unswayed by recession.
The natural tendency of buyers is to place larger orders whenever the prices are low, irrespective of the market scenario and price reduction, can lead to considerable profit. “We have been concentrating on reducing cost without compromising on quality. We are also offering customers cost effective solutions by using alternative and more economical raw material,” reveals Banka. This is a very effective method as it allows one to depreciate the price of the product for the benefit of the client.
Selling a product is not the end of the sales process. A competent customer support system is required in order to bring customers back for repeat sales. “We extend the warranty period on products and offer after sales support,” volunteers Gupta. After sales activities determine the reliability and commitment of the company towards its customers. “Our company takes immediate action if any problems regarding price, delivery or commitment occur,” claims Rajesh Bafna, Adinath Electronics, a supplier of electronics products.
Binding the customer with a minimum order quantity in the time of recession will only push him away. Companies should woo patrons by providing them with flexible order quantities. “We win orders by providing better prices and more flexible order quantities and payment terms, as compared to our adversaries,” discloses Vajpayee.
Another productive sales promotion scheme is to offer clients flexible payment terms although this could prove to be risky for business if the client turns out to be unreliable and evades payment. However, if one checks the repute of the client, granting flexible payment terms can bolster sales to a great extent and also help in forging long term business relationships, feel some companies. Graftec enlists flexible payment terms as the main reason why they are one of the preferred channel partners for customers. “Due to recession, people don’t want to take any risks and have become strict about payment issues but we are still offering credit,” affirms Vajpayee. Digital Promoters, too, provides 30-60 days of credit period, as does Advance Tec.
Electronics Bazaar, South Asia’s No.1 Electronics B2B magazine