Hence, as market growth rates began to slow down, marketers felt this was a temporary phenomenon. Declining growth rates could be circumvented through promotions that would increase trade inventory, consumer upstocking and market share. The patron of sales was enclosed in one word: Promotions! Amidst persistent fears of recession, marketers continued to ignore the fundamental economic problem of declining markets. Instead of fashioning a viable response to the fundamental problem, marketers embraced promotions to buy short-term volume. Scheme expenditure, as a percentage of total support, increased dramatically.
However, as the slowdown was more fundamental in nature, the resultant effect of the promotional onslaught was merely an increase in trade and consumer inventory. Over a period of time, promotions became a zero sum game. Increasingly, promotions were aimed at the competitors rather than at the consumers. Instead of exercising caution in the selective usage of promotions, marketers succumbed blindly to its short-term allure. In some categories, the commoditisation of brands had begun.
Result: No impact on shares; no impact on trend line of market growth; increase in trade inventory and consumer inventory.
Promotions then degenerated further into a tool to buy trade focus and shelf share. The number of activities on brands increased enormously leading to activity fatigue in the trade, consumer and sales force.
In order to beat activity fatigue innovation came into play - scratch cards, games of chance, gold coins and diamond's in the pack etc. The innovation fade was however very rapid. Data suggested that promotions were increasingly influencing a very limited set of brand decisions or switches. The time for reflection had arrived!
Caught between the tentacles of unaffordable levels of scheme expenditure and insignificant impact of promotions marketers were forced to ask the basic question - are promotions mindless?
The answer fortunately is NO! The principles that govern promotions are no different from all else in life. Activity carried out with full mindfulness - awareness of objectives, awareness of action being taken to meet them and awareness of its consequences - is meaningful activity. Promotional plans that follow these principles build and enhance brand value over time.
Consumer promotions play a key role in the life cycle of a brand. The role varies according to the stage in the life cycle, market situation and competitive scenario. Promotions can have a significant impact on penetration build for new brands and for stimulating growth in existing brands provided they are anchored on a well defined activation platform that builds brand equity.
* Awareness of Objectives: Promotions are an important element of the marketing mix and can serve many objectives
- Building awareness, trial, conversion, distribution coverage and visibility during launch of a new brand
- Build retrial, consumption frequency and depth during the re-launch of an existing brand
- Reward loyal consumers of existing brands/build distribution width or depth
- Manage a brand in a declining market/situation - retaining loyal consumers or keeping distribution width/depth intact
- Response to a competitive threat that seeks to erode share
The last three are most often misused with marketers using "marketing speak" to justify what are essentially promotions that attempt to buy volume. Every promotional act falling in these categories should certainly emanate from a well thought through promotional platform for the brand that stems from or builds the equity of the brand.
* Awareness of Action being taken to Meet Objectives: Depending on the promotional objective the right tool/scale of activity needs to be employed. With a wide variety of techniques available, it is quite conceivable for a young marketer to use a revolver to shoot down a low flying aircraft or the scattered blast of a shotgun to shoot down a clear, well defined target
- Building Awareness: A variety of means could be used, from the more common market place visibility - display contests - to sponsorship of events, direct marketing etc.
- Building Trial: This is normally done through sampling, price offs, pack premiums, banded offers, cross promotions and in shop promotions
- Increasing Repeat Purchase/loyalty/ depth of consumption: On-pack coupons that give money off on next purchase, collector schemes e.g. cards, stickers that are collected over a period of time, loyalty cards collected over a period of time leading to a gift at the very end, reusable containers with lower priced refill packs and extra product free are the more commonly employed tools
- Competitive Response: The approach employed most often during a competitive launch is to take loyal consumers out of the market for an extended period of time. This can be done through promotions like Buy One Get One free, Price offs', on pack discounts on larger pack sizes and extra quantity of product free
- Distribution coverage Expansion/ Building Trade Involvement: Trade discounts to push the product through wholesale into the rural hinterland to expand width of coverage, field force incentives, display contests are the more commonly employed means of achieving distribution width and depth
- Visibility Activity: In store merchandising, display contests that are either thematic or aimed at announcing a major promotion

* Awareness of consequences: The era of mindless promotions would have come to an earlier halt had marketers paid heed to the consequences of their actions - through a thorough evaluation of promotions. The factors to be kept in mind are
- Evaluation: technique and action standards - should be agreed at the conception of the promotion itself
- Evaluation should be done after an agreed time interval when the full effects of the promotion will be known
- A clear evaluation of cost vs. benefits i.e. objectives met but at what cost
What gives hope for the future is that we have numerous examples of promotions that worked - achieved domination of consumer mindspace, drove awareness and built sales/share. Britannia Khao World Cup Jao, Lux Gold Star offer, Pepsi Hai Koi Jawaab and Mera Number Kab Ayegaa are examples of promotions that stuck by certain rules that helped them to win in the marketplace:
- A Big Activation Idea that linked back to and built the core equity of the brand. The Idea helped the brand to break through the clutter and grab the consumer emotionally
- Aggressive support on media across media types to generate rapid awareness build. Rapid build up of awareness is critical as promotions are a short lived phenomena
- Substantial on ground promotional support though local market place events and enormous visibility at retail outlets
- Leveraging the national/local press and celebrities to drive awareness build
- Involvement of all channel partners by incentivising them and giving them a chance to win the big prizes in the promotion. This helped build strong trade recommendation for the brand
- Consumer prizes that were a combination of instant gratification as well as mega prizes at the close of the promotion
- A superb fulfilment program that ensured prizes reached the consumers on time
As we look into the future we find a few key trends in the marketplace that will impact the nature and intensity of promotional activity.
* Micromarketing rather than Promotions: The sheer diversity of India poses a challenge to marketers but also offers enormous opportunity to differentially target and grow select regions and states. As media becomes localised, it is possible to vary the marketing mix by state rather than rely on promotional activity alone to build regional brands. This also entails shifting marketing responsibility to operating teams based in the regions rather than run it as a central function from the corporate office
* Changing Nature of Trade and Shopper: The relatively homogenous nature of the trade in the country is changing rapidly with the emergence of modern trade in pockets, key accounts in self service formats and consolidation of large grocery outlets. At the same time, we are seeing the rapid mushrooming of outlets due to growth of urban centres. Shoppers and shopping behaviour are being segmented by outlet type. This will have a huge impact on both the scale and type of promotions. Marketers will be forced to design and implement channel based promotions in order to maximise their effectiveness
* Rural markets contribute to over a third to half the sales for some brands. While designing promotions marketers have however treated them as adjuncts of urban centres. As rural markets emerge as the powerhouse for future brand growth promotions designed exclusively for these markets will become the norm. Marketers will ignore this segment at their own peril.
* Direct to Consumer is an emerging channel to approach a select target audience. As consumer needs become sharply segmented and specialised products are available to satisfy them, the use of this channel will explode. Promotions in this channel are quite specialised but their effectiveness is well documented in the industrialised nations.
Promotions that follow the basic tenets - a Big Idea that builds the equity of the brand, sharp clarity of objectives and tools to be used and post promotion evaluation - will dominate the vast Indian Bazaar in the future.
Mindlessness will give way to Mindfulness!

The views expressed in this article are the author’s own and may not represent HLL’s views.