Sales Promotion in Marketing

Promotion is an umbrella term that describes all of the activities considered necessary for marketing communication. Promotional plan covers all phases of communication between the seller and the potential consumer. It addresses advertising and sales promotion and other forms of promotion. Sales promotion has grown in importance for all the retailers worldwide. There is a rapid growth of sales promotion which is due to rise in advertisements and pricing; because of the clutter of various commercial messages has made the sales promotional substantial, thus it helps to make the difference among these commercials in the market and focuses on the promotions to reach the target audience.

Sales Promotion in Marketing

Sales promotion is a composite of activities that round out the advertising and personal selling components of business. Sales promotion is an initiative undertaken by organizations to promote increase in sales, usage or trial of a product or services. Sales promotion is an important component of an organizations overall marketing strategy along with advertising, public relations and personal selling. It is a direct inducement that offers an extra value or incentive for the product to the ultimate consumer with primary objective of creating an immediate sale. Sales promotion act as a competitive tool by providing an extra incentive for the target audience to purchase or to switch one brand over the other. The sales promotion is a key ingredient of marketing campaigns, which consists of collection of incentives for short term but to generate quicker sales of a particular product or the service offered, some of which could be trials on certain product in advance and with rapidity. Sales promotion is defined as the tool of attraction that persuade consumer to make an immediate purchases by offering extra values or incentives. Sales promotion are those marketing activities other than personal selling, advertising and publicity that stimulates consumer purchasing and dealer effectiveness, such as displays shows and expositions, demonstrations etc. It is noted that sales promotions are those communication activities other than advertising and personal selling that induce interest or trial or the final purchase by the customer. The numerous definitions of sales promotions available have in common idea that sales promotions are temporary and tangible modification of supply, the goal of which is to directly impact consumers, retailer and sales force behavior.

Sales promotion accomplishes various objectives of marketing like to stimulate sales force enthusiasm, to stimulate sales for new brands, to introduce or facilitate sales of new products, to encourage repeated purchases of products. The objectives of sales promotion are to draw a strong and faster consumer’s response to brand. The objective or the purpose of the sales promotion tools vary from in their specific objectives. A free sample stimulates consumer trial, where as a free management advisory services aim to strengthen the relationships with the retailers, thus collectively the objectives of the sales promotion is to attract new consumers, to reward the loyal consumers, to increase the purchase of the occasional users, to increase the market share through attracting brand switchers by providing the price-off or the premiums, to stimulate consumer desire to immediate purchasing, to generate short term increase in the sales and to promote retailers, brand’s image.

There exist multiple types of consumer benefits with the sales promotion. The different types of consumer benefits associated with sales promotions are primarily distinction of extrinsic and intrinsic benefits. Extrinsic benefits are instrumental, functional and cognitive they lead to the customer satisfaction of values. Intrinsic benefits are non-instrumental, experience and effectiveness regardless to any practical usage. The one of the benefits sales promotion provides is money savings, it is also avails quality benefits as customer can upgrade to higher quality of products by paying less for the un-affordable high quality products, sales promotion increases shopping the convenience benefits by providing information about the brand making the consumer search easier and cost effective. It enhances the consumer perception of being smart shopper and hence reaffirms their personal values benefits. Sales promotion in this ever changing environment of shopping stimulates the consumers purchasing by providing information and exploration of products and finally sales promotion is fun to use and explore.

There are numerous reasons for the growth of the sales promotion. Increase in competition and introduction of economic liberalization has lead to growth of the sales promotion. The consumer price sensitivity also excelled the growth of the sales promotion; the consumer has become more price sensitive due to inflation as consumer look for value for money or the low price or discounted product. Sales promotion have a instant and positive impact on sales, advertising, personal selling has been a slow sales response process while sales promotion is for short duration which leads to the sense of urgency among the consumer leading to higher sales. Product standardization has also created a buzz for sales promotion, availability of more of similar product in the market has made the advertisement less influential, thus a price sensitive consumer moves towards the product offered at lower price. Consumers are now getting aware of using various promotions and what benefits or rewards he can earn for being a smart shopper. Advertisement has become more expensive while sales promotion is cost effective method to generate sales. Sales promotion increases the impulse buying and maximizes the profit by allowing the brand to compete in many market segments through price discrimination.

Sales promotion methods fall into two groups. Consumer sales promotion process that includes samples, coupons, cash refund offers, price offs, premium, prizes, patronage rewards, free trials, warranties, tie into promotion, cross promotions, pop displays and demonstration. Trade sales promotion methods focus on wholesalers, retailers and salesperson which includes price-offs, advertising, display allowances and free goods. Two types of sales promotion categories are suggested based on the incentive types. One was from economic incentive, including discounts, coupons and rebates, while another is from psychological incentives which include premium and sweepstakes. Sales promotion tools are categorized on the basis of timing given by sale incentives, instant and postponed sales promotion tools. Discount, premium and bonus pack were grouped as instant sales promotion tools while coupon, sweepstakes and rebates were grouped as postponed sales promotion tools. Another two verities of sales promotions tools one is monetary sales promotion and other is the non monetary sales promotion. Philip Kotler outlined thirteen sales promotion tools, in the recent years there are new sales promotion tools such as patronage awards from credit cards and e-coupons via email, point of sales (POS) devices. Currently the popular sales promotion tools which are offered by different retail sectors are:

  1. Direct price-off / discount: A price discount is a temporary reduction of the listed price of the product. It is a reduction in a brand’s regular price. The major reason for marketers to use the price-off reductions is that this type of deal usually presents a readily apparent value to shoppers, especially when they have a reference price point for the brand, therefore they can recognize the value of the discount.
  2. Coupon: A coupon is a promotional device that provides cent-offs savings to consumers upon redeeming the coupon. Coupons can be disseminated to consumers through newspapers and magazines, direct mail or through mobiles and packages.
  3. Bonus pack/discount for a package: Provide additional quantity of product at the regular price in an enhanced package or offer a separate package of product at a discounted price. Bonus packs result in a lower cost per unit for consumers and provide extra value, as well as more products for the amount of money paid.
  4. Buy-one-get-one-free offer: One more item is offered for free if the customer buys one item of a product at regular price. “Buy-two-get-one-free” and “buy-three-get-one free” are similar tools under the same deployment rationale.
  5. Free premium/gift/ advertising specialties: A premium is an offer of merchandise or services either free or at a low price that is used as an extra incentive for buyers. Several forms of premium offers, serving different purposes exist. The three types of offers are free-in-the-mail premiums, in-and on pack premiums, and self-liquidating premiums. Premium is gift item offered free in return for the purchase of one or more products.
  6. Joint / Tie-in promotion: Another product is offered for free or at a discount upon purchasing of a particular product.
  7. Stamp redemption: Stamp accumulations from repeat purchasing for discount, collectible premium or gift.
  8. Contest, game and sweepstake: Games, activities, competitions and lucky draws are offered upon purchase of a certain product or arriving at a certain amount of values. They offer consumers the chance to win cash, merchandise or travel prizes. However, there are some differences between the two practices. A contest is a promotion where consumers compete for prizes or money on the basis of skills or ability. In a sweepstakes, winners are determined purely by chance.
  9. Membership program: Discount or free product rewards are offered upon joining the membership program; members are later on entitled to certain privileges such as additional discounts or priority services, etc.
  10. Patronage rewards from credit card: Points accumulations on credit card for discount, gift redemption, or cash refunds.
  11. Free sample: Provides consumers a free small portion of a product, usually new to the market, for trial delivered door to door or sent through mail or picked up randomly at stores or by attaching it another product.
  12. Refunds & Rebates: Refunds and rebates refer to the practice in which manufacturers give cash discounts or reimbursements to consumers who submit proofs of purchase. A refund refers to cash reimbursement for packaged goods, whereas a rebate more often refers to reimbursements for durable goods. These two sales promotion techniques provide users a delayed rather than an immediate value since the consumer has to wait to receive the reimbursement.
  13. Event Sponsorship: In general, a company develops sponsorship relations with a particular event. In general, sports receive two-thirds of the event sponsorship budget.

It is found that most of the consumer evaluates products on the basis of benefits the product delivers and weight age of these benefits varies from product, purchase decision. Usage of sales promotion activities has a direct impact on behavior of consumers as it motivates a consumer to buy now rather than in future or enhances value of an offer temporarily till the promotion period. The consumer response towards the various sales promotion technique or tools is influenced by the demographics and psychographics of the consumer and the response also depends on the positive experience and values provided by sales promotion. All individuals have their own experiences, knowledge and values that create beliefs about the use of a product or the service. Based on these beliefs they evaluate the positive and the negative aspects and arrive at a personal attitude toward the behavior, also customers behavior does not come without consequences from others. Thus, they are under a social pressure to act in a certain way. Internal and external limitations also influence customer behavior. Personal attitudes, social pressure and perceived control issues influence one’s intentions to make the purchase. In evaluation of consumer purchase decision in low involvement or repeated purchase the importance of some sales promotion are nil and some of them are the most important ones.

Most of the promotions is made on the basis of price promotion. Price promotions are applied as stimuli prior to and post behavior, but also as mechanisms that lead to improved category-wide product sales. Price promotions not only shift the demand for the promoted product, but also the demand for substitute, complementary and products within similar categories. The price promotions attracts new consumers, retaining the loyal customers, it stimulates multiple product sales and attract the brand switchers. Price promotion can also have an in store effect where by consumers may be induced to make unplanned purchase of the promoted products; it serves as the dual role of attracting shoppers and increase their shopping expenditure. Price promotion strategies have been linked directly to customer brand loyalty. If all the brands in a product market have high brand loyalty, price promotions will not be useful to any of the brands. In more competitive markets, where both stronger and weaker brands compete, the picture is more complicated. Brand loyalty was found to have the potential to explain the use of price promotion as well as the frequency and depth of discounts in various markets. There is a positive correlation between the number of competitors and a brand’s likelihood, of using price promotions in a product market.

To describe attribution theory it has been explains that the cause of events, different types of attribution can be distinguished based on the object about which the attribution is being made. Attributions made about self come under self perception theory while attributions made about an object/ brand come under object perception theory. Each is analyzed in the context of promotions. According to self perception theory a purchase in the presence of a strong promotion is expected to lead the consumer to attribute purchase to an external cause at times of promotion rather than an internal cause i.e. to have liking for the product. This will lead to discontinuing of a favorable brand and repeat purchase probability will diminish. Object perception theory states that continuous promotion leads to the development of negative consumer attribute towards the brand considering at as an inferior quality brand. Attitude model depict that the consumer’s decision to perform a specific behavior is due to the consequence of beliefs, attitudes and intentions with regard to the behavior. As per this model, a consumer’s intention to buy a brand may be based on positive/negative attitudes towards a promotion. Consumer attitude towards any sales promotion technique is formed by their beliefs in the rewards and cost incurred in using the scheme. The adaptation-level theory explains that individuals compare prices, or any other attribute, to a personal reference level instead of valuing their absolute amount.

To conclude, sales promotion is an umbrella term that describes all of the activities considered necessary for marketing communication. Promotional plan covers all phases of communication between the seller and the potential consumer. It addresses advertising and sales promotion and other forms of promotion. Sales promotion has grown in importance for all the retailers worldwide. There is a rapid growth of sales promotion which is due to rise in advertisements and pricing; because of the clutter of various commercial messages has made the sales promotional substantial, thus it helps to make the difference among these commercials in the market and focuses on the promotions to reach the target audience.

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