Sales and Promotion Management

When customers go to the market to purchase commodities, they make a choice of what to buy and what to do without. The choice they make depends on satisfaction derived from utilizing the commodities and it varies from one customer to another at different times. Sales promotion is used to encourage customers make huge purchases where the price of certain commodities is reduced by various sellers in order to attract more customers and make huge sales. Customers may decide to buy one brand and not the other depending on the price of the commodity because; when the price is low they can purchase the product and save the rest of money for future use. Sales promotion can achieve goals in the short run by making huge sales but create problems in the longer-term because; once the price is increased after the promotion is over, the sales made decreases.

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Introduction

In the UK, customers shop in supermarkets where they make decision on the categories of goods to buy which assist them in knowing the brand to use and quantity to be bought. There are personal characteristics that influence decisions to be made such as; availability of income, status of the buyer, education and age. When the price is reduced to promote sale, customers will purchase commodity depending on the number of household members who will utilize the commodity. Therefore, response of customers to sales promotion is different depending on shoppers’ characteristics and various means of promotion that are used. (Smagalla, 2004 pp59-60)

Evaluating the evidences that sales promotions impact on brand choice behavior

According to (Priya, 2004 pp48-50) Consumers make choice on brand to use depending on the satisfaction derived from that particular brand. Once the brand is chosen, it is important to determine whether the consumer is able to purchase it at a given price. Different techniques are used to promote sales of a given commodity so that buyers can be persuaded to purchase the commodity available in the market. Promotional state of products is important because, it help manufacturers achieve their aim of making decision on which brand to produce. When price of product is reduced, it influences the choice made about the brand to be purchased because, the choice of brand depends on the willingness and ability of consumers to purchase that particular product. (Shuba, 2004 pp14-17)

When the price of products is reduced in order to promote brand, there are long term impacts because, if the price increase later, sales tend to reduce. For example, Coca Cola Company reduced price for its produce every now and then but when it increased the price later, sales reduced. Branding acts as a marketing promotion where media is used to reach many potential customers of the products. Value is gained by the brand after the customers are able to have total experience after using the brand for a long period of time. (Gilbert, 2002 pp23-26)

(Low, 2000 pp14-18) found that, coupon promotion is a form of marketing promotion used for consumer products and acts as major tool for promoting sales. For example, goods that are packaged spend more than 24% of promotion money on creating awareness to consumers. In UK, marketing of coupon is common and was used in 1999 when 4.7billion worth of coupon were distributed resulting to an increase of 44% from 1997. 76000 grocery stores introduced coupon in their marketing mix where 43% of total coupon were distributed using print media. Coupon is preferred by marketers because; it leads to increased brand sale without having to incur the cost of giving consumers price discount because middlemen are eliminated. Misconception by consumers when brand changes its value is avoided and traders are able to compete and deliver messages about availability of the brand using logo of the company, picture of the product and price of the product. Use of coupon make retail outlet attract consumers making them purchase more of the products. Utilitarian value is offered by coupon by offering monetary saving and reduction in search for information about a particular product. (Priya, 2004 pp67-69)

In UK, consumers who are loyal to the brand have high perceptions about the quality of product that is being promoted. They also believe that the product is attractive and of very high quality making it fit for consumption. When it comes to actual purchasing, potential buyers value promotion so much and purchase large quantities of products which are being promoted. Sale promotion encourages repeated usage of the product by consumers who are loyal to the brand. Consumers who are loyal are more realistic in their future expectations of the product than consumers who are seeing the product for the first time and have no experience about the quality of the product in question. When customers are satisfied by the product after using it for the first time, they become loyal and less investment is required to make them maintain their loyalty to the brand. (Done, 2004 pp24-26)

Study shows that, managers of the brand concentrate on consumers with high degree of loyalty because; they make their purchases in large volumes than their counterparts who are less loyal. Results of sales promotion are seen by the way consumers respond to a given product once they become aware of it. Sales promotion is made effective when it is repeated many times until that awareness sticks into the mind of customers making them have experience with availability and use of the product hence, purchasing it all the time. (Gerard, 2005 pp12-15)

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Assessing the Contention That Sales Promotion May Achieve Short-Term Goals but Can Create Longer-Term Problems for the Brand

Sales promotion helps to obtain desired results from sales. UK supermarkets use promotional techniques in order to increase value of products to the potential customers. The tools used for short-term promotion have the objective of obtaining customers response for the benefit of the sellers. Promotion in the supermarket shift from advertisement to sales promotion but research proved that, there is repeated purchase due to sales promotion. When price promotion is carried out, sales increase in the short run and customers who make use of sales promotion go back to the brands which are their favorite once the promotion is over. (Taylor, 2006 pp24-29)

Retailers in UK who engage in coupon promotions retain original product price and holders of coupon enjoy the discount. Buyers do not get reduced price and see no need of adjusting reference price to become lower. Consumers are offered product to try it for the first time so that they know the quality and purchase it. This sample is either posted to the consumer or taken to their door-step. Other packs show that, when consumer purchases one product, he gets one free of charge. This creates brand awareness and recognition of the brand. The variables which are independent depend on sales promotion which includes brand switching, acceleration of purchase and trials of the product. Price discount as a way of promoting sales have benefits because, consumers buy products which they do not normally buy, they buy brand even if other brands offer discounts, buy products earlier than planned because of the savings they would make when they buy product at a reduced price, they purchase more quantities of the product and buy product they had not tried before. (Burton, 2003 pp69-74)

According to (Dominic, 2002 pp48-51) Sales promotion has been misused because; manager use it in situations that need longer term solutions. The reality is that, the quick and positive results produced by sales promotion in the short run becomes problem in the long-run. Management can introduce promotions quickly in short term and expand sales but when one sale promotion is introduced after another, the serious problems that might arise are not noticed by management immediately. Those who use coupon for sales promotion in UK do not recognize price competition which erodes the loyalty customers had already developed in the specific brand. The customers will always want to bargain so that they buy from sellers who offer the cheapest price making them shift from one seller to another so that they can buy from the one who offers the lowest price. (Eric, 1995 pp13-18)

Sales promotion is supposed to apply when it is needed instead of using it continuously. This is because, if it is used all the times, there will be reduced profits generated from sales in the longer terms due to charging low price for the products making revenue generated from finished products insufficient to cover cost of production and generate profit. Sales promotion is very important because; it induces choice in short term but it has the problem of undermining preference of some brands if they are no longer promoted. Even if sales promotion has been used in marketing, it has negative impact on preference of consumers depending on characteristics of product being promoted which can increase or reduce in demand. (Mullins, 2008 pp34-36)

Sales promotion has longer term problems for the brand because; it is very expensive to maintain sales promotion due to the cost the owner of business is supposed to incur in order to continue promotion of the product. The promotion will attract many buyers who want to benefit from reduced price so that they can have reduction in their spending but the trader can not make huge profits in the long run. It is risky to use sales promotion for a long period of time because, the business can not achieve economic growth due to small amount of net profit generated from the investment. (Pina, 2008 pp56-58)

Conclusion

United Kingdom needs to assess the efficiency of its budget when allocating promotional activities so that the objective of boosting sales can be achieved. Investigation into the response of consumers is necessary so that promotional deals used in the supermarkets such as price discounts, free samples and coupons can be profitable. According to the statistics, price discounts have been significant on the buying behavior of customers because it influence the demand for a given brand once the price is reduced to promote sale. Acceleration of purchase and trial of the products are the influential variables that are related to discount but buying one in order to get one free is less significant. (Leonard, 2007 pp415-418)

References

Burton s. and Judith A. (2003): Highly coupon and sales prone consumers; benefits beyond price savings: Journal of advertising researchpp69-74

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Dominic M. and Siddarth S. (2002): The long term effects of price promotions on brand choice and purchase quantity: Journal of purchasing research pp48-51

Done E. (2004): A clean Brand slate: Marketing management pp24-26

Eric A. (1995): the impact of reference price effects on the profitability of price promotions: Marketing science pp13-18

Gerard S. (2005): Behavioral response to sales promotion tools: International journal of advertising pp12-15

Gilbert D (2002): The efficacy of sales promotions in UK supermarkets: a consumer view: International Journal of Retail & Distribution Management pp23-26

Leonard M. (2007): brands are build over years, why are they managed over quarters: Harvard business review pp415-418

Low G. (2000): Advertising vs. sales promotion: a brand management perspective: Journal of Product and Brand Management pp14-18

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Mullins R. (2008): Sales promotion; how to create and implement campaigns that really work, UK: Korgan page pp34-36

Pina J. (2008): The effect of promotion type and congruency on brands image: Journal of applied business research pp56-58

Priya R. (2004): coupon in context; discounting prices or decreasing profits: Journal of retailing pp48-50

Priya R. (2004): free gift with purchase; promoting and discounting the brand: Journal of consumer psychology pp67-69

Shuba et al (2004): Do promotions benefit manufacturers, retailers or both: Management science pp14-17

Smagalla D. (2004): Does promotional pricing grow future business? Sloan management review pp59-60

Taylor J. and Smith R. (2006): Marketing communication; integrated approach; UK: Korgan page pp24-29

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