Sales Promotion and Strategic Benefits

During the last decades, sales promotion becomes one of the most popular tools of market and management Sales promotion basically support rather than change consumer attitudes and opinions. Such issues as group norms; interpersonal relations; the awareness, retention, and selective exposure of potential consumers; and the impact of opinion leaders, are very influential. Customers tend to strengthen their existing positions by selecting communications channels that come together with previous stances and by filtering out contradictory information. The task of the literature review is to answer the question: Can the idea that sales promotion offer long-term strategic benefits to a brand or are the effects confined to short-term tactical gains?

We will write a custom Sales Promotion and Strategic Benefits specifically for you
for only $14.00 $11,90/page
308 certified writers online
Learn More

The research study made by Bawa and Shoemaker (2004) examines the effect of free sample promotions on consumers’ behavior and choices. The authors find that there is a difference between a communicator’s claims and the communicatee’s predispositions. Free samples have a long-term effect and can be used by companies as a strategic tool for long-term brand awareness. The effect is evident during the next 12 months after the promotion campaign. Thus, the authors claim that the change in attitude requires if a brand introduces an innovative or new product. Effective sales promotion requires an integrated promotional system that reaches from the main producer to the end consumer. Free samples flow to markets through long, complex channels that include manufacturers, retailers, wholesalers, consumers, agencies, and media. Each department can introduce the chain or pass on the information as it sees fit. The weakness of free samples is that the effect of long-term recognition of a brand varies, so marketers should pay special attention to past promotion campaigns and evaluate buyers’ perception and attitudes of free samples promotion technique.

The research study, “A benefit congruency framework of sales promotion effectiveness” pays special attention to multiple consumer benefits of sales promotions and their perception of different promotion techniques. In this situation, the amount and quality of communication, therefore, depends on the communication method. Sales promotion agencies, of which there are over 500 of considerable size and stature in the United States, make easy the development of a communications system. The research study investigates the impact of monetary and non-monetary promotions on consumer perception and the strategic goals of the company. the authors evaluate such benefits as “hedonic benefits (opportunities for value-expression, entertainment, and exploration), and utilitarian benefits (savings, higher product quality, and improved shopping convenience)” (Chandon et al 2000). Sales promotion serves four basic management purposes. First, the bridge information gaps existing among manufacturers, middlemen, and consumers. Second, they help coordinate the promotional activities of the total marketing system to achieve a coordinated thrust. The researchers find that monetary promotions are more efficient and have long-term effects on utilitarian products. Everyday-low-price policies have short-term effects and cannot be used by high-quality brands as long-term strategies. Sales promotion is just one major element of the communications mix described. Other major components include personal selling, public relations, and Sales promotion. A major problem confronting marketing management is how much of the sales task should be performed by Sales promotion and how much by other elements of the marketing mix.

Jedidi et al (1999) state that more and more manufactures use sales promotions as the main strategic tool for product marketing and brand awareness. Formal channels, however, do not account for all sales promotions. Advertising, which is an integral part of many marketing campaigns and sometimes precedes the marketing effort, lies outside them. Although it can be important in gaining market recognition for products and companies, promotion, like word of mouth, is frequently a comparatively low-grade marketing channel with a high degree of intrusion, distortion, and noise. Similar to the previous study, Jedidi et al (1999) find that price cut leads to short-term effects but has a little or no impact on long-term strategies and brand awareness. ales promotion can be appraised meaningfully only in terms of its effect on other aspects of marketing. As in all decisions, management is concerned with the returns on resources expended. A suitable rate of return should be realized on any investment in sales promotion, and since sales promotion has become a large item in the corporate budget, it necessarily creates considerable opportunities for increasing productivity. The study finds that long-term effects are less desirable for many companies as it is considered by some researchers. “The long-term effects of promotions on sales are negative overall, and about two-fifths the magnitude of the positive short-term effects” (Jedidi et al 1999). Sales promotion messages are meeting increasing competition from a plethora of other ads, from other media, from competitors, and from all the activities that vie for a person’s attention. Also, the researchers find that price decreases have a negative impact on the long-term performance of companies and brands.

The article “Sales promotions as strategic communication” by Ch. W. Lee describes the role and impact of sales promotions on Asian consumers. The author finds that more claims are made on consumer time and the cost of marketing. Moreover, a saturation area may be reached where larger expenditures yield proportionately smaller returns. The analysis is based on two promotion tools; coupons and lucky draws. Sales promotion also helps create and maintain marketing systems. It can foster communication and linkages of manufacturers, wholesalers, and shops. For the promotion task is not complete with the sale of the product; satisfied consumers must be retained. Reaffirmation of consumer choice, postsale support, is important. Continued sales promotion after purchase gives the consumer public acknowledgment of his wise choice and tends to eliminate or reduce cognitive dissonance. The consumer is reassured and resold. Repeat business is the avenue to continued success, and post-sale sales promotion is often the course to repeat business. Lee finds that managers in Singapore use trade and consumer sales promotions more often than traditional advertising. Similar to other researchers, lee finds that managers in supermarkets prefer price-oriented over non-price promotions but these types of promotions have short-term goals. The main aim of these promotions is to resist competition and attract customers today. A lack of consensus often exists within an industry as to what sales promotion is designed to do. Is it aimed at immediate sales impact, the introduction of a new product, the maturity of a general image, or the promotion of a brand name? All of these are rightful sales promotion tasks, each of which requires a different explanation. It is useful to distinguish the task of maintaining market position from that of cultivating and developing new markets. Marketing strategies define its sales promotion tasks unambiguously before effective campaigns are launched.

Baack (2002) and Pickton and Broderick (2000) discuss that sales promotions have a different and diverse impact on industries and consumers’ perception of the brand and product. These researchers express the same idea as all previous researchers that sales promotions seldomly have long-term effects and are efficient for some industries only. As a principal means of illuminating the attributes that differentiate a product, sales promotion is a competitive weapon that can secure a market niche and assure some firmness in the market by determining demand curves, making them more inelastic, and extending markets. From the consumer’s standpoint, sales promotion informs and persuades. It furnishes information, calls attention to some clues and not others, changes attitudes and opinions, relates products to consumer needs, gives consumers support for their decisions, affects the intensity of desires, and thereby generates action. Within the firm, a lack of clear-cut, integrated sales promotion objectives results in aimless sales promotion and wasted resources. The main causes of ineffective sales promotion are vagueness of objectives and goals; misconceptions and conflicting ideas of the function of sales promotion among all those who influence sales promotion decisions; lack of planning; insufficient emphasis on tactics and day-to-day activities; and failure to use available research aids.

The research made by Slotegraaf and Pauwels (2008) finds that long-term effects are seldom and are influenced by numerous factors such as brand equity and market situation. These researchers examine 100 brands related to seven product categories. Once a total budget is set, marketing should think in terms of the possible impact of different short-term and long-term effects: the extremes of spending the total budget on a sales promotion or on personal selling, and the results expected from different combinations of each. Here again, although it is impossible to get precise data, management estimates can be made. There is at least advantage to thinking in terms of inputs of alternative mixtures and resulting outputs. The reasons for the use of sales promotion are clear. Sales promotion affects both costs and revenues; used effectively, it can increase sales and profits. It supplements and improves the effectiveness of other elements of the marketing mix, alters the predisposition of potential purchasers, provides information, and gains brand loyalty, attracting consumers and stimulating consumer desire and action. The authors find that long-term effects are more common for small brands but ineffective for exclusive and expensive products. “Both permanent and cumulative sales effects from marketing promotions are greater for brands with higher equity and more product introductions, whereas brands with low equity gain greater benefits from product introduction” (Slotegraaf and Pauwels 2008, p. 294). Coordination of sales and sales promotion efforts, however, is a weak area of marketing management. Often sales and sales promotion managers behave like rivals rather than members of the same marketing team. Lack of coordination affects sales and profits adversely, and both sales and costs can be pushed beyond optimal levels.

Get your
100% original paper on any topic done
in as little as 3 hours
Learn More

In sum, analysis of literature review shows that sales promotions can offer long-term benefits only for some brands and industries while having no impact on other brands. these differences are explained by the market structure and history of the company, its product range, and types of promotions. the most effective sales promotions are free samples. Price reductions and discounts have short-term effects only. In order to succeed, managers should be concerned with the elasticity of demand. Large companies should take into account that the demand for their product to be less elastic or responsive to price; so they should introduce free samples rather than price reeducations. However, the industry changes reflected by the sales promotion concept and the marketing system are designed to provide more effective promotional tools that have a greater market impact.

Bibliography

Baack, D. 2002, Integrated Sales promotion, Promotion and Marketing Communications, rentice Hall/Pearson Education: Upper Saddle River, NJ.

Bawa K. and R. Shoemaker, 2004, The effects of free sample promotions on incremental brand sales, Marketing Science 23 (3), pp. 345–363.

Chandon, P., Wansik, B. and Laurent, G., 2000. A benefit congruency framework of sales promotion effectiveness. Journal of Marketing, 64, 65-81.

Jedidi, K., C. F. Mela, and S. Gupta. 1999, ‘Managing sales promotion and promotion for long-run profitability’. Marketing Science 18, 1-22.

Lee, Ch. W. Sales promotions as strategic communication: the case of Singapore. Journal of Product and brand management 11 (2), pp. 103 – 114.

Pickton, D. and Broderick, A. 2000, Integrated Marketing Communications, Pearson ducation Limited: Essex. Slotegraaf, Rebecca J. and Koen Pauwels, 2008, “The Impact of Brand Equity and Innovation on the Long-term Effectiveness of Promotions,” Journal of Marketing Research, 45(3), 293-306.

We will write a custom
Sales Promotion and Strategic Benefits
specifically for you!
Get your first paper with 15% OFF
Learn More
Check the price of your paper