There are a number of reasons that are favourable to the growth of sales promotion:

Advertisement

¨       Increasing Competition

 

The air of change is gaining momentum after the introduction of economic liberalisation.Due to increase in competition, companies are finding it increasingly difficult to compete on quality. They are therefore resorting to more and innovativemethods of sales promotion.

               

                To break away from the clutter, Samsung introduced the ‘phod ke dekho’ and ‘phir se phod ke dekho’ offers, which helped increase sales.

 

¨       Customers Have Become More Price Sensitive

 

This increased price sensitivity is a direct result of rampant inflation. Economic recession is likely to fuel this trend further, as consumers and dealers become more sensitive towards prices.

 

¨       Sales Promotions Generally Create An Immediate Positive Impact On Sales

 

Advertising, personal selling and other methods of promotion produce slower sales response compared to sales promotion. Sales promotions are mostly for short duration, for a specified period, leading to a sense of urgency in consumers to buy now. This creates an immediate positive impact on sales. With careful planning, it would not be difficult to measure the impact on sales volume and profit, and see the consequences of running the promotion even on weekly or daily basis.

 

¨       Products have become more standardized

 

In many product categories, there is a proliferation of brands; many of them are line extensions and me-too brands. Most brands are being perceived by consumers to be more or less similar within a given price range because of the inability of manufacturers to develop truly differentiated products. Under these circumstances, advertising messages are unable to strongly influence the consumers’ perceptions and create brand franchise. As a result of these perceptions of similarity among brands, marketers have no way but to compete on the basis of extra benefit offered through sales promotion. Competing companies struggle to capture market share by using every tool likely to bring sales success.

 

¨       Consumer Acceptance

 

As competition intensifies and promotions proliferate, consumers have learnt to earn the rewards of being smart shoppers. Over a period of time, they have also learnt that brands on promotion are not necessarily of lower quality.

Woodland has a scheme of upto 50% off on Woodland shoes and apparel.

This learning based on experience, gets transferred to other product categories as well. Consumers have learnt that promotions are being extended to many product categories where such promotions were unheard of.

 

¨       Expectations Of Price Decrease

 

With the entry of many different brands of consumer durable products in the same product category, consumers anticipate that the prices of durable goods will come down. This encourages them to postpone their purchases. To speed up the purchase in this segment of consumers, sales promotions are an effective and attractive method. Consumers evaluate the incentives associated with their purchase decision and are motivated to act now, rather than wait for the anticipated decrease in price. The marketers should ensure that the extra benefit is attractive enough to create a sense of urgency in consumers.

Samsung offers upto Rs. 8,000 off on exchanging an old refrigerator for a new Samsung refrigerator.

 

¨       Advertising Has Become More Expensive And Less Effective

 

All the advertising media have become quite expensive. Audio-visual medium, which is considered as the most effective for short-duration ads, may cost in excess of Rs. 1 lakh for a 10 second exposure during prime time. In many cases, consumers have reached a point of boredom due to excessive advertising on TV. Some consumers even consider advertising as an intrusion into their privacy, leading to zapping (surfing channels). Firms with small budgets cannot compete with big companies which spend huge sums of money on advertising. For these small budget firms, sales promotion is a more cost-effective promotion method to produce sales results.

 

¨       Trade Has Become More Powerful

 

Retailers and wholesalers have become powerful and find themselves in a position to demand extra facilities from the companies. They Channel members demand more incentives to get the desired results. Manufacturers do not seem to have any alternatives but to concede to their demands, keeping in view the competitive market conditions.

  • Pepsi offers silver coins to their dealers stocking Pepsi cases during Diwali season. And the promotions offer differs across dealers.

 

 

¨       Emphasis On Sales Volumes

 

Towards achieving the long-term profit goals, manufacturers try to attain high sales volume. Brand managers and product managers find themselves under pressure to achieve short-term sales results for the sake of their careers. Compared to any other promotional method, sales promotion is a more effective method to generate short-term sales volume.

 

¨       Sales Promotions Maximise Profits

 

A number of economic theories conclude that a company can maximise profits by using sales promotion. Such promotions can permit price discrimination by allowing the brand to compete in 2 or more different market segments. Sales promotion may allow a premium brand to compete with a lower tier brand among price sensitive consumers. For example, a premium band of toilet soap may be on promotion in some price sensitive markets, while in the remaining markets it is sold at its normal price.

 

¨       Introducing An Element Of Interest

 

There are a number of promotions which are often called interest promotions. Some of the more popular interest promotion techniques are samples, contests, and sweepstakes, free premiums and mail-in premiums. These promotions create an element of interest and excitement, and consumers enjoy these and response enthusiastically to such contests and sweepstakes, etc.

Fevicol had recently launched a contest in which one had to choose 3 Fevicol ads which they considered the best, and then complete a slogan ‘I like Fevicol ads because…’

 

¨       Impulse Buying Is Increasing

 

The number of marginal customers is increasing. Displays at the point of purchases lead to impulse buying by consumers, more so if the items on display are not expensive. There is a popular saying in Hindi, “jo dikhta hai, voh bikta hai.”

This strategy is followed by soft drink majors like Pepsi and Coke on a large scale. They pay huge sums of money to keep their products in front so that they are visible.

These are also known as display promotions

 

¨       Sales Promotion Specialists Are Available   

 

As a result of economic liberalisation, the number of management institutions has increased. This has lead to the availability of specialists, who are not only well paid but can handle this specialised work more efficiently in the current market conditions, where sales promotion has become more important.

 

¨       Excess Stocks

 

Because of increasing number of brands, it is difficult for manufacturers and dealers to anticipate future sales. This, at times, leads to excessive inventories, and the quickest way to clear that, is to go for sales promotion.

Footwear companies like Bata, Woodland, etc regularly offer around 50% discount on their products.

Advertisement
The following two tabs change content below.
We, at BMS.co.in, believe in sharing knowledge and giving quality information to our BMS students. We are here to provide and update you with every details required by you BMSites! If you want to join us, please mail to [email protected]
12 Comments
  1. 안전카지노 2 months ago

    … [Trackback]

    […] Info to that Topic: bms.co.in/reasons-for-rapid-growth-of-sales-promotion/ […]

  2. 카지노사이트 2 months ago

    … [Trackback]

    […] Find More to that Topic: bms.co.in/reasons-for-rapid-growth-of-sales-promotion/ […]

  3. New Torch onion link 2 months ago

    … [Trackback]

    […] Read More on to that Topic: bms.co.in/reasons-for-rapid-growth-of-sales-promotion/ […]

  4. 카지노사이트 2 months ago

    … [Trackback]

    […] Read More here on that Topic: bms.co.in/reasons-for-rapid-growth-of-sales-promotion/ […]

  5. kiu teaching hospital 1 month ago

    … [Trackback]

    […] There you will find 32020 more Information to that Topic: bms.co.in/reasons-for-rapid-growth-of-sales-promotion/ […]

  6. … [Trackback]

    […] Find More Info here to that Topic: bms.co.in/reasons-for-rapid-growth-of-sales-promotion/ […]

  7. 메이저사이트 1 month ago

    … [Trackback]

    […] Read More to that Topic: bms.co.in/reasons-for-rapid-growth-of-sales-promotion/ […]

  8. Furnace Repairs 1 month ago

    … [Trackback]

    […] Find More on that Topic: bms.co.in/reasons-for-rapid-growth-of-sales-promotion/ […]

  9. Library 1 month ago

    … [Trackback]

    […] Find More Information here on that Topic: bms.co.in/reasons-for-rapid-growth-of-sales-promotion/ […]

  10. situs poker online 2 weeks ago

    … [Trackback]

    […] Read More to that Topic: bms.co.in/reasons-for-rapid-growth-of-sales-promotion/ […]

  11. child porn 1 week ago

    … [Trackback]

    […] Find More Info here on that Topic: bms.co.in/reasons-for-rapid-growth-of-sales-promotion/ […]

  12. 조커바카라 6 days ago

    … [Trackback]

    […] Here you can find 4027 additional Info on that Topic: bms.co.in/reasons-for-rapid-growth-of-sales-promotion/ […]

Leave a reply

Your email address will not be published. Required fields are marked *

*

*

BMS.co.in is aimed at revolutionising Bachelors in Management Studies education, also known as BMS for students appearing for BMS exams across all states of India. We provide free study material, 100s of tutorials with worked examples, past papers, tips, tricks for BMS exams, we are creating a digital learning library.

Disclaimer: We are not affiliated with any university or government body in anyway.

©2020 BMS - Bachelor of Management Studies Community 

A Management Paradise Venture

Ask Us On WhatsApp
or

Log in with your credentials

or    

Forgot your details?

or

Create Account