What are the advantages of Sales Promotions?



Ans.    Sales promotions have a significant effect on the behaviour of consumers and trades people.  Such promotions can bring in more profits for the manufacturers because they permit price discrimination.

—       Price discrimination : Producers  can  introduce price discrimination  through  the use of sales promotions. They can charge different prices to different consumers and trade segments depending on how sensitive each segment is to particular prices. Coupons, special sales events, clearance sales and discounts are examples to explain the phenomenon.

Often such price discrimination are offered in specific cities in the country,

Bajaj Auto Ltd. started the scheme on 20th august 2001, where by if you buy a Bajaj Spirit two-wheeler you get ` 3000/- off, valid only in Ahmedabad.

Such price discriminating sales promotions that enable consumers and traders to pay less in certain market area or stores usually bring in more contribution than if one price is charged to all.  Such price discrimination also held in adjusting to fluctuations in demand and supply situation without affecting any changes in the list price.

—       Effect on consumer behaviour : As sales promotions are mostly announced for a short period, customers may feel a sense of urgency and stop comparing the alternatives.  They are persuaded to act now rather than later.

With every 500g pack of Tang, you get a free Tang glass. Offer valid only till stocks last.

In our over communicated society and because of selective attention, it is not uncommon to ignore many advertisements.  Sales promotion deals such as discounts, debates, coupons, premiums, etc also increased the attention getting power of advertisements and convey the advantages and benefits of the brand, including price information. By using promotions, marketers can reach the deal prone customers and encourage brand switching.

—       Effect on trade behaviour : Short-term promotions present an opportunity and encourage dealers to forward by. This forward buying ensures that retailers won’t to go out of stocks.  As dealers have more than the normal stocks, they think it advisable to advertise in local media, arranged displays and offer attractive promotion deals to consumers. These actions help in increasing the store traffic.

Retailer promotion: Buy Cadbury’s products worth ` 3000/- and get any 30 chocolates worth ` 5 each free. Buy a box of Munch and get 1 Munch free.

Regional Differences :

The South is generally characterised by greater degree of going out and people tend to drink outside the house. The Tamilian, consumer in particular, is value oriented, rational and looks up to film stars, while the Keralite is more international in his outlook. The Bangalorean is as Cosmopolitan as his Mumbai or Delhi counterpart.” That  sort  of  diversity,  believes  Coca-Cola,  calls  for  a  corresponding  variety  in promotions.  The place to attract is the retail zone. Coca-Cola recently launched a promotion called ‘ world of Coca-Cola’ covering Chennai in Tamil Nadu and Bangalore and Mysore in Karnataka. It was a value deal, aimed at the consumer disposed towards global- style outings.  The consumer pays Rs 20 along with a label of a 500 ml of PET bottle to get a card which entitles him to gifts and discounts at 29 outlets, including those of global chains such as TGI Friday and Baskin and Robbins this, in these cities.  About four years ago, Pepsi had a similar promotion with its Pepcards.  This, however was on a national level, while the Coca-Cola promotion is South based build retail level activity matters more than it does in the North.  The primary aim is to help the retail raise volumes.

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MT UVA- University, Vocational and Affiliated Education for BMS


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