What are the disadvantages of Sales Promotions?



Ans.    While sales promotion is a powerful and effective method to produce immediate short term positive results, it is not a cure for a bad product or bad advertising.  In fact, a promotion is speed up the killing of a bad product.

—       Increased price sensitivity : Frequently promoted brands in the product category, especially on the basis of price, make consumers and traders more price sensitive not only for the promoted brands but for other brands as well in the same product category. Consumers wait for the promotion deals to be announced and then purchase the product.  This is true even for brands where brand loyalty exists.  Customers wait and time their purchases to coincide with promotional offers on their preferred brands.

—       Quality image may become tarnished : If the promotions in a product category have been rare, or the product happens to be of high involvement category, the promotions could have a negative effect about its quality image. Consumers may start suspecting that perhaps the product has not been selling well, the quality of the product is true compared to the price or the product is likely to be discontinued because it has become outdated.

—       Dealers forward buy and divert stocks : In case of deals for the trade, many dealers forward buy, in excess of their inventory requirements.  This is particularly happens if a product is low bulk, much in demand and the inventory holding costs are favourably low. This is true both for wholesalers as well as retailers. Forward buying of excessive stocks on deals or quantity discounts can lead to diversion of some of the stocks in non-deal areas. Forward buying of excessive stocks on deals or quantity discounts can lead to diversion of some of the stocks in non- deal areas.

Wholesalers and retailers do not hesitate in selling these excess stocks in non- deal areas on prices that are less than the list price, but keeping some reasonable margin for themselves. This is likely to have a negative effect on price discrimination efforts of the company as dealers and those areas would not be buying even the normal requirements from the company.

—       Merchandising support from dealers is doubtful : One of the trade promotions tool is to offer promotional allowances to trade people to motivate them to provide merchandising support and to pass on some benefit  to  consumers. This generally is the condition attached with such promotional allowances. In many cases, the dealers do not cooperate in providing the merchandising support nor do they pass on any benefit to consumers. The retailer might not be willing to give support because he does not have the place, or the product does not sell much in his shop, or may be he thinks the effort required is more than the commission/benefit derived.

—       Short-term orientation : Sales promotions are generally for a short duration.  This gives a boost to sales for a short period.  This short-term orientation may sometimes have negative effects on long-term future of the organization.  Promotions mostly build short-term sales volume that is not maintained.

Heavy use of sales promotion, in certain product categories, may be responsible for causing brand quality image dilution.

The argument given in favour is that companies should develop superior products or services which are better than competitors and consumer should be convinced through appropriate and focused advertising about the superiority of the product and its image.

This will result in lasting brand identities reflecting consumer values.  Then there will be no need to offer any extra benefits; only the lasting brand image will keep customers loyal to the brand.


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MT UVA- University, Vocational and Affiliated Education for BMS


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