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Research on Sales Promotion

According to Hornik and Lieberman (1996), it is important to point out sales promotion is the sum total of methods aimed at presenting an attractive proposal to clients within a given time frame. The trend is to reach a speedy conclusion to the purchase or expedited implementation of the deal. Kotler (1994) concludes that sales promotion is persuasion and sales through unconventional means.

Objectives of Sales Promotion

According to Geva (1944) tools of sales promotion are distinctive by their unique targets. Sales personnel utilize promotion based on incentives to attract new clients, reward for loyal customers and to increase the rate of return buying of the occasional user.

 New clients are divided into 3 types: Users of a different brand in the same categories; users of different categories; and consumers who often change from one brand to another. When a certain brand is successfully promoted by frequent use of reductions, then the customer tends to disparage it and only buys it because of low price consideration. Other brands are less frequently offered at special discount.

Sales promotion campaigns mainly attract consumers who often transfer from one brand to another, or use other brands, or in other categories. Consumers are not always aware of sales promotions or take advantage of them. Consumers who change brands are mainly looking for low prices, better deal or gifts. It is reasonable to assume that sales promotion campaigns will not generate loyal users of the brand.

In contrast to Geva, Alvarez & Casielles (2005) claim that the result of a research carried out by them, sales promotion has an influence on choice of brand. The findings of the research indicate that the best sales promotion is price reduction – “Reference Price”. In other words, when examining consumer behavior for choosing a brand, we check whether sales promotion has been performed for the product and what is the immediate influence on consumer behavior. The conclusion of the research is that most effective sales promotion is immediate price reduction.

The consumer is the one who can squander money on a more expensive brand which he would like to buy. Thus, he prefers to buy an alternative product at a lower cost, so this is the best sales promotion move.

In Marketing Week (2005), response to the question of the objective of sales promotion, is that sales promotion is ubiquitous, and the consumer has become indifferent to sales promotion. Therefore, the question arises whether sales promotion increases sales and whether the end user reacts to it. In order for sales promotion to succeed it must penetrate the ‘Life Styles” of the consumers. Sales promotion is meant to change the consumers’ life. For instance, if the sales promotion campaign awards the consumer a home, this is more effective than offering a vacation: the higher the “reward” for the consumer, the marketing promotion is more effective.

Advantages of Sales Promotion

The researchers, Farris & Quelch (1997), claim that sales promotion provides a number of important advantages to producers and consumers alike. Sales promotion enables the producer to adapt to short-term changes of supply and demand. It allows producers to check what is the highest list price they can demand, since they can always reduce it. Sales promotion drives the consumers to try out new products and not always to stick to the usual products. Sales promotion helps the producer to adapt his sales plans to different consumer segments.

Types of Sales Promotion

Kotler (1996) distinguishes  three types of sales promotion.

  1. Sales promotion to end-user: Reduction campaigns, demonstrations, trying out the product, display stands, competitions with prizes, participation in exhibitions and fairs.
  2. Sales promotion to agents – discounts for substantial orders, bonuses for increased sales, joint advertising, and publicity campaigns.
  3. Providing incentives such as bonuses for outstanding salesmen; competition among sales staff for carrying out certain assignments on a daily basis.

Every one of the media tools could be more effective to achieve goals or certain targets, however, there are usually several stages and their use needs to be co-ordinated: advertisements which create awareness of and interest in the product facilitate the work of the salespeople. Public Relations complement the advertising and increase trustworthiness. Reduction or prize campaigns aimed at consumers require the advertisement to publicize the campaign and need personal sales to convince the retailers to participate in the campaign.

Hornik and Kotler (2000) consider sales promotion is a leading component of the marketing campaign, and they define it thus: A variety collection of incentives – most of them short-term with the objective of stimulating quick purchases or larger purchases of the products/services by the consumer or retailer,

Sales promotion offers an incentive for buying. Sales promotion involves sales promotion tools to traders (discounts, advertising and display budget and gratis goods), promotion for businesses and sales representatives (exhibitions, conferences and competition among sales representatives and special advertising items), and sales promotion to consumers (samples, coupons, offers for refunds, discounts, presents, rewards for buying, free trials, promotion linked to additional products, display stands at sales points and demonstrations). Sales promotion means are used by most companies, and in addition, manufacturers, distributors, retailers, associations and non-profit organizations.

 

Effectiveness of Sales Promotion

According to Jenis & Man (1999), ten years ago the ratio between sales promotion, 60:40. today in many companies which sell consumer products, the sales promotion budget is 65%-75% of the total budget. In recent decades the budget expenditures for sales promotion have increased significantly every year. The rate of fast growth is expected to continue.

In contrast to this view, Davis (1996), asserts that the rapid growth in sales promotion means (coupons, competitions and so on) has created a situation of overloaded promotion reminiscent of the overcrowded area of advertising.  There is apprehension that the consumers will cease to pay attention, and in that case coupons and other promotion means will have considerable less impact on encouraging consumers to buy. The producers will have to find ways of overcoming this overkill problem. For instance, higher redemption offers for coupons, or more dramatic exhibitions and demonstrations at the sales point.

We can understand that Davis suggests that the sales promotion means have reached a stage of relatively fast wane as a result of their rapid increase.

Summary:

There are various components involved in marketing and sales campaigns of a company. Each company interested in its sales promotion must choose the most appropriate tools in order to promote its sales.

Sales promotion has a direct impact on consumer choices when deciding what to buy.

Bibliography

Geva, A. (1994) Consumer behavior – purchasing decisions I,II, Open University Israel  publications, Tel-Aviv

Hornik, I. Kotler, P. (2000) Marketing Management Open University

Kotler, P. (2000) Kotler on marketing. Tel-Aviv, Matar publishers.

Alvarez A. B. & Casielles V. R. (2004), Cunsumer evaluations of sales promotion: the effect on brand choice, European Journal of Marketing, Vol 39 ,pp- 54-70

 

James I. (1999). “ The influence of life period on buying process the person”. Journal of Marketing. Pp- 44-51

Jenis S. & Man H. (1999), “On a Clear Day you Can See Progress”, Business Week, June 19, pp-104-125.