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AdvanLages of sales promoLlon

1 rlce dlscrlmlnaLlon
roducers can lnLroduce prlce dlscrlmlnaLlon Lhrough Lhe use of sales promoLlon 1hey can charge
dlfferenL prlces Lo dlfferenL consumers and Lrade segmenLs dependlng on how senslLlve segmenL ls Lo
parLlcular prlces Coupons speclal sales evenLs clearance sales and dlscounLs are examples Lo explaln
Lhe phenomenon CfLen such prlce dlscrlmlnaLlon are offered ln speclflc clLles ln Lhe counLry 8a[a[ AuLo
LLd sLarLed Lhe scheme on 20Lh augusL 2001 where by lf you buy a 8a[a[ SplrlL Lwowheeler you geL
8s3000/ off valld only ln Ahmadabad
2 LffecL on consumer behavlour
As sales promoLlons are mosLly announced for a shorL perlod cusLomers may feel a sense of urgency
and sLop comparlng Lhe alLernaLlves 1hey are persuaded Lo acL now raLher Lhan laLer WlLh every 300g
pack of 1ang you geL a free 1ang glass Cffer valld only Llll sLocks lasL
3 LffecL on Lrade behavlour
ShorLLerm promoLlons presenL an opporLunlLy and encourage dealers Lo forward buy 1hls forward
buylng ensures LhaL reLallers won'L Lo go ouL of sLocks As dealers have more Lhan Lhe normal sLocks
Lhey Lhlnk lL advlsable Lo adverLlse ln local medla arranged dlsplays and offer aLLracLlve promoLlon deals
Lo consumers 1hese acLlons help ln lncreaslng Lhe sLore Lrafflc 8uy 2 dozen shampoo sacheLs geL 2
sacheLs free
4 8eglonal ulfferences
1he SouLh ls generally characLerlsed by greaLer degree of golng ouL and people Lend Lo drlnk ouLslde Lhe
house 1he 1amllan consumer ln parLlcular ls value orlenLed raLlonal and looks up Lo fllm sLars whlle
Lhe kerala ls more lnLernaLlonal ln hls ouLlook 1he 8angalore ls as CosmopollLan as hls Mumbal or uelhl
counLerparL Such facLors have Lo be Laken lnLo conslderaLlon whlle provldlng lncenLlves Lo Lhe
cusLomers
ln mld 80s hlllps declded Lo launch a speclal pro[ecL ln 1amll nadu and Andhra radesh for Lhelr rural
buyers So for Lhe 1amll nadu markeL Lhey creaLed a speclal campalgn 1he Super SLar of Lhe Pouse"
and made Lhe clne ldol 8a[nlkanL Lhelr brand ambassador as ln LhaL sLaLe he ls popularly known as
SupersLar" Whereas ln Andhra radesh Lhey launched Lhelr brand as Mega SLar of Lhe Pouse" as
Chlran[eevl was Laken as Lhelr brand represenLaLlve Sales promoLlon was done by organlzlng varlous
'super shows' and 'megashows' for Lhe masses ln sLaLes of 1amll nadu and Andhra radesh
respecLlvely 8oLh Lhese campalgns became a ma[or success
Disadvantages

1. Increased price sensitivity
Consumers wait Ior the promotion deals to be announced and then purchase the product. This is
true even Ior brands where brand loyalty exists. Customers wait and time their purchases to
coincide with promotional oIIers on their preIerred brands. Thus, the routine sales at the market
price are lost and the proIit margin is reduced because oI the discounts to be oIIered during sale-
season. 'The Diwali Bonanza Offers on electronic goods.
. Quality image may become tarnished:
II the promotions in a product category have been rare, the promotions could have a negative
eIIect about its quality image. Consumers may start suspecting that perhaps the product has not
been selling well, the quality oI the product is true compared to the price or the product is likely
to be discontinued because it has become outdated. The Smyle Powder offer of "Buy 1 and get
2 free went on and on. Ultimately people stopped asking for the product as the on-
going sales promotion strategy made the customers perceive it to be a cheap and an
inferior product.
. Merchandising support from dealers is doubtful:
In many cases, the dealers do not cooperate in providing the merchandising support nor do they
pass on any beneIit 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
eIIort required is more than the commission/beneIit derived.
4. Short-term orientation:
Sales promotions are generally Ior a short duration. This gives a boost to sales Ior a short
period. This short-term orientation may sometimes have negative eIIects on long-term Iuture oI
the organization. Promotions mostly build short-term sales volume, which is diIIicult to
maintain. Heavy use oI sales promotion, in certain product categories, may be responsible Ior
causing brand quality image dilution






Reasors lor 0roWlr ol 3a|es Prorol|or

1 lncreaslng CompeLlLlon
1he alr of change ls galnlng momenLum afLer Lhe lnLroducLlon of economlc llberallzaLlon uue Lo
lncrease ln compeLlLlon companles are flndlng lL lncreaslngly dlfflculL Lo compeLe on quallLy 1hey are
Lherefore resorLlng Lo more lnnovaLlve meLhods of sales promoLlon ln order Lo have a
compeLlLlve advanLage over lLs compeLlLors llke Levls epe klller and oLhers Spykar !eans once a year
has a grand sale of up Lo 30
2 CusLomers Pave 8ecome More rlce SenslLlve

1hls lncreased prlce senslLlvlLy ls a dlrecL resulL of rampanL lnflaLlon Lconomlc recesslon ls llkely Lo fuel
Lhls Lrend furLher as consumers and dealers become more senslLlve Lowards prlces lf Lhe cusLomers geL
branded [eans aL half Lhe acLual prlce Lhen Lhey are deflnlLely golng Lo make huge purchases of Spykar
!eans because Lhey wanL value for Lhelr money as Lhey are prlce senslLlve
3 Sales romoLlons Cenerally CreaLe An lmmedlaLe
oslLlve lmpacL Cn Sales

AdverLlslng personal selllng and oLher meLhods of promoLlon produce slower sales response compared
Lo sales promoLlon Sales promoLlons are mosLly for shorL duraLlon for a speclfled perlod leadlng Lo a
sense of urgency ln consumers Lo buy now 1hls creaLes an lmmedlaLe poslLlve lmpacL on sales
4 roducLs have become more sLandardlzed

ln many producL caLegorles Lhere ls a prollferaLlon of brands many of Lhem are llne exLenslons and me
Loo brands MosL brands are belng percelved by consumers Lo be more or less slmllar wlLhln a glven
prlce range because of Lhe lnablllLy of manufacLurers Lo develop Lruly dlfferenLlaLed producLs under
Lhese clrcumsLances adverLlslng messages are unable Lo sLrongly lnfluence Lhe consumers' percepLlons
and creaLe brand franchlse As a resulL of Lhese percepLlons of slmllarlLy among brands markeLers have
no way buL Lo compeLe on Lhe basls of exLra beneflL offered Lhrough sales promoLlon CompeLlng
companles sLruggle Lo capLure markeL share by uslng every Lool llkely Lo brlng sales success

1here are many unbranded [eans sold aL shopplng malls and places llke llnklng road brand whlch are
boughL aL half Lhe prlce of acLual branded [eans eople who are money consclous buy such [eans
1herefore Spykar !eans comes up wlLh such dlscounLs whlch helps Lhem ln lncreaslng Lhelr sales and
also ln sLock clearance lf any
3 Consumer AccepLance
As compeLlLlon lnLenslfles and promoLlons prollferaLe consumers have learnL Lo earn Lhe rewards of
belng smarL shoppers Cver a perlod of Llme Lhey have also learnL LhaL brands on promoLlon are noL
necessarlly of lower quallLy Spykar !eans lf sold aL dlscounL raLes are noL percelved Lo be a brand of
low quallLy lnsLead lf word ls ouL of a mega dlscounL scheme for spyker !eans Lhen people even Llme
Lhelr purchase accordlngly
6 AdverLlslng Pas 8ecome More Lxpenslve And Less
LffecLlve
All Lhe adverLlslng medla have become qulLe expenslve Audlovlsual medlum whlch ls consldered as
Lhe mosL effecLlve for shorLduraLlon ads may cosL ln excess of 8s 1 lack for a 10 second exposure
durlng prlme Llme ln many cases consumers have reached a polnL of boredom due Lo excesslve
adverLlslng on 1v Some consumers even conslder adverLlslng as an lnLruslon lnLo Lhelr prlvacy leadlng
Lo zapplng (surflng channels) llrms wlLh small budgeLs cannoL compeLe wlLh blg companles whlch
spend huge sums of money on adverLlslng lor Lhese small budgeL flrms sales promoLlon ls a more cosL
effecLlve promoLlon meLhod Lo produce sales resulLs
71rade Pas 8ecome More owerful
8eLallers and wholesalers have become powerful and flnd Lhemselves ln a poslLlon Lo demand exLra
faclllLles from Lhe companles 1hey Channel members demand more lncenLlves Lo geL Lhe deslred
resulLs ManufacLurers do noL seem Lo have any alLernaLlves buL Lo concede Lo Lhelr demands keeplng
ln vlew Lhe compeLlLlve markeL condlLlons ln shopplng malls llke Clobes and LlfesLyle decenL marglns
have Lo be pald Lo Lhem ln order Lo have shelf vlslblllLy for your brand
8 Lmphasls Cn Sales volumes
1owards achlevlng Lhe longLerm proflL goals manufacLurers Lry Lo aLLaln hlgh sales volume 8rand
managers and producL managers flnd Lhemselves under pressure Lo achleve shorLLerm sales resulLs for
Lhe sake of Lhelr careers Compared Lo any oLher promoLlonal meLhod sales promoLlon ls a more
effecLlve meLhod Lo generaLe shorLLerm sales volume
9 Sales romoLlons Maxlmlze roflLs
A number of economlc Lheorles conclude LhaL a company can maxlmlze proflLs by uslng sales promoLlon
Such promoLlons can permlL prlce dlscrlmlnaLlon by allowlng Lhe brand Lo compeLe ln 2 or more
dlfferenL markeL segmenLs Sales promoLlon may allow a premlum brand Lo compeLe wlLh a lower Ller
brand among prlce senslLlve consumers lor example a premlum brand of LolleL soap may be on
promoLlon ln some prlce senslLlve markeLs whlle ln Lhe remalnlng markeLs lL ls sold aL lLs normal prlce


10 lnLroduclng An LlemenL Cf lnLeresL

1here are a number of promoLlons whlch are ofLen called lnLeresL promoLlons Some of Lhe more
popular lnLeresL promoLlon Lechnlques are samples conLesLs and sweepsLakes free premlums and
mallln premlums 1hese promoLlons creaLe an elemenL of lnLeresL and exclLemenL
and consumers en[oy Lhese and response enLhuslasLlcally Lo such conLesLs and sweepsLakes eLc
11 lmpulse 8uylng ls lncreaslng
1he number of marglnal cusLomers ls lncreaslng ulsplays aL Lhe polnL of purchases lead Lo lmpulse
buylng by consumers more so lf Lhe lLems on dlsplay are noL expenslve 1here ls a popular saylng ln
Plndl [o dlkhLa hal voh blkLa hal"
12 Sales romoLlon SpeclallsLs Are Avallable
As a resulL of economlc llberallzaLlon Lhe number of managemenL lnsLlLuLlons has lncreased 1hls has
lead Lo Lhe avallablllLy of speclallsLs who are noL only well pald buL can handle Lhls speclallzed work
more efflclenLly ln Lhe currenL markeL condlLlons where sales promoLlon has become more lmporLanL
13 Lxcess SLocks
8ecause of lncreaslng number of brands lL ls dlfflculL for manufacLurers and dealers Lo anLlclpaLe fuLure
sales 1hls aL Llmes leads Lo excesslve lnvenLorles and Lhe qulckesL way Lo clear LhaL ls Lo go for sales
promoLlon