Sales promotion is an element in competitive age to survive and grow. In this buyer’s market era no business organization can afford to ignore sales promotions. Advertising expenditure can be converted into revenues with the support of sales promotion efforts only.
By using sales promotion firm may remain in the memory of the king of the market and ensure their survival.
Advantages of Sales Promotion
Marketeers can reap the following advantages from the implementation of appropriate sales promotion technique:
1. Increase the Sales
Sales promotion helps in increasing sales in a short span of time. It can eliminate idle cycles in some specific goods.
2. Change of Attitude
Promotions offering price deals influence the attitudes of consumers towards buying the brand.
Consumer’s price perception has a significant effect on attitude of the consumer.
Related: Top 7 Powerful Techniques of Inventory Control for Stock Management.
3. Brand Switching
Sales promotions encourage consumers to buy a different brand than the one they bought on earlier occasions.
If the attitude toward the brand has been quite low then a sales promotion is likely to encourage a switch to the promoted brand.
Displays at the point of purchase may induce brand switching.
4. Target Audience
Sales promotion can be targeted on specific groups especially selected retailers and their customers.
A manufacturer may apply area-specific Strategies for sales promotion.
5. Specific Objectives
It can also be targeted to achieve specific objectives, such as increasing repeat purchase or stock clearing.
Sales promotion can permit price discrimination.
6. Indirect Roles
Sales promotion can also be used to achieve other objectives, such as widening distribution or ‘shelf facing’.
Sales promotion may also help in increasing the effectiveness of advertising.
7. Reduced Costs
Due to sales promotions, the demand for product increases and the manufacturer can avail the benefits of Economies of scale.
More purchase on the part of retailers and Consumers, reduce inventory costs of the manufacturer and increase profitability.
Related: 18 Major Advantages and Disadvantages of Supermarkets.
8. Demand Creation for New Products
Many techniques of sales promotion motivate prospects to test new products.
Sales promotion techniques stimulate the desire in consumers to go for promotion product with more quantity. This generates demand for the product.
9. Competitive Advantage
Organisations design new methods to face the competition and remain the winner in the competition.
By having focus on sales promotions the firm analysis market scenario and competitors move and accordingly prepare itself.
It helps the firm to remain competitive.
10. Goodwill
Many sales promotion schemes directly or indirectly increase the Goodwill of a firm in the market due to Innovative sales promotion techniques.
Sales promotion schemes keep name and brand product in the mind of people, which contribute to the Goodwill of the firm.
Related: 31 Factors Affecting the Choice of Distribution Channels (Explained).
11. Prolong Life Cycle
Sales promotion techniques help in increasing the life span of the product during different stages of the product life cycle.
Using sales promotions maturity stage of the product can be prolonged and the firm can generate more and more revenues.
Disadvantages of Sales Promotion
Despite its recent widespread use as an important element of marketing campaigns, the essence of sales promotion is that it is intended as a very short term influence on ‘sales’.
It has an insignificant long term effect, but may be used as an additional factor.
Following are the disadvantage of sales promotion:
1. Short Term
The effect of sales promotion is immediate.
There is rarely any lasting to increase in sales when sales promotion discontinued sales become immediately Low.
Heavy use of sales promotion may cause quality image dilution.
Related: Process of Price Determination with Examples (Step by Step).
2. Hidden Costs
In sales promotion efforts many costs, like management/ Salesforce time and effort, do not consider in the direct costs.
These costs reduce the actual benefits.
3. Decrease in Brand Loyalty
Promotions can conflict with the main brand messages, and Confuse the customers as to what the image really is.
Regular customer may have some doubts about quality considerations due to excessive sales promotion.
Related: 18 Reasons and the Importance of Product Innovation (Explained).
4. Price Sensitivity
Sales promotion can persuade users to expect a lower price in the future, and potentially damage ‘quality’.
It is a general tendency among buyers to anticipate more and more price reductions which are not good for long term reputation of the firm.
The disadvantage of sales promotion though maybe the lack of effectiveness. There is the thing that only 16% of the Trade Promotion events were profitable, based on incremental sales of brands distributed through retailer warehouses.
For many promotions, the cost of selling was ‘greater’ than the earning from the selling.
Thus, now you know the advantages and disadvantages of sales promotion.
I agree with every word. Sales promotion has a lot of pitfalls and it turns out the even the biggest eCommerce brands don’t have an organized sales promotion strategy. I’m investigating about sales promotion as my company developed an amazing solution (I’m biased of course but you are welcome to see for yourself) https://www.namogoo.com/platform/intent-based-promotions/
Intent-Based Promotions offers individualized promotion only to shoppers who need a push and avoid wasting promotions on people who have purchased anyway or people with no intention of buying – thus hurting price sensitivity and the brand’s perceived value. It also knows what is the minimum accurate incentive to offer each shopper. It’s an amazing tool.
Thanks