Sales promotion can be used to pursue important sales objectives. The increasing use of sales promotion in marketing programs is more than a passing fad.
It is a fundamental change in strategic decisions about how companies market their products and services. But sales promotion has certain problems.
The value of this increased emphasis on sales promotion has been questioned by several writers, particularly with regard to the lack of adequate planning and management of sales promotional programs.
Overuse of sales promotion can be detrimental to a product in several ways.
Limitations of Sales Promotion
Some of the limitations and abuses of sales promotion are described below:
1. Difficult to Differentiate Product
A director of sales promotion services at one large firm noted.
There is a great temptation for quick sales fixes through promotions.
Its a lot easier to offer the consumer immediate price savings than to differentiate your product from a competitor’s.
2. Losing Perceived Value
A brand that is constantly promoted loses perceived value.
Consumers often end up purchasing a brand because it is on sales, they get a premium, or they have a coupon, rather than basing their decision on a favorable attitude they have developed.
When the extra promotional incentive is not available, they switch to another brand.
3. Inhabiting Trial of a Brand
Many findings suggest that marketers must be careful in the use of price promotions as they may inhabit the trial of a brand in certain situations.
4. Affects Consumer Attitude Formation
Consumers who consistently purchase a brand because of a coupon or pice off deal may attribute their behavior to the external promotional incentive rather than o a favorable attitude towards the brand.
5. Sales Promotion Trap
A sales promotion trap or spiral can result when several competitors use promotions extensively.
When all the competitors are using sales promotions, this not only; owners profit margins for each firm but also make it difficult for anyone firm to hop off the promotional bandwagon.
6. Creating a Price Orientation
Since most sales promotions rely on some sort of price incentive or giveaway, a firm runs the risk of having its brand perceived as cheap, with no real value or benefits beyond low price. Product Orientation and Consumer Orientation – Explained (Marketing).
7. Borrowings from Future Sales
Talking about the significant risks associated with sales promotions, Management must admit that sales promotions are typically short term tactics designed tor reduce inventories, increase cash flow, or show periodic boosts in market share.
The downside is that a firm may simply be borrowing from future sales.
Consumers or trade buyers who would have purchased the brand anyway may be motivated to stock up at the lower price.
This results in reduced sales during the next few time periods of measurement.
8. Alienating Customers
When a firm relies heavily on sweepstakes or frequency programs to build loyalty among customers, particularly their best customers, there is the risk of alienating these customers with any change in the program.
9. Time and Expense
Sales promotions are both costly and time-consuming.
The process is time-consuming for the marketer and the retailer in terms of handling promotional materials and protecting against fraud and waste in the process.
10. Legal Consideration
With the increasing popularity of sales promotions, particularly contests and premiums, there has been an increase in legal scrutiny.
Legal experts recommend that before initiating promotions that use coupons, games, sweepstakes, lottery, and contests, a firm should check into laws and regulations, otherwise these can create legal trouble.
11. Erodes Brand Loyalty
Some experts think that most sales promotion does not help develop close relationships with consumers and instead erode brand loyalty.
They feel that an overemphasis on sales may undermine a brand’s future.
12. Useful Only in Mature Markets
It should be noted that the use of sales promotion is only in mature markets where competition for customers and attention from channel members is fierce.
Moreover, if the total market is not growing, sales promotion may just encourage deal prone customers and intermediaries to switch back and forth among brands.
13. Increase Price
Sales promotion plans also increase the prices that consumers pay because they increase selling costs and ultimately it is consumers who pay for those selling costs.
14. Simply Making Product Available
Some reimburse intermediaries for promotion effort in proportion to their sales to final consumers.
Thus, their focus is on supporting those intermediaries who actually increase sales to final consumers, which can be quite different to just directing sales promotion expenditure to intermediaries who simply make the product available.
Making the product available is a means to an end, but if making it available, without producing sales, is all that is accomplished, the sales promotion effort does not make sense.
15. Costly Mistakes
Sales promotions require careful management of all the details so as to avoid making costly mistakes.
Because sales promotion includes a wide variety of activities, each of which may be custom designed and use only once, a wide range of skills is required.
Mistakes caused by lack of experience can be very costly. 25 Importance of Sales Management (With Examples).
16. Stepchild Treatment
Sales promotion mistakes are likely to be worse when a company has no sales promotion adviser.
They allocate money to sales promotion is there is any leftover, or if a crisis develops.
Many companies, even some large ones, do not have a separate budget for sales promotion or even know what it costs in total.
17. Negative Effect on Brand Image
Although sales promotion can support brand image, excessive price reduction sales promotion efforts can negatively affect brand image.
Indeed, in the future brand advertising may become more important than a sales promotion.
Some firms that shifted from brand advertising to sales promotion have lost market share.
18. No Immediate Results
Not all sales promotions meet the condition that is required.
For instance, training given to a distributor’s sales force may be valuable, but may not produce immediate results.
19. Inflated Result
Current sales promotion results may be inflated by sales ‘stolen‘ from the future.
That is, a sales promotion may get buyers to act now when they would have bought the product in the future anyway.
It a “cannibalizing effect” which is a lower level of sales after the promotion ends compared to before the sales promotion began.
20. No Increase in Market Share
A firm’s market share may not increase following an expensive sales promotion, but promotion may have offset the potentially damaging impact of a competitor’s promotional activity.
21. Promotion Clutter
The growing use of sales promotion has resulted in promotion clutter.
Consumers are increasingly turning out promotions, weakening their ability to trigger an immediate purchase.
Manufacturers are now searching for ways to rise above the clutter.
What is the primary limitation of sales promotion?
Consumers who consistently purchase a brand because of a coupon or pice off deal may attribute their behavior to the external promotional incentive rather than o a favorable attitude towards the brand. Sales promotions are both costly and time-consuming.
Thus, now you know the limitations of sales promotion.