Current issues in Sales Promotion
The issue of sales promotion has been receiving increasing attention from both advertising and marketing professionals and academicians. This increase of attention can be explained by two major interrelated factors: first, the nature of sales promotions - it brings certain measurable (as opposed to advertising) impact on sales, which attracts many marketing managers; it also has been proven by time to be the effective collection of techniques to increase sales. However, the phenomenon of sales promotion is not studied very widely. Sales promotions expenditures for most of the companies are increasing, however with the total promotional budgets staying relatively the same it can be assumed that the increase of expenditures on sales promotion come at the expense of decreasing advertising budgets. There are several reasons explaining this phenomena: Increased brand parity and price sensitivity of consumer - with more brand choices available to the consumer and with the fact that product differences are becoming less and less apparent, consumers are becoming more and more reliant to the price and price incentives. This goes hand in hand with another reason of increasing sales promotions budget - decreased brand loyalty. Consumers are getting used to the fact that almost always at least one brand category is on sale or on a sales promotional offer. Another reason is coming from the routs of corporate culture and the reward and promotion strategy within corporations - in the conditions of severe competition there is increasing pressure on brand managers to show fast results in terms of increased sales and nothing is as effective in short run as sales promotions to achieve this goal. Another explanation has to do with the consumer responsiveness to money saving options - for example the results of NCH Consumer Survey indicate that on average 80.5 percent of consumers in US used coupons over the period of 1996-1999. (Shimp 1993). One more reason for increasing sales promotion importance is that many product categories on the market are in the mature stage and according to the product life cycle theory, sales promotions are extremely effective in maturity stage of the product helping to boost sales. (Blattberg, Neslin 1990). Finally the reason that is very relevant to highly competitive markets, where companies find themselves constantly fighting for the smallest piece of market share - "prisoner's dilemma" spiral - which is very similar to a price war situation. Manufacturers are locked into defensive reactive escalation of sale promotional expenditures. If one company cuts its sales promotions, it will suffer short-term loss, chances are that competitors will take advantage of that, if the company increases its sales promotional expenditures short term increase of sales might be very small because competitor reacts. (Blattberg, Neslin 1990) Because of highly practical importance of sales promotion the number of publications in trade press on sales promotion has increased dramatically over the past decade. However the same is not true for academic press. Though there is a certain increase of articles on the topic in the academic journals, there still are a lot of potential areas for research that didn't receive enough attention. The purpose of this paper is to reveal what is really known and proven about sales promotions, to systematize knowledge already available, discuss different models available in literature and to identify possible directions of future research. Please note that this paper is not intended to discuss the issues relevant to each particular element of sales promotion, rather it is focused on the general issues and characteristics shared by all (or most) of the components.
Uncertain Definitions of Sales Promotions
Systematization of knowledge on sales...
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