An Examination of Sales Promotion Programs

Topics: Marketing, Sales promotion, Hong Kong Pages: 22 (5029 words) Published: February 27, 2014
Journal of Promotion Management, 16:467–479, 2010
Copyright © Taylor & Francis Group, LLC
ISSN: 1049-6491 print / 1540-7594 online
DOI: 10.1080/10496491003659563

An Examination of Sales Promotion Programs
in Hong Kong: What the Retailers Offer
and What the Consumers Prefer
LIN YANG
Victoria University of Wellington, Wellington, New Zealand

WAH-LEUNG CHEUNG
Hong Kong Baptist University, Hong Kong, China

JAMES HENRY and JOHN GUTHRIE
University of Otago, Dunedin, New Zealand

KIM-SHYAN FAM
Victoria University of Wellington, Wellington, New Zealand

This study gives an insight into the retailer’s capability of managing sales promotion by examining the sales promotion programs offered by Hong Kong cosmetic and toiletry retailers and the consumers’ preferences. The results indicate that instant-reward programs are popular among retailers and preferred by consumers. The results also show that the preferences for sales promotion programs are dependent upon consumers’ demographic and sociocultural characteristics. Implications for advertisers designing and communicating sales promotions are offered.

KEYWORDS consumer behavior, Hong Kong, retailing cosmetics
and toiletries, sales promotion

INTRODUCTION
In the past decade there has been greater pressure on marketing budgets and a greater demand on marketing management to achieve marketing communications objectives more efficiently. Marketers search for a more cost-effective way to communicate with the target markets other than conventional media advertising. As a result, manufacturers and retailers have been gradually Address correspondence to Lin Yang, School of Marketing and International Business, Victoria University of Wellington, PO Box 600, Wellington 6140, New Zealand. E-mail: lin.yang@vuw.ac.nz

467

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L. Yang et al.

switching from above the line mass media advertising to a variety of below the line sales promotions. This trend reflects the ongoing disenchantment with mass media advertising based on the difficulty of measuring its effectiveness. However, the trend also reflects a desire by manufacturers and retailers to get closer to customers by some form of relationship marketing. A number of explanations have been forwarded for the increasing popularity of promotions (Dawes, 2004; Dickson & Sawyer, 1990; Low & Jakki, 2000; Quelch, 1983). One of the key factors is the changing relationship with advertising. Previously, advertising and sales promotion were viewed as alternatives to one another. “This has changed as increased use by market leaders such as Proctor and Gamble and McDonald’s have given promotion a newfound ‘respectability,’ and as rising prices and increasing ‘ad clutter’ have raised doubts about advertising’s cost-effectiveness” (Peattie, 1998, p. 43). Other factors include the increasing power of retailers (Toop, 1992), matching competitors’ promotions (Lal, 1990), changes in marketing culture where short term gain is becoming more attractive than long term consumer franchise building through advertising (Peattie, 1998), and the desire of manufacturers and retailers in influencing consumers’ buying behavior (Alvarez & Casielles, 2005).

Sales promotion can be defined as “special offers” and excludes all paid media advertising, but also includes techniques like coupons, self-liquidating offers, bargain packages, gifts, sampling, and point of purchase promotions and displays (Liao, 2006; Peattie, 1998). Sales promotion is value offered to the customer in a short-term orientation. It essentially aims to stimulate demand during the period in which it is set (Peattie & Peattie, 1995; Lehman & Winer 2002). The potential benefits of using sales promotions could range from attracting new customers from competitors to persuading customers to switch to brands with higher profit margins or simply inducing existing customers to buy more.

According to Peattie and Peattie (1995), promotions can be divided into two groups: “value-increasing”...

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