Excessive Sales Promotion and Brand Equity

Topics: Marketing, Sales promotion, Brand Pages: 14 (5044 words) Published: October 20, 2008
A marketing report:
Does excessive sales promotion result in dilution of brand equity? Group 4
Amandeep Singh Gandhi
Kirtan Acharya
Murthy BBTGS
Ravish Malik
Sirish CP
Vivek Singh
What is sales promotion?
Why is it required?
Decisions involved in sales promotion
Types of sales promotion
Sales promotion to be used at different stages of the product lifecycle Direct and interactive marketing
A special case: Intrusive sales promotion
What is Sales Promotion?
Sales promotion is an incentive given to the consumer to buy the company’s products or services. Although some sales promotions can be continuous (frequent flier miles), most of such programs are short-term. They are usually used to cash in on a particular season or festival. Sales promotions sometimes can be a better choice compared to advertising when the customer base is small and geographically distributed. Marketers have found that in the information world where the customers are continuously bombarded with nearly infinite amount of messages, advertising alone is not enough. To meet their sales they must use additional promotional methods in addition to advertising. Also, the high cost of advertising may cause marketers to seek alternative, lower cost promotional techniques to meet their goals. This role is fulfilled by sales promotion. In this report, we will talk about the importance of sales promotions and the different types of sales promotions. We will explore the various options available to us other than sales promotion. Different types of sales promotions are most effective depending on the stage of the product life cycle. We will thus look at the options which the marketer should follow to get maximum benefit out of the promotion campaign. Before reaching a definite answer, we will also need to look at some of the possible negative effects of sales promotion. By exploring all these areas, we feel that we will be able to answer the question as to whether excessive sales promotion can dilute the brand equity. Why is sales promotion required?

Sales promotion is important due to many reasons. It fulfils many important objectives. Sales promotions often attract brand switchers, who are primarily looking for a lower price, an add-on value, or free trials before buying a new brand. Moreover sales promotions benefit both the manufacturers and consumers. Some of the service firms also use promotions to attract new customers and establish loyalty. The major objectives of sales promotion can be specified as follows:- Building Product Awareness – Whenever a new product is introduced in the market, customers need to be made aware of the product as soon as possible and in as many numbers as possible. Many sales promotion techniques are highly effective in exposing customers to products for the first time. During such promotional campaigns, an effort can also be made to capture customer information which can be used in the future to contact customers. Creating interest - Sales promotion can be used as a tool to create interest about the product in the minds of consumers. For example in Mumbai, between Bandra and Mahim, there is a small stretch of space where many sales promotions campaigns have taken place. These include huge floats and sets which make the customer curious. Once they had a big air-filled balloon in the shape of a 7-Up can. Another instance was when they built a mock up set of the show Kaun Banega Crorepati. This creates a memorable impression in the minds of the customers and attracts them towards the product or the service. Likewise, in the retail industry an appealing sales promotion can significantly increase customer traffic to retail outlets. Here, creating interest is nothing but giving the consumer first experience of the product. To do this marketers sometimes tend to give commodities for free, during the initial period. Giving a shampoo packet with the daily newspaper can be considered as a sales...
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