Sales Promotions and Consumers

There are multiple definitions of sales promotions in the marketing literature which aim to highlight its different aspects. Webster (1971, p.556) was first to define sales promotions as “short-term inducements to customer buying action”. Davis (1981, p.536) added another dimension by defining it as ‘marketing efforts supplementary in nature performed for a limited duration in order to induce buying’. Schultz and Robinson (1982, p.8) added the role of different stakeholders into the definition by saying ‘it’s a direct inducement or incentive to the sales force, the distributor, or consumer, with the primary objective of creating an immediate sale’. Kotler (1988, p.645) defines sales promotions as “a diverse collection of incentive tools, mostly short term, designed to stimulate quicker and/or greater purchase of a particular product by customers or the trade”

There seems to emerge four important themes from these definitions of promotions:

1. a) They are action focused
2. b) They are marketing events
3. c) They have direct impact, which is immediate and short term on consumer behaviour, and
4. d) They are designed to influence market intermediaries.

Blattberg and Neslin (1990) tried to capture all the above themes by defining promotions as ‘an action-focused marketing event aiming to have a direct impact on the firm’s customer’s behaviour’.

Sales promotion is a complex interaction of consumer behaviours and management decisions. Conceptual underpinning of sales promotions can be found in different streams of consumer behaviour theories and economic theories of inventory management. Sometimes promotional goals for retailers and suppliers are not the same (Dawes, 2012). For retailers, the attractiveness of sales promotions is often linked to their assets. They may want to liquidate the inventory and are more interested in category expansion than sales of any particular brand. On the other hand, the manufacturer is interested in volume gains whether it comes from expansion of demand or brand switching.

It was observed by the Srinivasan et al. (2004) that margin implications in sales promotions varied across brands even within the same categories. The manufacturer may design the promotions keeping in view the customers who react most to the , but the retailer’s objective at that time may be to improve sales of a complementary product.

Therefore, we can summarise retailers’ objectives for sales promotions as 1) increased store traffic, 2) increased sales and 3) increased profits. They are more interested in product category sales than brand sales. On the other hand, manufacturers’ objectives are interested in increasing trail, repeating purchase and increasing loyalty (Mullin, 2010).

The conflict of interests between retailers and suppliers seems to arise from the lack of understanding of promotional impacts on consumer behaviour, supply chain management and associated costs/benefits. Some promotions increase price sensitivity, stock piling and brand switching. Others increase consumption, trial of new products and category expansion.

Therefore, there is a need to carefully examine promotions both from retailers and manufacturers perspectives and critically evaluate the promotional impacts as per their intended objectives. This critical evaluation requires detailed understanding of consumer behaviours and associated supply chain issues. The promotional impacts expected from all types of promotions depend upon certain factors. The next section will review the literature about the promotional impacts. Then it will focus on short term promotional impacts and factors affecting these impacts.

References

Blattberg, R. C. and Neslin, S. A. (1990). Sales Promotion Concepts, Methods, and Strategies. NJ: Prentice-Hall.

Davis, Kenneth R., (1981). Marketing Management, 4th Ed. New York: John Wiley, 1981.

Dawes, J.G., (2012), “Brand-Pack Size Cannibalization Arising from Temporary Price Promotions”, Journal of Retailing, Vol. 88, no. 3, pp. 343-355.

Kotler, Philip, (1988). Marketing Management: Analysis, planning, implementation and control, 6th ed. Englewood Cliffs, NJ: Prentice Hall.

Mullin, R.M, (2010). Sales Promotion: How to create, implement and integrate campaigns that really work. 5th Ed. India: Kogan Page.

Schultz, Don, E. and William A. Robinson, (1982). Sales Promotion Management. Chicago: Crain Books.

Srinivasan, S., Pauwels, K., Hanssens, D.M. and Dekimpe, M.G. (2004), “Do promotions benefit manufacturers, retailers, or both?”, Management Science, Vol. 50, no.5, pp. 617-629.

Webster, F. E. (1971). Marketing Communication: Modern Promotional Strategy. John Wiley & Sons Publishers.