Influence Of Sales Promotion

What are some of the reasons marketing and brand managers are allocating more of their promotional budgets to sales promotion rather than media advertising?

Since the mid ‘80s, the proportion of marketers’ promotional budgets allocated to both consumer and trade promotion has increased, while the proportion allocated to media advertising has declined. From our lecture slides [1], some reasons for this increased spending on sales promotion include:

¥ Consumers have become less loyal to brands and are purchasing more frequently on the basis of price, value, and convenience and buying brands that are on sale or that they can use a coupon for.

¥ Sales-promotion tools, such as samples and coupons, are often used as part of the shaping process

Some of the potential negative effects of sales promotions are an increase in price sensitivity, a decrease in brand loyalty, and brand equity erosion. Brand loyalty and brand equity are closely related. According to Palazón-Vidal and Delgado Ballester (2005), nonmonetary promotions, such as premiums, take the focus away from the price. “When promotion experience is linked to enjoyment kind of feelings, thoughts, and benefits, more favorable and positive brand associations are linked to the brand” [2] Frequent use of price promotions causes consumers to infer lower product quality and is related to low brand equity. The reason for low brand equity is that price promotions lead consumers to think primarily about the deals and not about the utility provided by the brand. However, non-monetary promotions can be used to build brand knowledge rather than erosion of brand image, since in this case, price is not the guiding factor. When it comes to monetary promotions such as discounts and clearance, it may lead to undermining brand equity of brands. For example, brands like Michael Kors and Coach have many Outlet stores and and are available in discount stores across the country. This has led to dilution of their brand image. Other brands like say, Louis Vuitton which are not known to have any promotional or discount

Several companies now offer online couponing services, for example, websites like Valupage.com, Valpak.com and savings.com offer customers the option to download manufacturer- and retailer-sponsored coupons. Cox Target Media also offers consumers the opportunity to access coupons for their local area online through its websites such as Valpak.com and savings.com. Target has its own savings app for mobile phones called “Cartwheel” where customers can download digital coupons. It is also becoming easier to get to know promotions, sales, sweepstakes etc. via social media or just by visiting a brand’s webpage. By clicking just a few buttons, consumers can compare prices, look for the best deals and take advantages of short term promotions with great ease.

Many companies are moving contests and sweepstakes online because of the low cost, immediate data collection capabilities and ability to keep consumers engaged with the company and/or brand when they visit a web site to enter a