The Measurable Effects of Sales Promotions

Reasons and Disadvantages of Sales Promotions

Mar 7, 2009 Gwendolyn Cuizon

Sales promotions are easier to control and implement. Also the results are easier to measure particularly when it comes to the increase in volume sales.

Sales promotions are marketing strategies adopted by the company for various reasons. Most companies use the ability to deliver volume sales to attain a certain result or results.

Reasons for Sales Promotions

• This could be a way of monitoring the performance of product management. Since sales promotion can possibly provide immediate impact on consumer sales, it is not unusual for product managers to use these strategies to attain their sales objectives.
• Also, companies have to cope with pressure on sales margins which they can achieve through paying closer attention to cost-effective sales volume. Since the results of using sales promotional techniques can be determined accurately, product management can easily predict sales volumes.
• And more importantly, sales promotions are not only effective in attaining short-term sales they are also more cost-effective compared to other integrated marketing communications tools such as advertising. The progressive fragmentation of audiences and the increase in media costs have tipped the balance in favor of sales promotion techniques which are more likely to deliver demonstrable results.

Popularity of Sales Promotions

The reason sales promotions are gaining popularity is due to the fact that product and sales management are very confident in their ability to handle the techniques of sales promotion. Other forms of integrated marketing communication tools need to go through a lot of thought and internal debates before funds are allocated or decisions are arrived at.

Product managers also are more in control of the determination and implementation of sales promotional activities. They have a freehand when it comes to what sales strategies to use.

The importance of sales promotions as an integrated marketing communications tool could be attributed to the the increase in number of specialist sales promotions agencies operating in certain places. In the past, sales promotion was viewed as part of other marketing communications techniques. Today, it is one of the stand-alone effective marketing tools.

Disadvantages of Sales Promotions

• On the downside, the sales promotions, unlike other integrated marketing comuncation tools, work often on a short-term basis only.
• Also, unlike advertising or public relations, for instance, sales promotions strategies may have no lasting impact on the brand.

Research conducted by Ehrenberg et al. (1991) showed that "Consumer promotions have large immediate sales effects, but do not appear to be brand building."

A similar study of 25 grocery brands across four countries showed that:

- For established brands, sales are not constantly high after the sales promotion is over. The benefit only lasts the length of the sales promotions and a negligible increase of just 1 per cent in sales was noticed.

- Buyers who bought during the sales promotions are actually familiar with the brands. Therefore, sale promotions have not really attracted new, additional buyers or encouraged brand switching.

- Price promotions only cater to a limited number of customers, usually 10-20 percent.

In conclusion, it can be gleaned that sales promotions do not really have long-term impact on sales. Increases in sales often last only during the entire period of sales promotions. Also, no after-effect on consumer loyalty is noticeable because the majority of extra buyers in a sales blitz have tried the brand already. Around 80-90 per cent said they bought the brand within the last twelve months.

Sales promotions may be effective in the short-term but these marketing strategies do not have long-term impacts.

The copyright of the article The Measurable Effects of Sales Promotions in Business Management is owned by Gwendolyn Cuizon. Permission to republish The Measurable Effects of Sales Promotions in print or online must be granted by the author in writing.

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