In implementing the concept, pricing, promoting activities

In the big picture, promotion is an
indispensable component of Marketing Mix. Marketing is the process of planning
and implementing the concept, pricing, promoting activities and delivery of
ideas, products and services to generate exchanges that fulfill individual and
organizational goals. A good job at customer relationship management will lead
to exchanges. Exchanging process will take place when there are no less than
two parties that want to offer their potential value to the other. The moment
when two parties communicate and deliver their goods and services, exchange can
happen. Marketers can use right promotion techniques to stimulate exchange and
increase the happening frequency1.

 

Sales promotions is a part of the 4Ps
(Price, Place, Product, Promotion) in the marketing mix. It either aims at the
consumers (B2C setting) or at the intermediaries (dealers, retailers) in form of sales-incentives
(B2B setting). Sales promotions is a type of media and non-media stimuli that
is activated in a fixed time interval with several goals, such as launching a
new product (trial), inducing consumers to stockpile, increasing
in-store/online traffic, improving product availability2.

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Simply put, the primary goal of sales
promotions is to compose an instant unplanned need by adding an additional
advantage to buy the product.

Sales promotion, therefore, is designed to be used as a short-term tactic to
stimulate sales, generate
brand image and awareness, retaining customers, generating Web traffic, and
facilitating the capturing of information about the target public.

 

When
implementing a sales promotion campaign, business must carefully have
calibrated following factors to achieve the purpose. Firstly, whether the cost
of the promotion can justify the resulting sales increase expenditure, or if it
is worth accepting a loss but increase the level of brand awareness. Secondly,
before launching a promotion campaign, marketers cannot only pay attention to
the short-term sales revenue increase amount, but must ensure the coherence
between sales promotions campaign and the brand image. Because, for example, a
heavy discount on a product may lead to some negative long-term damage to the
brand. In case of start-ups, companies that use too many promotion programs in
order to viral their brand during the soft opening may lead to the adverse
effect that consumers may misunderstand the brand concept. While the companies
are products or services oriented but appear promotions oriented, and consumers
often perceive products with promotions as products with lower quality than
competing brands. Thirdly, before implement a promotion program, marketers
should take the promoting duration and promoting frequency into account.

Holding promotions too frequently will habituate consumers to purchase only
when promotions are activated. Will the program induce consumers who will
continue to purchase in the post-promotion period, or will it be only
attractive to people who always look out for a bargain when promotions are in
effect3. 

 

However, when the battle in reaching
the customers’ attention amongst companies becomes more intense than ever,
companies still need to apply promotion programs. According to California
Management Review, consumer promotions have three distinctive characteristics:
communication, economic motivation, and emotional attractiveness. Communication
can draw attention from customers, and provide information about the products
or services being promoted. Economic incentives offer additional value to the
product by combining some discounts and enticement. While emotional
attractiveness appears as a distinct invitation that engages customers in the deal
now or in the near future. When using sales promotions as a tool to market something,
it must offer incentives. They cost companies’ resources and must generate
extra revenue to pay for the expenses. A short sale which clears out the
stockpile but, with added advertising expenditure, decreases margin is a
failure4.

 

Sales promotions is a robust marketing
tool, but with 2-side effect. They can be an essential power for brands, not
only to gain new consumers, save the exists, but also create advocacy from
existing consumers by converting them to loyal fans. On the other hand, promotions
may erode the brand equity by directing consumer’s perception intensively on
price. Nevertheless, staying away from promotions altogether will give
competitors a chance to draw customers away.