Sales Promotion in the Australian Food Industry

Abstract

The food manufacturing industry in Australia reflects a very competitive marketplace, one in which sales promotion is extensively used. Some would argue that this activity is actually a prerequisite to doing business-just because it is such a competitive environment. Although much is understood about the purpose of promotional activity, less is known about what in reality occurs at an aggregate level, and what the potential implications of promotional behaviour may be in years to come. Indeed, a concern over the potential impact of the overuse of price-based promotions saw the development of a review of marketing practice in the food manufacturing industry. One hundred and fifty-eight senior managers responsible for promotional budgets were surveyed to identify their behaviour and beliefs about sales promotion. Interestingly, after examining their claimed objectives, actual techniques and the measurement tools utilized, a number of discrepancies became evident. Managers frequently use a range of techniques, most commonly product sampling, point of purchase displays, free product and cut prices, with the key objectives of attracting new customers, improving brand awareness and stimulating sales. The techniques and objectives employed supported the claimed role of sales promotion as a tool to enhance brand/market position, although priced-based promotions, which are more associated with competitive retaliation, were also commonly used. Despite claiming to be conscious of the potential damage to brand equity if price-based promotions are used excessively, little research was employed to test this.