Sales Promotion Activities Research Articles

Sales Promotion Types and Customer Sensitivity

As markets are becoming fiercely contested, the marketers are forced to deploy sales promotion activities or tools to maintain and expand sales. There is a visible trend in favour of sales promotions. But optimum decisions cannot be taken unless correct assessment of customer sensitivity to various sales promotion tools is made. This study was undertaken to study consumer response to sales promotion activities. The key consideration was to explore how promotion sensitivity is spread. Accordingly, a scale measuring consumer sensitivity to seven promotion or deal type was administered. The data analysis revealed presence of two groups, i.e., sales promotion sensitives and insensitives. The deal sensitive group exhibited higher sensitivity to all deal types on a generalised basis. The data did not reveal presence of specific deal, sensitive groups. While the insensitives group exhibited, low sensitivity towards all promotion types.

A Decision Support System for Planning Manufacturers' Sales Promotion Calendars

A common event in the consumer packaged goods industry is the negotiation between a manufacturer and a retailer of the sales promotion calendar. Determining the promotion calendar involves a large number of decisions regarding levels of temporary price reductions, feature ads, and in-store displays, each executed at the level of individual retail accounts and brand SKUs over several months or a year. Though manufacturers spend much of their marketing budget on trade promotions, they lack decision support systems to address the complexity and dynamics of promotion planning. Previous research has produced insights into how to evaluate the effectiveness of promotional events, but has not addressed the planning problem in a dynamic environment. This paper develops a disaggregate-level econometric model to capture the dynamics and heterogeneity of consumer response. By modeling the purchase incidence (timing), choice and quantity decisions of consumers we decompose total sales into incremental and nonincremental (baseline plus borrowed). The response model forms the basis of a market simulator that permits us to search for the manufacturer's optimal promotion calendar (subject to a set of constraints, some of them imposed by the retailer) via the simulated annealing algorithm. Calendar profits are the net result of the contribution from incremental sales minus the opportunity cost from giving away discounts to nonincremental sales and the fixed costs associated with implementing promotional events (e.g., retagging, features, displays). Incremental sales result from promotion-induced switching, the acceleration and quantity promotion effects on those switchers, increased consumption and the carryover effect from purchase event feedback. We applied our approach to the promotion-planning problem of a large consumer-packaged goods company in a nonperishable, staple product category suggested by company executives (canned tomato sauce). Subject to a retailer pass-through constant rate of 80%, provided to us by the collaborating firm, the optimal promotion calendar produced by the modeling system followed a pattern of frequent and shallow temporary price reductions with no feature or display activity. We also analyze how that result would change under different retailer pass-through scenarios. Our findings indicated that the manufacturer could substantially improve the profitability of its sales promotion activity and that there would be a concurrent positive effect on retailer profit and volume levels. Management reported to us that the insights from the use of the system were implemented in their promotion-planning process and produced positive results. A validation analysis on follow-up data for one market showed that promotion activity could be significantly reduced, as recommended, with no adverse effect on the brand's market share, as predicted. To generalize the model beyond the specific category where it was implemented, we conducted a sensitivity analysis on the profile of the calendar (i.e., frequency, depth, and duration of deals) with respect to changes in market response, competitive activity, and retailer pass-through. First, we found that the optimal depth, frequency, and timing of discounts is stable for price elasticities ranging from near zero to around four (in absolute magnitude). We also found no systematic impact of competitive promotions on the profile of the optimal calendar. For example, variation in competitive activity did not affect the optimal depth or frequency of discounts. Lastly, we found changes in retailer pass-through to have a significant effect on the optimal depth and number of weeks of trade promotion that a manufacturer should offer. This emphasizes the importance to manufacturers of having accurate estimates of pass-through for purposes of promotion budgeting and planning.

Pesticide poisoning: A major health problem in Sri Lanka

Acute pesticide poisoning is a major public health problem in Sri Lanka. In several agricultural districts, it precedes all other causes of death in government hospitals. Most of the acute poisoning cases are intentional (suicide) and occur among young adults, mainly males. Poisoning due to occupational exposure is also common, but less well documented. In an irrigation area in Sri Lanka a very high incidence of serious pesticide poisoning was observed, with 68% due to intentional ingestion of liquid pesticides. It is argued that the easy availability and widespread use of highly hazardous pesticides is the most important reason for this high number of poisoning cases. The frequent application of highly hazardous pesticides in high concentrations was often irrational and posed serious health and financial risks to the farmers. Sales promotion activities and credit facilities promoted this excessive pesticide use, which was not counteracted by an agricultural extension service. Hazardous practices when spraying pesticides were due to the impossibility of applying recommended protective measures under the local conditions, rather than to lack of knowledge. Current emphasis on programs that promote the safe use of pesticides through education and training of farmers will be ineffective in Sri Lanka because knowledge is already high and most poisoning cases are intentional. Instead, enforcement of legislation to restrict availability of the most hazardous pesticides would result in an immediate health benefit. Improved agricultural extension services to promote alternative non-chemical methods of pest control is the most important strategy, in the long term, to prevent acute pesticide poisoning.

Sales promotion practices of consumer goods companies in an advanced developing country

In recent years, manufacturers of consumer and industrial goods as well as service firms have been increasingly thinking in global terms and paying more attention to sales promotion in their overall promotional programmes and strategies. The purpose of this paper is to investigate the consumer sales promotion practices of consumer goods producing companies in the advanced developing country of Turkey. It was discovered that sales promotion activities are gaining importance in overall promotional practices of Turkish companies, though there are differences in its use by type of industry, size of company, area of business and locus of decision-making within the firm. Furthermore, differences were detected between companies using sales promotions versus other forms of promotional techniques such as mass media advertising, personal selling and publicity. Study findings may be applicable to other developing countries that are at a similar level of socio-economic, market and technological development as Turkey.

Promotional competitions as a strategic marketing weapon

Sales promotion activity continues to grow in terms of the number, scale and variety of promotional techniques being used by companies in their marketing communication campaigns. Research among marketing academics has yet to catch up with this reality and sales promotion continues to suffer from relative neglect compared to advertising;from a tendency for all promotional tools to be tarred with a rational economic brush; and from being labelled as a set of “tactical” took that lack the strategic brand‐building possibilities offered by advertising. This article builds upon earlier research examining the communication potential of competitions, to test empirically whether the potential marketing communications benefits claimed for competitions are actually recognised and pursued by marketing practitioners.

Increased theft as a side effect of sales promotion activities: An exploratory study

A combination of commonly used promotional activities, i.e., advertising, price reductions and increased exposure, was associated with increased thefts of six candy products. Thefts increased for each of the six products during the period the combination of promotional activities was used. Large increases in sales were observed for only two of the products. Sales of the other four products increased marginally or decreased in conjunction with promotional activities. When compared to normal sales conditions, the period of promotional activities produced less net profit per week for five of the six products. The results are of interest to retailers since they indicate that promotional activities for some products may produce a negative side effect, namely, increased theft. Further, promotional activities may not always produce increased sales.

INCREASED SALES AND THEFTS OF CANDY AS A FUNCTION OF SALES PROMOTION ACTIVITIES: PRELIMINARY FINDINGS

We used an A-B-A design to evaluate the effects of two commonly used promotional activities-price reduction and increased exposure, in combination and separately-on sales and thefts of candy at a grocery store. The combination of activities and the increased exposure condition produced the greatest increases in sales. The combination of activities was also associated with the greatest increase in thefts.

Differential responses to retail sales promotion among African-American and Anglo-American consumers

Ethnic populations are growing in numbers throughout the United States, and retailers today are challenged to develop promotional strategies to reach these consumers. Couponing is one particular sales promotion activity to which ethnic consumers have historically responded poorly. This study examines the responses of African-American and Anglo-American consumers to four types of retail sales promotion—coupons, product displays, feature advertisements, and price discounts. Results show that significant differences exist between African- and Anglo-Americans only in their use of'cents-off'coupons. One implication is that there are possibly some media-related factors contributing to this outcome, since using coupons is the one promotion activity involving media exposure outside of the retail establishment. Thus, there is a need for retailers to plan promotional strategies so that they are effective in reaching the particular ethnic markets which they serve.

Consumers' Attitudes Related to the Importance of Sales Promotion Activities Used by Dentists

This article investigates consumers' attitudes related to choice criteria and sales promotion activities used by dentists. A suggestion of relevant internal and external promotion activities for dentists is provided. These activities include public relations of staff, atmospherics, discounts, complementary services, newspaper columns and public announcements.

Producers' markets: A model of oligopoly with sales costs

A producers' market is one in which individual producers set prices and incur most transaction costs, as they engage in sales promotion or marketing activities. 1 show that non-collusive profit-maximizing behavior leads to the emergence of the lowest marginal-cost producer as the ‘price leader’ (but not as a monopolist) in a simple producers' market for a homogeneous good. The comparative statics of the simple model (which allows no price discrimination or buyer tradeoff between sales promotion and price) suggest that the prevailing price will not be very responsive to demand shocks, or to cost shocks that do not directly affect the price leader, but will respond via a roughly proportional mark-up to the price leader's costs. On the other hand, marketing costs and profits respond almost proportionately to demand shocks.

Promotion Investments that Keep Paying Off

Considers the nature and extent of sales promotion activity. Examines promotions as a method of protecting a brand in the future, various promotion techniques, and how to prepare for the growth of a promotion. Surmises that the trends that have made promotion so prevalent will continue, so brands that utilize franchise and image‐building promotions will reap rewards in the future.

HOW SALES PROMOTION CAN WORK FOR AND AGAINST YOU

Expenditures for sales promotion activities have increased dramatically during the past decade. Along with this added emphasis, however, have come some undesirable effects. This article considers some of the key issues that influence sales promotion decisions. It describes current sales promotion activities, identifies some of the negative consequences of these activities, introduces a cost‐benefit philosophy for sales promotion decisions, and proposes a specific method for making those decisions.

Sales Promotion Effectiveness Can Be Measured

John H. Weber argued in a recent issue of the JOURNAL OF MARKETING that the role of sales promotion in making sales cannot be measured quantitatively, because there are too many unknowns in the market place. He contended that general economic conditions affect consumer response to promotion in unknown, unmeasurable, and unpredictable ways; and he made the same point for local market conditions, competitive reactions, and intra-company factors. The present author takes issue with Weber's views-he asserts that the effectiveness of sales promotion activities can indeed be determined, and that experimental methods can be utilized.

Rejoinders, Commentaries, and Specialized Articles Sales Promotion Effectiveness can be Measured

John H. Weber argued in a recent issue of the JOURNAL OF MARKETING that the role of sales promotion in making sales cannot be measured quantitatively, because there are too many unknowns in the market place. He contended that general economic conditions affect consumer response to promotion in unknown, unmeasurable, and unpredictable ways; and he made the same point for local market conditions, competitive reactions, and intra-company factors. The present author takes issue with Weber's views—he asserts that the effectiveness of sales promotion activities can indeed be determined, and that experimental methods can be utilized.