Sales Promotion Strategies Research Articles

Effect of product category on promotional choice: comparative study of discounts and freebies

PurposeMarketers have been using discounts and freebies for sales promotion strategy for a long time, yet a dilemma concerning better promotion remains. The paper tries to address this issue through empirical research by classifying sales promotion based on their utility and relatedness to the product to which they are bundled.Design/methodology/approachTwo hypotheses were drawn: there is a distinctive preference of sales promotional offering, when it is bundled with a product, and the preference of promotion varies with the product category it is bundled with; discounts by retailers are preferred over advertised discounts, but they negatively affect the credibility of the product The hypotheses were tested by a double‐staged experimental protocol. The first stage standardized the perceived price of the freebies, and the second stage consisted of a 2 × 2 × 2 mixed model experiment. The first hypothesis was tested with Friedman's Test and Wilk's λ, and the second hypothesis was subjected to t‐test and factor analysis on a four‐item scale.FindingsPromotion type influences the rate of increase in market demand and is product category dependent. Promotional offerings which can be readily converted into monetary terms are more preferred to freebies but in the long‐run, they can affect the overall value of the product. Retailer discount is preferred over advertised discount but has a negative perception. Hedonic freebies are least preferred; but have a higher perceived value.Research limitations/implicationsThe study deals with the promotional choice of consumer durables and consumables. It is applicability to other product categories needs confirmation.Practical implicationsThe findings can be useful for marketers in designing promotional strategies, especially in the consumer retail segment, new product marketing and brand extension situations.Originality/valueThe paper will help marketers design better and appropriate promotion vis‐à‐vis a product and its target consumers.

Sales promotion strategies and belief in luck

AbstractThe effect of buyer belief in good luck on the propensity to select a sales promotion strategy involving a lucky draw (e.g., sweepstakes) is investigated using a sample of 699 individuals in Hong Kong. Using subscales from Darke and Freedman's (1997b) Belief in Good Luck Scale, it is found that a belief in being personally lucky is associated with selecting a lucky draw over other sales promotions options, but that a general belief in the phenomenon of luck is not. Moreover, it is found that perceived utility of the lucky‐draw prize is consistently associated with the option to select a lucky draw over other sales promotion strategies. © 2008 Wiley Periodicals, Inc.

SPECIALIZED SEMINARS AS AN ELEMENT OF SALES PROMOTION TOOL IN IT ENTERPRISES IN CROATIA

Increasingly dynamic and competitive marketing environment places new demand on companies trying to promote and sell professional products and services such as ICT. The main focus is on changing the emphasis away from broad based marketing to more specialized forms of active selling. Event based marketing, especially in the form of seminar selling may present an effective opportunity which can be adopted by company in order to ensure winning of the maximum number of profitable new clients at minimum cost and nurture relationship with the existing ones. Recent research shows that the Croatian ICT market is continuously growing. Companies oriented to specific target markets, like the ICT one, can chose most acceptable among diverse forms of promotion, in accordance with their financial possibilities, and the type of products and services they offer. During specialized seminars, workshops, lectures, congresses and fairs, ICT companies can present all details underlying their complex processes and projects, which is yet another manner of creating an added value. Therefore, this form of promotion has a significant role in the marketing mix of ICT companies. Compared with personal advertising and selling there is much more time, human and financial resources required in order to prepare and carry out specialized seminars. However, contribution to the creation of the long-term customer relations is their advantage. Specialized seminars are definitely capable of increasing the sales of ICT companies. This paper presents results from the empirical research undertaken on representative sample of the Croatian ICT companies with the objective to explore their sales promotion strategies. The main target of research was to find out the efficiency and rate of adoption of a seminar selling methods in the ICT sector on the Croatian market.

Embedded Premium Promotion: Why It Works and How to Make It More Effective

In this paper we define an embedded premium (EP) as an enhancement that involves a social cause added on to a product or service. We characterize EP as a sales promotion strategy and juxtapose it with traditional approaches, such as discounts and rebates. Across three experiments, using a nationwide Internet panel and employing stated measures and model-based inference, we find that at low denominations EP is more effective than an equivalent price discount. We describe how an EP’s social association may influence consumer choice quite differently than price promotions and, contrary to the asymmetric price promotion effect documented in the promotions literature, we find that EP benefits an unknown brand more than a known brand. Our hierarchical Bayes approach uncovers heterogeneity in EP effectiveness that can be explained by affinity toward the focal charity, personal motivations, and demographic markers. An identifiable segment of individuals prefer the “other” over “self,” suggesting possible EP optimization and segmentation strategies. Two such strategies, customization and coverage, are empirically tested, and the former is shown to be very effective. Our findings have broad implications for brand managers with regard to resource allocation and EP program return on investment (ROI), as well as important social welfare implications.

From Fatwallet to eBay: An investigation of online deal-forums and sales promotions

Abstract Sales promotions are an important part of retail advertising strategy. Traditionally, research on sales promotions has generally assumed that the buyers are end consumers who do not engage in reselling, in large part due to high transaction costs. However, the recent Internet related technologies have dramatically lowered the cost of transferring goods between consumers, leading to relative ease of reselling activity amongst individual consumers. Little is known about the impact of this phenomenon on retailer's sales promotion strategy. In this research we investigate the reselling activity in online auctions for products that active deal seekers can obtain at deeply discounted prices from retailers. We further investigate the role of deal-forums in the resale process. Data is collected from an online deal-forum ( http://www.fatwallet.com/ ) and eBay to test various reselling-related hypotheses. The results show that there is a significant abnormal increase in the number of newly posted auctions of a product after the deal information of this product is posted on deal-forum website. We also find that there is a significant price incentive for individuals to resell. The implications for sales promotion research and practice are discussed.

Sales Promotion and Cooperative Retail Pricing Strategies

Supermarket retailers make strategic pricing decisions in a high-frequency, repeated game environment both in buying and selling fresh produce. In this context, there is some question as to whether a non-cooperative equilibrium can emerge that produces margins above the competitive level. Supermarket pricing results from tacitly collusive equilibria supported by trigger price strategies played in upstream markets. Upstream activities are, in turn, driven by periodic retail price promotions. This hypothesis is tested using a sample of fresh produce pricing data from 20 US supermarket chains. The results support the existence of tacitly collusive non-cooperative equilibria in upstream and downstream markets.

On-line personalized sales promotion in electronic commerce

Electronic Commerce encompasses all electronically conducted business activities, operations, and transaction processing. With the development of electronic commerce in the Internet, companies have changed the way they connect to and deal with their customers and partners. Businesses now could overcome the space and time barriers and are capable of serving customers electronically and intelligently. However, it is quite a great challenge to attract and retain the customers over Internet due to the low barrier of entrance and severe competition. Personalization, a special form of differentiation, when applied in market fragmentation can transform a standard product or service into a specialized solution for an individual. In this research, an on-line personalized sales promotion decision support system is proposed. The proposed system consists of three modules: (1) marketing strategies, (2) promotion patterns model, and (3) personalized promotion products. The marketing strategies contain sales promotion strategies and pricing strategies. Promotion patterns are generated according to various sales promotion strategies, and the promoted prices for the promotion products are generated by considering both the current stages of business life cycle and product life cycle. In the promotion patterns model, by segmenting the market, customer behaviors of three categories can be analyzed by utilizing data mining techniques and statistical analysis to generate personalized candidate promotion products. Finally, multiple evaluation indicators are used and adjusted to rank and obtain the final personalized promotion products. With the promotion products based on customers' past frequent purchase patterns, it has the potential to increase the success rate of promotion, customer satisfaction, and loyalty. In this paper, a prototype system was developed to illustrate how the proposed on-line personalized promotion decision support system works in electronic commerce and a simplified case of performance analysis was conducted for evaluation.

VONNA(HBP)

ABSTRACT In this paper, a new learning package, VONNA(HBP), which provides an interactive and online environment for novices to study and practice hotel budget planning, is introduced. Its design philosophy will be discussed thoughtfully with special focus on how to make use of the multimedia and Internet. According to literatures, learning packages are faced to be more effective in delivering teaching material. Researchers indicate that students using a self-paced learning package score higher than in a traditional classroom setting. Moreover, the learning package provides different scenarios for students to explore themselves in a practical environment and is more cost effective and systematic than lectures. Currently, most learning packages in hotel education are not implemented using multimedia with Internet access. Our paper describes a new learning package that fills the gaps. VONNA(HBP) requires participants to investigate operational budgets on various areas such as sales levels, payroll, inventory level, promotion strategies, and facilities planning, etc. Eventually, the students/novices are required to practice their skills in a comprehensive case about a hypothetical hotel. They need to solve managerial problems by a combination of budgetary planning on human resources, staff training programmes, facilities' maintenance and replacement, or promotion schemes. Analytical tools are available for students/novices to judge an appropriate decision in handling constrained resources.

Time Pressure and Information in Sales Promotion Strategy: Conceptual Framework and Content Analysis

The purpose of this study is to investigate differences in time pressure and information between two broad classes of promotional offers: (1) “advanced receipts” in which consumers are encouraged to expedite the purchase of a good or service to take advantage of coupons, rebates, price-offs, premiums, etc.; and (2) “delayed payments,” in which consumers are urged to “buy now and pay later.” A content analysis of 222 promotional offers was conducted using the time and outcome valuation model as a theoretical basis for understanding the role of time pressure in terms of time allowed before the offer expiration as well as copy and information in these different types of promotional offers. The findings indicate that delayed payment offers allow less time to participate than advanced receipt offers, have more time pressure copy for those promotional offers giving a deadline and provide more information.

EVALUATING CROSS‐NATIONAL SALES PROMOTION STRATEGY: AN AUDIT APPROACH

Sales promotion is an important element of marketing communication strategy which accounts for more promotional expenditures than advertising in some countries. However, sales promotion has been generally ignored by researchers. This article briefly reviews the criteria used in the US to evaluate sales promotions and these criteria are found inadequate to guide the formulation of sales promotion internationally. Environmental sensitivity factors are identified which are overlooked in domestic sales promotions and an audit approach to planning and evaluating cross‐national sales promotion strategy is presented.