In the big picture, promotion is anindispensable component of Marketing Mix. Marketing is the process of planningand implementing the concept, pricing, promoting activities and delivery ofideas, products and services to generate exchanges that fulfill individual andorganizational goals. A good job at customer relationship management will leadto exchanges. Exchanging process will take place when there are no less thantwo parties that want to offer their potential value to the other.
The momentwhen two parties communicate and deliver their goods and services, exchange canhappen. Marketers can use right promotion techniques to stimulate exchange andincrease the happening frequency1. Sales promotions is a part of the 4Ps(Price, Place, Product, Promotion) in the marketing mix.
It either aims at theconsumers (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 thatis activated in a fixed time interval with several goals, such as launching anew product (trial), inducing consumers to stockpile, increasingin-store/online traffic, improving product availability2.Simply put, the primary goal of salespromotions is to compose an instant unplanned need by adding an additionaladvantage to buy the product.Sales promotion, therefore, is designed to be used as a short-term tactic tostimulate sales, generatebrand image and awareness, retaining customers, generating Web traffic, andfacilitating the capturing of information about the target public. Whenimplementing a sales promotion campaign, business must carefully havecalibrated following factors to achieve the purpose.
Firstly, whether the costof the promotion can justify the resulting sales increase expenditure, or if itis worth accepting a loss but increase the level of brand awareness. Secondly,before launching a promotion campaign, marketers cannot only pay attention tothe short-term sales revenue increase amount, but must ensure the coherencebetween sales promotions campaign and the brand image. Because, for example, aheavy discount on a product may lead to some negative long-term damage to thebrand. In case of start-ups, companies that use too many promotion programs inorder to viral their brand during the soft opening may lead to the adverseeffect that consumers may misunderstand the brand concept. While the companiesare products or services oriented but appear promotions oriented, and consumersoften perceive products with promotions as products with lower quality thancompeting brands. Thirdly, before implement a promotion program, marketersshould take the promoting duration and promoting frequency into account.
Holding promotions too frequently will habituate consumers to purchase onlywhen promotions are activated. Will the program induce consumers who willcontinue to purchase in the post-promotion period, or will it be onlyattractive to people who always look out for a bargain when promotions are ineffect3. However, when the battle in reachingthe customers’ attention amongst companies becomes more intense than ever,companies still need to apply promotion programs.
According to CaliforniaManagement Review, consumer promotions have three distinctive characteristics:communication, economic motivation, and emotional attractiveness. Communicationcan draw attention from customers, and provide information about the productsor services being promoted. Economic incentives offer additional value to theproduct by combining some discounts and enticement. While emotionalattractiveness appears as a distinct invitation that engages customers in the dealnow 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 generateextra revenue to pay for the expenses.
A short sale which clears out thestockpile but, with added advertising expenditure, decreases margin is afailure4. Sales promotions is a robust marketingtool, but with 2-side effect. They can be an essential power for brands, notonly to gain new consumers, save the exists, but also create advocacy fromexisting consumers by converting them to loyal fans.
On the other hand, promotionsmay erode the brand equity by directing consumer’s perception intensively onprice. Nevertheless, staying away from promotions altogether will givecompetitors a chance to draw customers away.