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Critically analyse the view point that priced-based Sales Promotions can have a damaging effect on a brand. ...
To properly answer the question above I believe it is crucial to first give an insight in to what sales promotions are and why they have become increasingly important over recent years.
Sales Promotions are “a direct inducement that offers an extra value or incentive for the product to the sales force, distributors or the ultimate consumer with the primary objective of creating an immediate sale” (BELCH & BELCH 2001 p524, Quoting HAUGH J).
Over recent years there has been a dramatic increase in the usage of sales promotion by companies. ... It is much easier to account for sales promotions than other promotional tools such as advertising, which is more of a long-term investment. Finally probably one of the main factors why a company will use sales promotions such as priced based promotions is they want to increase their advantage in the market place over their competitors.
So what are priced based sales promotions? I am going to concentrate to begin with on trade and the promotions, which are offered to retailers by manufacturers. Although it does not answer directly the question I believe it is crucial to give an understanding of the sales promotion relationship between both parties. ...
Trade allowances are by far the most common form of trade promotions they act to “reward wholesalers and retailers for performing activities in support of the manufacturers brand” (SHIMP 2000 p533). ...
Although it has become apparent that retailers do not always pass on the savings to the consumer after they have received the priced based sales promotion from the manufacturer. ...
I am going to start with looking at the priced based sales promotions offered to that of the consumer. ...
There is also no evidence to prove that consumers will change their buying habits permanently after the coupon sales promotions “consumers revert to their pre-coupon brand choice immediately after redeeming a competitor brand coupon” (SHIMP 2000 P568). ...
The next type of priced based sales promotion I am going to look at is price off; this is under the bracket of a consumer deal. ... There are many uses for this price based tool for example to reward brand users, to remove consumers from the market by loading them with products, to encourage retrial after new consumers have just tried the product or maybe even to gain extra shelf display (SHIMP 2000).
There a number of draw backs with this method as there are with all priced based promotions. They are not strong enough to reverse negative sales trends and they do not attract as many trial users as other forms of sales promotions such as sampling. ...
Some other examples of priced based consumer deals are refunds and rebates. ...
So are these types of priced based sales promotions damaging to the manufacturers brand? I have looked at each of the priced based promotions individually and the problems and misgivings they have. ...
Many researchers suggest that priced based sales promotions are considerably damaging to a company and many companies misuse them greatly. ... They will then move onto another brand, which is either lower priced or likely to be on promotion, as they believe that the value of the brand is worth more in comparison.
Approximate Word count = 2670
Approximate Pages = 10.7
(250 words per page double spaced)
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