Role Of Sales Promotion

Sales promotions are action-focused marketing events whose purpose is to have a direct impact on the behavior of the firm’s customers. There are three major types of sales promotions: consumer promotions, retailer promotions, and trade promotions. Throughout the world, sales promotions offered to consumers are an integral part of the marketing mix for many consumer products. Increasing importance of sales promotions as a percentage of the total advertising and promotional budget and increasing at a rate of 12 percent per year over the last 10 years, studies that strive to understand the impact of sales promotions on consumers are very important. An advertising strategy is a campaign developed to communicate ideas about products and services

The term advertising is constantly referred to as 'above the line expenditure ' and can be defined as all non-personal communication in measured media. This includes television, cinema, radio, print and outdoor media. Sales promotion, for which the term 'below the line expenditure ' is used as a synonym, is not easily defined. In practice sales promotion is a specific activity, which can be defined as the making of a featured offer to certain customers within a specified time period. This means that to qualify as sales promotion, someone must be offered something which is featured rather than just being an aspect of trade.

Strategic role of sales promotion

Because sales promotion is essentially used as a tactical device, it often amounts to a series of unconnected gimmicks to lacking any coherence. Contrary to this advertising has been always considered as a strategic process of building brand value over the longer term. Compare this against sales promotion which is commonly used to help the company retain a tactical advantage.

One of the most difficult marketing decisions facing companies is how much to spend on promotional John Wanamaker, the departmental - store magazine, said, "I know that half of my advertising is wasted but I don 't know

Third, it encourages the competitive stability to the extent that competing firms spend approximately the same % of their sales on promotion.

Inspite of the advantages, the % sales method has little to justify it. Its reasoning is circular: It views sales as the determiner of the promotion rather than as a result. It leads to budget setting by availability of funds rather than by marketing opportunities.

• Competitive Parity Method:

Some companies set their promotional budget to achieve share-of-voice parity with other competitors. Two arguments are made in support of competitive parity method. One is that the competitor’s expenditure represents the collective wisdom of the industry. The other is that maintaining a competitive parity helps prevent promotional wars. Neither argument is valid. There are no grounds for believing that competition knows better what should be spent on promotion.

• Objective and Task Method:

The objective & task method calls upon marketers to develop their promotion budgets by defining their specific objectives, determining the task that must be performed to achieve these objectives, and estimating the cost of performing these