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The benefit of sales promotions is that they induce choice. However, this benefit may be offset by undermining preference for the brand when it is no longer promoted. Despite the fact that sales promotions have long been employed in marketing practice and researched academically, a clear understanding of the impact of sales promotion on post-promotion brand choice continues to evade brand managers and marketing scholars alike. This manuscript attempts to provide insight on the effects of sales promotions on brand choice. Sales promotions do not affect post-promotion brand choice and loyalty. However, depending upon characteristic of the sales promotion and the promoted product, promotions can either increase or decrease choice for a brand. The empirical results provide insights for crafting sales promotion strategy and for understanding the process by which promotions influence brand choice and loyalty.
The research investigates that brand loyalty and brand choice affected by the Sales promotion in the context of discounting tools. The research is carried out at one of the most leading superstores chain Sainsbury, London. The influence of the sales promotion is examined at different stores of Sainsbury located at different areas in London.
This chapter is an introduction regarding the subject made to create an understanding by the reader, and then it proceeds with describing research background and Aims & Objectives of the research. In last chapter discuss the foundation of the research topic and diagram showing the structure of the dissertation.
Sales promotion lures customers, maintains loyalty, creates excitements, often keyed to patronage, and appeals to channel members. Sales promotion has turn out to be a essential component of communication mix that aim to provide extra worth to consumers. This extra worth generates instant sales volumes (Fill 2005). Sales promotion propose lots of rewards to consumers and producers; various benefits are highlight in the figure 1.1 and talk about in the following paragraph.
Load Up Existing User
Attract New Customer
Trade Up To Better/ Bigger Product
Figure 1.1: Manufacturer-consumer sales promotion objectives
source: Brassington, F. Pettit, S. Principles of Marketing; 1997 (4thed). P, 659)
Manufacturers are continuously attempting to obtain their brand name observed amongst a plethora of manufacturer readily available. Initiatives by organizations are not only directed at acquiring their brand name observed by the customers but additionally to obtain the customer interested sufficient to purchase it on each and every subsequent buying event.
In this context variations with in the results of marketing mix variable in the shoppers with various buying traits, such as loyalty have caught the interest of marketers. Increasing quantity of researchers and marketing practitioners have undertaken systematic attempts to fully understand the connection in between brand loyalty and the components that affect it in the course of the previous couples of decades (lau et al., 2006) utilization of sales promotion directed for the shoppers is one of the components influencing brand choice actions (Dodson, Tybout and strenthal, 1978) that has elevated the curiosity for the marketers who are extensively making use of it to enhance profits. Research have proven that sales promotion posses a substantial effects with in the consumers choice as well. (Mela, Gupta and Lehman 1997; papatta and krishnamurti, 1996) Roughly 70% of the choices about which brand to buy are taken instore.(De Pelsmacker, Gevens and Vanden Bergh, 2001) Whether or not to carry on with all the brand or to change to a different brand is a part of this decision making process. Its not shocking then that organizations wish to fully understand and affect this selection approach. Comprehending the factors influencing current or possible customers buy behavior is important in designing an efficient marketing mix that generates profits. Apart from product or service traits and price promotional attempts are amongst the most well known instrument utilized by producers and retailers to impact this approach. On the other hand a lot from the nature in the results of sales promotion still becomes understood.
Kotler(1997. p,662) illustrate that advertising overheads has been declining whereas sales promotion expenses has been rising. Few years back sales promotion to advertising ratio was about 40:60, but now many of the consumer goods companies allocating 65 to 75 percent of their total budget for sales promotions.
According to Duncan, Sales promotion is an important part of communication mix that passes "one sided non-private messages" to customers (Duncan 2002).
As a part of promotional mix the objectives of sales promotion is to directly linked to the overall marketing strategy (Kotler 2006, 470). Sales promotional tools can largely be classified into value-increasing methods.
Short-term sales promotional objectives can be generally planned to meet by motivating consumersÂ´ to immediate action. However, long-term sales effects are under an academic debate. Research illustrate unreliable outcomes of long-term sales promotion.(Peattie & Peattie 1993)
The aim of sales promotions is to encourage the customer to spend on the promotional item or brand and also retailers or traders to increase stock levels so that customer can get these brands. Promotional and loyalty programs have been designed to encourage consumers to spend more at superstores and also to retain current customers and to attract new customers. (Duncan,2002)
Sales promotions are broadly categorized to value adding (non-price promotions) or value increasing promotions (price-based promotions) (Gilbert and Jackaria 2002) which cause sales increase and product awareness amongst consumers(Fill 2005). Value increasing promotions, such as price deals, coupons and refund offers, change the price or quantity in order to increase the value of the offering. The value increasing promotions are the most commonly used and thus dominate the literature. Value adding promotions do not change the price or quantity, but instead, add value to the overall offering by bundling something extra to it. Examples of value adding promotions are free gifts, complementary products, competitions and sweepstakes.
Due to the development of relationship marketing, Retailers attract and retain the customer by value added products while manufactures trying to get strategic position by using sales promotional techniques
The majority of research workers agree with the fact regarding sales promotion.s raising impact on short-term sales. In spite of this, long-term impact are within an academic discussion and various studies exhibits opposing outcomes. According to Ailawadi (2001), sales promotions possess a positive longterm impact on sales due to the fact promotions convince shoppers to switch brands and to spend money on bigger quantity. Several study indicates that right after a promotional purchase possibility for a repeat purchase is usually lower as compared to following a non-promotional purchase.
Literature determines 5 primary causes pertaining to that. 1st, promotion is usually regarded to be an exterior stimulus and after it is ended up shoppers are less likely to re-purchase (Dodson et al. 1978, Bawa & Shoemaker 1987; in Peattie & Peattie 1993, 257). 2nd, consumers may also get relaxed with the reduced price and demotivated to purchase
with the actual price (Monroe 1973, Winer 1986, Kalwani et al. 1990; in Peattie & Peattie 1993, 257). 3rd, promotions might possibly also really encourage low-probability
buyers to try. On the other hand some people who are certainly not inclined to make repeat purchases and therefore the offers have a negative effect on long-term sales. (Neslin & Shoemaker 1989; in Peattie & Peattie 1993, 257) 4th, price is used as a evaluate of quality for a lot of consumers. In that sense, cut down in the price devalues the brand in the vision of the customers. (Dodson et al. 1978; in Peattie & Peattie 1993, 257) Final, ordinary buyers usually tend to stockpile for the period of a promotion, decreasing the amount of after-promotion buying (Frank & Massey 1971; in Peattie & Peattie 1993, 257).
Various studies has shown that sales promotions enhance the possibility for repeat
purchases. In the event that consumers are satisfied with the product which is being promoted, it is most likely that they may also purchase it after the promotion is finished. (Peattie & Peattie 1993, 257) Davis et al. (1992) consider that price promotions do not have impact on consumersÂ´ quality awareness and promotions do not switch the long-term purchase habits of an established product. Also brand switching and purchase re-timing are under an academic evaluation. Moriarty (1985; in Peattie & Peattie 1993) discovered that promotions possess just a small impact upon brand switching and consumers who perform switch may be those that are usually seeking for the ideal deal and therefore cannot be kept as loyal consumers. Earlier studies has also identified that shoppers just re-time their purchases as per promotional offers (Doyle & Saunders 1985; in Peattie & Peattie 1993, 257).
Based on the prior research, three distinct long-term outcomes of sales promotions
can easily be determined. First, when the promotion strategy has been effective in persuading new buyers it may have a positive effect on long-term sales. On the other hand, when these new buyers that are usually searching for the best deal, it might be that when the offer is finished, there are no long-term results on sales. Third chance is that, in accordance to the reasons mentioned above, promotions may possess a damaging effect on the long-term sales. (East 1997)
The conclusion of several research scholars has been shown in the table 1.1
(Kotler 2006, 470)
Sales promotion is
a part of promotional mix and its objectives are directly linked to the overall marketing
Peattie & Peattie
marketing activities usually specific to a time
period, place or customer group, which encourage a direct response from consumer or
marketing intermediaries, through the offer of additional benefits.
Sales Promotion result to sales increase up to 450 % ,however for limited time
Gilbert,D. Jackaria.N (2002)
Discount and Buy One Get One Free results to brand switching and product trial
as well as stock piling
Alverez,B, Casielles R(2004)
Manufacturers and retailers can make brand choice process easier by sales promotion
Pauwels,K. Slotgeraaf, R (June 2008)
At the introductory stage, creation of awareness for new product is effective by Sales Promotion
Lattin and bucklin,( 1989) quoted by Dawes John (2004)
Consumer price reference decreased by sales promotion and right after promotion duration ends buyer resists to pay actual price, hence sales falls
Lamb et al. (2009)
Coupons is a great approach to motivate buyers to spend again especially when dealing with product trial period it also raise sales
Table 1.1 The role of sales promotion
Source: Table drawn by the researcher
. Research Aim and Objectives
Purpose of this research is to study that are brand loyalty and brand choice is affected by sales promotion in the context of discounting tools.
Researcher has set it aims and objectives in systematic order to meet the purpose of research:
Analysis of sales promotion literature, its types along with its importance in Business.
To analyze how Brand switching, Product Trial, Purchase Acceleration and stock piling caused by various kind of sales promotion
To examine impact of discounting tools (a) Price Reduction (b) By one get one free offer (c) Free sample (d) coupons, at one of the famous retail chain.
To find out which discounting tool is more effective in order to cause brand switching, purchase acceleration, stock piling and product trial and furnish suggestion to retailer and producer London.
Rationale for the Chosen Topic
The researcher has picked to perform research to examine the role of sales promotion in affecting brand loyalty and brand choice, due to the fact marketing experts are allocating a huge volume of funds to promotion based marketing. For example in 1996, $9.5 billion was spent in USA on premium based marketing. (Astous and Jacob (2002, p.1270). Earlier works suggested that rationality in back of this type of huge investment was to provide the brand increased attraction and worth. All of such activities are directed to shift individuals purchasing patterns (Alvarez 2006)
While mentioned in the previous paragraphs that there is a discussion on the function and usefulness of sales promotion. Academics as well as professionals have got deep concern pertaining to the effect of any marketing element. In the event any promotional tool fail in order to obtain its goal, it could damage its performance (Malter Webster, Wanesan, (2005), quoted by Pauwels et al 2008),and reliability (Rust et al 2004, quoted by Pauwels et al 2008).Alvarez and Casielles (2005) state that firms have been getting various sales promotion techniques with the goal of impacting on consumer's purchasing patterns, but these companies get just short term results and fail to obtain long term outcomes in transforming individuals actions.
Keeping in view the previously mentioned imbroglio in regard to usefulness of sales promotion, the analyst has decided to perform this analysis to discover the purpose of sales promotion in causing product switching, product trial, sales acceleration and stock adding, and then suggest a number of techniques to producers and retailers relating to sales promotion techniques to acquire highest possible returns from any promotional approach.
Structure of the Dissertation
This dissertation consist of five chapters, In first chapter Research creating the general background of the topic by giving research background, Aim & objectives shows the purpose and dimension of research and then this chapter present rationale behind choosing the research topic and structure of dissertation.
In second chapter researcher discuss about background of sales promotion theories with the discussion on its affects on brand choice and brand loyalty. The chapter Starts with fundamental definitions of sales promotion as furnished by famous Marketers accompanied by detail debate on the significance of sales promotion and its aspects. The views and finding of many research scholars and marketers concerning brand loyalty, its significance, aspects and affect of sales promotion on brand loyalty and choice has been explained. Chapter ends up at the conclusion particular to research goals
Major involved research process is discussed in third chapter. The chapter begins with research philosophies along with discussion on these philosophies and then explanation on suitable philosophy for research. This chapter also shows design of research, methods for data collection, questionnaires, methods of data analysis, detail of field work, step by step discussion on reliability and validity.
Analysis and presentation of primary data starts the fourth chapter and also shows affect of sales promotion on brand loyalty and brand choice. The data is collected with help of set of questions, which are developed especially to acquire information with respect to various discounting tools. The analyst has made use of detailed statistics, i.e. frequencies as well as percentages for investigating the data.
In beginning of the chapter researcher describe the demographic profile of respondent and then analyze statement of 20 questions inquired about 48 respondent and ends up with the discussion and diagrammatic presentation of crucial results.
Description of finding is done in fifth chapter on affect of sales promotion on brand loyalty and brand choice. On the basis of findings recommendation is forwarded to managers: chapter also discuss the direction of advance research and limitation of present research. In the end chapter discusses that sales acceleration, product trial, stock piling, brand choice and brand loyalty is caused by sales promotion as sales promotion is effective marketing tool.
Research Aims & Objectives
Rationale for Chosen Topic
Definition of sales promotion
Importance and types of sales promotion
What is brand loyalty
Role of sales promotion in influencing brand loyalty
Data collection methods
Sampling, data analysis, field work details, validity and reliability
Summary of key findings
Limitations and future research