Download an overview of price based consumer sales promotional techniques

International Journal of Management Focus |1
AN OVERVIEW OF PRICE BASED CONSUMER SALES PROMOTIONAL TECHNIQUES
B. KARTHIKEYAN
Assistant Professor, Department of Business Administration, Annamalai University, Tamilnadu
Dr. N. PANCHANATHAM
Professor and Head, Department of Business Administration, Annamalai University, Tamilnadu
Abstract
Sales promotion is an important component of a company's marketing communication strategy
along with advertising, public relations, and personal selling. At its core, sales promotion is a marketing
activity that adds to the basic value proposition behind a product for a limited time in order to stimulate
consumer purchasing, selling effectiveness, or the effort of the sales force. Consumer promotion is a category
of sales promotion including free samples, winning contests, different price packs, and sweep stakes. The
concept of price is mostly linked with the consumer perception about sales promotion, because sales
promotion is in fact ultimately a reduction in the price of the product or the amount of resources spent by
the consumer. This paper has dealt the price based sales promotion and its issues.
INTRODUCTION
Sales promotion is one of the seven aspects of the promotional mix that adopts short term, nonrecurring methods to boost up sales in different ways. In order to understand the basic role and function
of sales promotion, one must differentiate between sales promotion and other components of the
marketing mix. Sales promotion usually operates on a short timeline, uses a more rational appeal, returns
a tangible or real value, fosters an immediate sale, and contributes highly to profitability.
Consumers have accepted sales promotion as part of buying-decision criteria. Primarily, sales
promotion offers consumers the opportunity to get more than they thought possible. Furthermore, many
people are reluctant decision makers who need some incentive to make choices. Sales promotion gives
them the extra nudge they need in order to become active customers. Sales promotion offers have become
an integral part of the buying process, and consumers have learned to expect them.
NEED OF SALES PROMOTION
The progression of sales promotion has been spurred by business, especially big business. Top
managers and product managers have played direct roles in encouraging the recent growth of sales
promotion. The product manager's goals and desires have provided the initial impetus. Product
managers are challenged to differentiate their product in a meaningful way from competitors' products
because buyers have many choices among brands and products offering similar satisfactions. Sales
promotion techniques provide solutions to this dilemma. Heads of companies today focus increasingly
on short-term results. They want sales tomorrow, not next quarter or next year. Sales promotions can
provide immediate hikes in sales.
PRICE BASED CONSUMER SALES PROMOTIONAL TECHNIQUES
1. PRICE DEALS:
A consumer price deal saves the buyer money when a product is purchased. The price deal
hopes to encourage trial use of a new product or line extension, to recruit new buyers for a mature
product, or to reinforce existing customers' continuing their purchasing, increasing their purchases,
accelerating their use, or purchasing of multiple units of an existing brand. Price deals work most
effectively when price is the consumer's foremost criterion or when brand loyalty is low. Four main types
of consumer price deals are used: price discounts, price pack deals, refunds or rebates , and coupons .
2. PRICE DISCOUNTS:
Buyers learn about price discounts and cents-off deals either at the point of sale or through
advertising. At the point of sale, price reductions may be posted on the package or signs near the product
or in storefront windows. Ads that notify consumers of upcoming discounts includes fliers, newspaper
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July – Sep’2012
and television ads, and other media. Price discounts are especially common in the food industry, where
local supermarkets run weekly specials.
Price discounts may be initiated by the manufacturer, the retailer, or the distributor. For instance,
a manufacturer may "pre-price" a product and then convince the retailer to participate in this short term
discount through extra incentives. Effectiveness of national price reduction strategies requires the
support of all distributors. When such support is lacking, consumers may find that the manufacturer's
price is covered by the retailer's price, bearing witness to the power of retailers.
Existing customers perceive discounts as rewards and often then buy in larger quantities. Price
discounts alone, however, usually don't induce first time buyers. Other appeals must be available, such
as mass media ad exposure or product sampling.
3. PRICE PACK DEALS:
A price pack deal may be either a bonus pack or a banded pack. When a bonus pack is offered,
an extra amount of the product is free when the product is bought at the regular price. This technique is
routinely used for cleaning products, food, and health and beauty aids to introduce a new or larger size.
A bonus packs rewards present users but may have little appeal to users of competitive brands. It is also
a way to "load" customers up with the product.
When two or more units of a product are sold at a reduction of the regular single-unit price, a
banded pack offer is being made. Sometimes the products are physically banded together, such as in
toothbrush and toothpaste offers. More often, the products are simply offered in a two-for, three for, or
ten-for format. In other cases, a smaller unit of the product may be attached to one of the regular size.
REVIEW OF LITERATURE
Sales promotion is projected to increase the sales of final ultimate consumers of the product
(Kotler and Armstrong, 2002). Some kinds of sales promotion are based on some sort of benefit whereas
some are very communicative in type (Kotler P, 1999). In the field of marketing it is often believed that
perceptions are stronger than reality; because consumers make decisions based on their perceptions of
various stimuli (Rizvi S N Z et al, 2011).
The content of price promotion, such as some of communication message is referred as message
framing. Many studies has focuses on different types of promotion discounts of consumption behaviors,
for example price discounts, bonus packs, price presentation (dollars, cents-off, percentage-off and
revised price), discount location (proximal, distal) (Chen et al., 1998 DelVecchio et al., 2009; DelVecchio et
al., 2007; Hardesty andBearden, 2003), but this study focuses on only percentage discounts.
PRICE BASED PROMOTIONS
The Indian consumer is changing rapidly particularly in durable market. They now have a
choice of wide range of products, quality and prices. Organized retailing is changing the whole concept
of shopping in terms of consumer buying behavior. Shopping today is much more than just buying it is
an experience itself (Patel V et al, 2009). Given the growing importance of sales promotion, there has been
considerable interest in the effect of sales promotion on different dimensions such as consumers’ price
perceptions (Manalel J et al, 2007). In this context, it is much more necessary to study the major benefits
consumers perceive to derive out of some marketing programmes like sales promotion.
Promotions of such indefinite price discounts are referred to as tensile price claims (TPC), and
are defined such that “the exact discount is not specified for any one particular product and is thus
ambiguous to the consumer” (Choi and Kim, 2007, p. 469). Upon visiting a retailer, consumers will
discover that specific products fall into the discount range at predetermined rates; for example, television
prices may be reduced by 10 percent while socks may be offered at 50 percent savings.
The subjective price knowledge of a consumer is thought to be one major determinant of how
price promotion benefits are perceived. Price knowledge should enable a consumer to better evaluate
prices and the benefits of price promotions (Evanschitzky, Kenning and Vogel, 2004). One important
question, however, is whether this assumption holds true when price promotions include more than one
price component or different price dimensions, which have to be evaluated. Leasing offers, for example,
normally require an assessment of different price dimensions; even more difficult for the consumer is the
promotion of special edition models as price evaluation has to be combined with an evaluation of
different product components (Herrmann and Wricke, 1998).
Price discounts offer economic benefits to consumers, influence consumer’s decision. Perceived
value can be defined as the customer’s assessments of the benefits acquired relative to the perceived price
(Chandrashekaran, 2004). Thaler (1985) used mental accounting theory based on prospect theory. The
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accounting systems often influence decisions in unexpected ways. In the discount framing of order effect,
consumer has different positive feelings and emotions, which will increase purchase intention. The
psychology of consumer psychological status and choice adds a potentially chief dimension to price
framing.
Sales promotion stems from the premise that any brand or service has an established perceived
price or value, the "regular" price or some other reference value. Sales promotion is believed to change
this accepted price-value relationship by increasing the value and/or lowering the price. Familiar
examples of consumer sales promotion tools include contests and sweepstakes, branded give-away
merchandise, bonus-size packaging, limited-time discounts, rebates, coupons, free trials, demonstrations,
and point-accumulation systems.
CONCLUSION
Sales promotion techniques are distinct from most other forms of marketing in that they directly
link the strategy and execution of a marketing campaign. They are geared toward creating an immediate
boost in sales volume in response to a substantive offer in the promotion (discount, premium, etc.). As
opposed to advertising to build brand image or name recognition, sales promotion is nearly always tied
directly to the act of buying the product or service in question. As such, sales promotion is considered an
efficient and effective vehicle for marketing communications. For consumers, sales promotion provides a
direct and often rational motivation to purchase the product or service being promoted.
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