Advantages and Disadvantages of Sales Promotion

18/02/2021 1 By indiafreenotes

Advantages of Sales Promotion

Strengthens Customer Involvement and Loyalty: Sales promotion can be the primary mechanism organizations use to interact with their customers and ultimately build a stronger connection (e.g., offer customer rewards).

Helps Create Awareness of New Products: Sales promotion is a highly effective methods for exposing customers and business partners to new products and for moving customers to take an action (e.g., sample a product).

Can Be Quick to Develop: Compared to other types of promotion, some sales promotions can be quickly created and made available within a market (e.g., creation and distribution of email coupon).

Helps Reduce Inventory: Sales promotion can be used to rapidly reduce inventory in situations where product replacement is needed (e.g., products nearing expiration date; clearing inventory to make room for new models).

Used to Support Other Promotions: Sales promotion is often used as a supporting feature of other methods of promotion (e.g., salespeople may give promotional items to give to sales prospects).

Disadvantages of sales promotion

  • As the sales promotional activities are short-lived, the results of such activities will also be short-lived. The moment the various inducements offered by the marketer are withdrawn, the demand is bound to fall.
  • The number of sales promotional activities to be performed are too many, distribution of free samples and gifts, making such offers as price off and money refund, holding contests, participating in trade fairs and exhibitions, display and demonstration of goods and so on.
  • As far as the various types of discounts (cash discount, off-season discount and festival discount etc.) are concerned, there is always a feeling that these are not real and the price would have already been hiked.
  • Sales promotion offers such as price cut, discount, free gift etc., may sometimes create an impression that these are being done to sell a poor-quality product.
  • Sales promotion is generally required to promote sales of those brands which are not so very popular. Popular brands move fast in the market without much effort. Brand popularity can be secured mainly by means of advertisement and personal selling.
  • Another drawback of sales promotion is that there is a tendency on the part of all the competitors to use the same method of sales promotion at the same time. Such an approach may not benefit all. For example, if all the manufacturers of air-conditioners offer off season discount (during winter), the consumer may only decide based on brand popularity.
  • The marketer cannot use any sales promotional tool at any time. Certain tools are to be used only in the introduction stage of a product, while others will be used in the growth and maturity stages. Indiscriminate use will not produce the expected results.
  • Sales promotion, by itself, cannot produce results. It can only supplement advertising and personal selling which are vital for a business.
  • It involves additional expenditure on the part of the business. Apart from the heavy expenditure to be incurred on advertisement and personal selling, the business may have to spend further on sales promotion. This leads to an overall increase in promotional costs.
  • Sales promotion is non-recurrent in nature. It cannot, therefore, be used continuously. The marketer has to select the most appropriate tool of sales promotion and the same shall be introduced at the right time.