Sunday, August 5, 2012

Advantages & Disadvantages of Sales Promotions

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The biggest advantage of sales promotions are that, if they are done correctly, they can

stimulate and increase consumer purchases and develop or improve retailer or

middlemen efforts to stock and sell a product. A sales promotion can be coupons, gifts,

samples, in-store promotions, contests or sponsorship of special events (sporting events,

fairs, etc.) In markets where consumers may be hard to reach through regular

advertising channels, a sales promotion is necessary and very effective. Sales

promotions are generally seen as fun and can have long-lasting ifavorable mpressions on


In addition, another advantage is that sales promotion activities may be narrowly

targeted to consumers and/or offered for only a short time before being dropped or

replaced with more permanent efforts. This flexible nature of sales promotions makes

them ideal for a marketing campaign tailored to fit local customs and circumstances. For

example, Philip Morris, British American Tobacco, & R.J. Reynolds competed in the

Taiwanese market by handing out free cigarettes, a practice not utilized in the U.S.

market. Both Philip Morris and R.J. Reynolds built market share by offering Korean

consumers free cigarette lighters and desk diaries with the firms logos in return for

cigarette purchases.

One of the disadvantages is that the success of a sales promotion may depend on local

adaptation. Since cultures have an impact on any type of advertising/promotion,

marketers must ensure that the type of sales promotion they have selected for a

particular country is not a prohibited activity. Since some local laws do not permit free

gifts, coupons, premiums or discounts, marketers must thoroughly research the countries

before undertaking sales promotions. Another disadvantage may be the cost of sales

promotions. The up-front costs may be high; however successful sales promotions can

reap rewards many times over in the long run. Companies just need to be able to make

the investment in the up-front costs.

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