Sales Promotion Impact on customer buying behaviour

8/10/2019 Sales Promotion Impact on customer buying behaviour

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Effectiveness of Sales Promotion on

the Buying Behavior of Customers


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Introduction

In a competition world a business cant survive if its products unable tofetch its customer in the market. Thus all sort of marketing tacticsare undertaken to maximize sales and offering incentives to itscustomer is one of the way to attract customers to buy the product.Thus, sales promotion is important to increase the sale of anyproduct.

Every businessman wants to increase the sale of goods. There aremany offers in the markets notices of winter sale, summer sale,trade fairs, discount upto 50% and many other schemes to attractcustomers to buy certain products.

These offers are not available to the customers throughout the year.During festivals, end of the seasons, year ending and some otheroccasions these schemes are generally found in the market.


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Objectives

To analyze the customers typeof buying decision in response tosales promotion strategies.

To explore logic behind such sales promotional activities by

examining consumer behavior.


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Sales Promotion Concept

Sales promotion includes incentive-offeringand interest-creatingactivities which are generally short-term marketing eventsother thanadvertising, personal selling, publicity and direct marketing.

The purpose of sales promotion is to stimulate, motivate and influence

the purchase and other desired behavioral responses of the firmscustomers.

Sales promotion offers a direct inducement to act by providing extraworth over and above what is built into the product at its normal

price.


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Tools of Sales Promotion

Commonly used tools of sales promotion are

(i) Free samples:

(ii) Premium or Bonus offer:

(iii) Exchange schemes:

(iv) Price-off offer:(v) Coupons:.

(vi) Scratch and win offer:

(vii) Money refund offer.


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Buying Behavior


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Need recognition

Occurs when a person feels a gap between his actual sate and a

desired state.

Arises due internal and external stimuli: internal stimulus

E.g. hunger will push a certain person to search for a meal.

A new ad of a new luxurious car represents an external stimulus that willmake an individual to feel that there is a discrepancy between the new,

state of the art car and his/her old car.

Magnitude of the gap between the actual and the desired state and

relative importance of the recognized problem, will make a person

eager to overcome the discrepency. (Hawkins et al 2004:504-507).


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Information search

Seek searching for information about the different brands

and the different alternatives available.

The amount of search carried out depends mainly on the

importance of the product and its price.

Information could be acquired from sources like :-

Personal experience with using such products.

Surrounding environment like

Family.

Friend Colleagues

Commercial sources like :-

Printed and TV ads.

Packaging displays.

Dealers,


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Evaluation of alternatives

At this stage customer evaluate several available alternatives.

This necessitates the use of a certain evaluative criteria.

Customer facing the decision of the purchase of a new car. Interested in three features:

Price,

Warranty Fuel economy.

This customer will value the options available for him and select the one

that best fits his desires. The example represents an attr ibute-based

alternatives evaluation.

A customer who is examining the attributes of alternatives to pick the one

that best fits him/her is carrying out an attribute-based alternatives

evaluation process.

If a customer loves a certain brand and goes for it directly, then he/she has

made an att i tude based choice


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Purchase decision

Other factors are influencing on consumer buying behavior

Attitudes of others:

It is the other consumers opinion and preference regarding certain

brand.

Other consumers could be member in a family or friend, who may

influence on consumers decision making and change their brand

preference.

Unanticipated factors: For instances Functional risk: the product may not perform as it was expected

Physical risk: the product may have a negative influence on consumers health

Financial risk: the price of product is higher than the products value.

Psychological risk: the product may influence on consumers psychology.


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Post purchase evaluation

At this stage the customer starts to test the product and

will end up by being satisfied or dissatisfied by that

experience.

Degree of satisfaction or dissatisfaction is the degree of

discrepancy between what expected from the product

and its current state.

Expectations Product performs Degree of Satisfaction

High Low Disatisfied

Low High Satisfied


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Effects Of SP Offers On Buying Behavior

For certain current brand users will purchase their product inhigh er

quanti t iesfor their future needs and wants.

Consumers of competing brands may switch and purchase other

branded products because of the reduction in the product price.However, repeat purchase by these consumers is not known.

Purchasing a product they did no t need

Purchasing a product they have never tr ied before since its value is

very high and wants will be satisfied with minimum cost and risk.

Purchasing sooner than u sual and later than usu al


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Sales promotions are playing an important role in consumer

percept ion.

According to self-perception theory consumers prefer to purchase products

based on external attributes, which is taking advantage of price reduction,

instead of internal attributes, which is brand preferences.

However, the main weakness point of sales promotion in influencing consumerbuying behavior is that

Consumers mainly build a reference based on the previous prices of the product.

Then this reference is used to compare between the current price of this product

and pervious prices as well.

Using sales promotion is mainly increasing the degree of

hesi tat ion to b uy a certain brand in i ts non promot ion period.

As a result it may increase sales for sho rt term.

but it influence negatively on brand equityin long term.


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Sales promotion does not h elp to sw i tch brand loyal buyers to

other brands.

Sales promotion is more eff ic ient than advert is ing in influencing

consumer buying behavior.

A real life example which is AKAI in India used heavily sales promotion when

they offered good trade in value on black and white TV sets at buying a new

color TV. In matter of fact, AKAI become a market leader when they did such

strategy


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Conclusion

Consumer buying behavior is influenced on its pre purchaseevaluation and purchase stages by sales promotions.

Sales promotion has only short term effect on consumer buyingbehavior

It is a tool that encourages consumers to try a new product.

The main aim of using such marketing tool is increasing sales inshort run.

Sales promotion is used when certain company launch a newproduct.

If this new product exceeds customers expectations, it will lead tocustomer satisfaction and may be lead to customer loyalty.

Sales promotions are not only effective in attaining short-term salesas they are also more cost-effective compared to other integratedmarketing communications tools such as advertising.

Sales promotion tools are supplementary or complementary toexisting business as an additional marketing strategy.


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References

Gupta, S. and Cooper L.G. (1992) The discounting of discounts and promotionThresholds, Journal of consumer research, 19 (3), 401-411

Gupta, Sunil: Impact of Sales Promotions on When, What and How Much to Buy.Journal of Marketing Research 25 (November 1988): 342-355

Huff, Lenard C. and Alden, Dana L.: An Investigation of Consumer Response toSales Promotions in Developing Markets: A Three-Country Analysis," Journal of

Advertising Research (May-June 1998): 47-56.

Kotler, P (2002), Marketing Management .Prentice-Hall publication Landler, Mark andDeGeorge, Gail: What Happened to Advertising?. Business Week (September 23,1991): 66-72.

Mela, C.F, Gupta, S. & Lehman, D.R. (1997) The long term impact of promotion andadvertising on consumer brand choice. Journal of Marketing research, 34(May), pp.248-261.

Michael J. Dotson, Sales Promotion Preferences: A Demographic AnalysisAppalachian State University Eva M. Hyatt, Appalachian State University

Shimp, Terence A. Advertising Promotion: Supplemental Aspects of IntegratedMarketing Communications (Fifth Edition), Dryden Press, Fort Worth, TX. 2000.

'Simonson, Itamar: The Effect of Product Assortment on Buyer Preferences. Journalof Retailing 75(1999): 347-370.

Zeithaml, Valerie A.: Consumer Perceptions of Price, Quality, and Value. Journal ofMarketing (July 1988): 222.

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Sales Promotion Impact on customer buying behaviour