Advantages and Disadvantages of Sales Promotion

Advantages of Sales Promotion

Sales promotion can prove useful for marketers in several ways. These include:

  1. 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).
  2. 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).
  3. 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).
  4. 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).
  5. 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).
Disadvantages of Sales Promotion

While the benefits of sales promotion are very attractive to a marketer’s promotional plan, there are downsides to this type of promotion. These include:

  1. May Condition Customers to Wait for Promotion – Repeated use of sales promotion may condition customers to wait until a product promotion is available before making their next purchase resulting in the marketer not maximizing a product’s revenue potential (i.e., customer will not pay full price).
  2. Can Lower Perception of the Brand – The overuse of some sales promotions may condition customers to believe the lower price is the regular price, which may cause them to not believe the product’s quality compares to similar competitors’ products that offer less frequent or no price reductions.
  3. Issues With Promotion Clutter – While in the same way an advertisement competes with other ads for customers’ attention, promotional clutter may also be an issue with sales promotions (e.g., excessive promotion sent by email, postal mail).
  4. Distributors May Not Be Willing to Accept – Some sales promotions targeted to consumers require the assistance of distributors (e.g., retailers), however, not all distributors may accept a consumer sales promotion, especially if the promotion requires the distributor to perform extra work.

Obstacles to Effective Communication

While a message source may be able to deliver a message through a transmission medium, there are many potential obstacles to the message successfully reaching the receiver the way the sender intends. The potential obstacles that may affect good communication include:

Poor Encoding

This occurs when the message source fails to create the right sensory stimuli to meet the objectives of the message. For instance, in person-to-person communication, verbally phrasing words poorly so the intended communication is not what is actually meant, is the result of poor encoding. Poor encoding is also seen in advertisements that are difficult for the intended audience to understand, such as words or symbols that lack meaning or, worse, have totally different meaning within a certain cultural groups. This often occurs when marketers use the same advertising message across many different countries. Differences due to translation or cultural understanding can result in the message receiver having a different frame of reference for how to interpret words, symbols, sounds, etc. This may lead the message receiver to decode the meaning of the message in a different way than was intended by the message sender.

Poor Decoding

This refers to a message receiver’s error in processing the message so that the meaning given to the received message is not what the source intended. This differs from poor encoding when it is clear, through comparative analysis with other receivers, that a particular receiver perceived a message differently from others. Clearly, as we noted above, if the receiver’s frame of reference is different (e.g., meaning of words are different) then decoding problems can occur. More likely, when it comes to marketing promotions, decoding errors occur due to personal or psychological factors, such as not paying attention to a full television advertisement, driving too quickly past a billboard, or allowing one’s mind to wonder while talking to a salesperson.

Medium Failure

Sometimes communication channels break down and end up sending out weak or faltering signals. At other times the wrong medium is used to communicate the message. For instance, trying to educate doctors about a new treatment for heart disease using television commercials that quickly flash highly detailed information is not going to be as effective as presenting this information in a print ad, where doctors can take their time evaluating the information.

Communication Noise

Noise in communication occurs when an outside force, in some way, affects delivery of the message. The most obvious example is when loud sounds block the receiver’s ability to hear a message. Nearly any distraction to the sender or the receiver can lead to communication noise. For instance, many customers are overwhelmed (i.e., distracted) by the large number of marketing promotions they encounter each day. Such promotional clutter (i.e., noise) makes it difficult for marketers to get their message through to desired customers.