I was interested in Alan Mitchell’s article “Promotions fails to pull its weight” (MW February 28).
It was fascinating to read that the grocery marketers are only now learning the lessons of sales promotion.
In a direct customer relationship, there can be no doubt that sales promotion increases response and consumer trial. In all but very few cases, however, customer performance is reduced thereafter. This is not surprising; sales promotion frequently attracts non-committed buyers whose purchase decision is only indirectly related to the product itself.
While the short-term sales figures may look very attractive, and superficially, both strategies achieve the same sales revenue, the hidden costs can also be considerable. Not only must the increased costs of packaging, distribution and returns-handling be calculated, but the long-term impact on consumer perceptions can irrevocably alter the nature of the relationships that a company has with its market.
Sales promotion has its place, but the objectives must be clear and the long-term strategic implications considered. if any sustainable increase in brand equity or competitive advantage is to ensue.