Rationalize the reasons for organizing sales promotion activities periodically by Firms.

Rationalize the reasons for organizing sales promotion activities periodically by Firms. Pickup any two firms/products which in the recent past has organized sales promotion activities and discuss their success stories.

Sales promotion, a key ingredient in marketing campaigns, consists of a diverse collection of incentive tools, mostly short term, designed to stimulate quicker or greater purchase of particular product or services by consumers or the trade. Sale promotion expenditure have been increasing as a percentage of budget expenditure annually for the last two decades. Several factors contribute to this rapid growth, particularly in consumer markets. Promotion is now more accepted by top management as an effective sales tool; more products managers are qualified to use sales-promotion tools; and product managers are under pressure to increase current sale. In addition, the number of brands has increased; competors use promotions frequently; many brand are similar; consumers are more price oriented; the trade has demanded more deals from manufacturers; and advertising efficiency has declined because of rising costs, media clutters, and legal restraints. The rapid growth of sales promotion media has created clutter- for instance, by offering larger coupon-redemption values or using more dramatic point-of-purchase displays or demonstrations.
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A perusal of the list of the product groups, which emerged as the major users of sales promotion, and from the market feel, it seems clear that a transformation from the seller to buyer market is taking place and marketing has become more competitive in these product markets. In addition to increasing competition. The reasons for organizing sales promotion activities periodically by firms are many:
• Sales promotion makes an immediate effect on sales.
• Measurement of the effectiveness of sales promotion is easier as against the other promotional methods.
• Channels of distribution are emerging as powerful entities and demand greater use of incentives to get desired results.
• Products are becoming standardized and similar, and so need increased support of non-price factors of which sales promotion is an important one.
• Impulse buying is on the increase, and so is the rise in the number of marginal customers. With virtually no brand loyalty, offer of attractive schemes help manufacturers to induce such customers to choo'se their product.
• Sales promotions do not tend to yield new, long term buyers in mature markets because they attract mainly deal- prone consumers who switch among brads as deals become available.
Akai, a Japanese manufacturers of stereo equipment and TV sets, managed to become a TV- set market leader in India by running value —added sales promotion. It offered good trade-in value on black- and -white TV sets at the purchase of a new color TV sets. At other times it would offer a free watch, or calculator or radio, along with the purchase of TV sets. This steady promotion made AKAI a very popular brand in India and competitors such as Sony were not free to compete in the same way. The major users of promotion are: tea, coffee, and beverages, soaps, toiletries, detergents and washing soaps; tooth paste; textiles; food products and baby; foods; house hold remedies; and consumer durables like fans , refrigerators, sound systems television and house hold appliances.