Sales promotions are vital for companies to increase sales and project their brand names. Sales promotion has its own advantages and disadvantages. When used moderately with careful planning, sales promotion increases sales, even after the promotions period is completed. When sales promotion is overdosed, the emotion or the need that surrounds them disappears.
Advantage of Sales Promotion
1. Create Urgency
Sales promotions draw attention to a particular product or service being offered. They distinguish a company from the rest of other in the competition in terms of prices. When sales promotions are offered for a limited time, they create urgency among customers because they have to act before the promotion expires. As a result, the limited supply reduces the time before which the customers have to react. In most cases, they will cease to compare alternatives and purchase the item or service that is offered at the best price and quality.
2. Maintain Trade Flows
One of the advantage of Sales promotion is that it keeps the trade flow between distributors and retailers. This refers to products that have a certain lifespan, as well as things that do not. For business it means that items are regularly replenished with items that have been manufactured recently. It also encourages distributors to buy more items and make sure that they always have an adequate supply of sales, says Dryden. Very often, suppliers / distributors purchase items according to need and how often a commodity is sold. Therefore, if sales of an item is particularly slow, dealers / suppliers are less likely to buy this item regularly, so it is more likely to run out of reserves.
Disadvantage of sales promotion
As with majority of sales promotions, either the dealer or the business that offer the product do not benefit as much like before. Sales promotion is a calculated risk, but it needs to be carefully planned and managed to be truly effective. Sales promotions should be advertised to let the customers know of the special offer. If there is a discrepancy between what is advertised and the real deal, it will be viewed negatively by the public. Retailers and distributors must ensure that any sales promotion that is published should be honest, or else your own sales promotion itself will act against your company, possibly tarnishing its reputation.
2. Price sensitivity
Sales promotions can be disadvantageous when they are offered quiet regularly. The key to success with an effective sales promotion is its irregular supply, and when it is a surprise for the customer. If it is done too often, it creates price sensitivity among customers. Price sensitivity should encourage the customers to buy things only when promoted into a sale rather than buy at the regular retail price.