Reasons for the increase in sales promotion

1. The growing power of retailers:

The power shift in market place from manufacturing to retailers.

a. Advent of optical checkout scanners

b. Consolidation of grocery store industry

c. Evolution of private labels.

2. Declining Brand Loyalty

3. Increased promotional sensitivity: Marketers are making greater use of sales promotion into marketing programs because consumers respond favorably to the incentive. (a) An obvious reason for consumers increased sensitivity to Sales promotion offers is that they SAVE MONEY .( b) Another reason is that many purchase decisions are made at the POP by consumers who are increasingly becoming price sensitive and facing too many choices.

4. Brand Proliferation: A major aspect of many firms marketing strategies over the past decade has been the development of new products.

5. Fragmentation of the Consumer markets: As the consumer becomes more fragmented & Traditional mass media- based advertising becoming less effective, marketers are turning to more segmented & highly targeted approaches.

Many companies are tailoring their promotional efforts to specific regional markets: Eg.Bajaj Alliance offer to WIAA.

Whirlpool concentrating on women

6. Short-term Focus: Brand managers use S P routinely, not only to introduce new products or defend against competition but also to meet quarterly or yearly sales & market share goals.

7. Increased Accountability: Results from SP programs are generally easier to measure than those from advertising. Many companies are demanding measurable, accountable ways to relate promotional expenditures to sales & profitability.

8. Gaining a competitive advantage: Many companies are turning to sales promotion to gain or maintain a competitive advantage. A major development in recent years is the use of account – specific marketing (also referred to as comarketing) whereby a marketer collaborates with customizes promotions for individual retailers.

9. Clutter: The increasing problem of advertising clutter has lead to the need to use consumer promotions as a way of attracting attention and interest to advertising. Sales promotion offers such as coupons, contests and sweepstakes are often used to attract attention to ads and increase consumers‘ involvement with a marketer‘s IMC program.