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While sales promotion is a powerful and effective
method to produce immediate short term positive
results, it is not a cure for a bad product or bad
advertising. In fact, a promotion is speed up the killing
of a bad product.
Increased price sensitivity
Frequently promoted brands in the product category,
especially on the basis of price, make consumers and
traders more price sensitive not only for the promoted
brands but for other brands as well in the same product
category.
Consumers wait for the promotion deals to be
announced and then purchase the product. This is true
even for brands where brand loyalty exists. Customers
wait and time their purchases to coincide with
promotional offers on their preferred brands.
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Quality image may become tarnished
If the promotions in a product category have been rare,
or the product happens to be of high involvement
category, the promotions could have a negative effect
about its quality image. Consumers may start
suspecting that perhaps the product has not been selling
well, the quality of the product is true compared to the
price or the product is likely to be discontinued because
it has become outdated.
Dealers forward buy and divert stocks
In case of deals for the trade, many dealers forward
buy, in excess of their inventory requirements. This is
particularly happens if a product is low bulk, much in
demand and the inventory holding costs are favourably
low. This is true both for wholesalers as well as retailers.
Forward buying of excessive stocks on deals or quantity
discounts can lead to diversion of some of the stocks in
non-deal areas. Forward buying of excessive stocks on
deals or quantity discounts can lead to diversion of some
of the stocks in non- deal areas.
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Merchandising support from dealers is
doubtful
One of the trade promotions tool is to offer promotional
allowances to trade people to motivate them to provide
merchandising support and to pass on some benefit to
consumers. This generally is the condition attached with
such promotional allowances. In many cases, the
dealers do not cooperate in providing the merchandising
support nor do they pass on any benefit to consumers.
The retailer might not be willing to give support because
he does not have the place, or the product does not sell
much in his shop, or maybe he thinks the effort required
is more than the commission/benefit derived.
