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Deal or No Deal: Sales Promotion Influence on Consumer Evaluation of Deal Value and Brand Attitude

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As marketers continue to spend more and more on sales promotions, it is increasingly important for them to consider and understand how consumers evaluate and respond to these offers as well as what influence the offers have on consumer brand attitude. This is especially significant for small businesses as their resources, including promotion budgets, are usually substantially less than their larger counterparts. Therefore, it is essential that small businesses implement marketing strategies that generate the greatest return. One such strategy is the usage of sales promotions. However, in order to accomplish this, small business managers must understand the sales promotion landscape and recognize that it extends beyond simple discounts or coupons. Further, all sales promotions are not created equal, at least not in the eyes of consumers. Whether a sales promotion is deemed as a good offer is contingent upon more than just the promotion type. Rather, marketers must be cognitive of the roles of framing, consumer type, familiarity with the brand, consumer purchase involvement, and frequency of promotion and consider the influence of each variable on the consumer’s perception of the offer and attitude towards the brand. In keeping with the Small Business Institute Journal’s primary purpose of publishing practical, applied research, this article offers practitioners a practical review for understanding the sales promotion landscape, consumer perceptions of deal value, and the potential influence of sales promotions on brand attitude as well as provides considerations for implementing a sales promotions strategy.

THE GROWING ROLE OF SALES PROMOTIONS

The role of sales promotion as a means to stimulate trial and increase sales has undergone substantial growth in the last three decades. In 1991, marketers spent approximately $56 billion on consumer sales promotions (Myers , 2019) . In 2019, spending increased almost six-fold to over $300 billion resulting in an estimate of more than half of promotion budgets allocated to consumer sales promotions (Myers , 2019) . Sales promotions are regularly used across multiple industries and product categories (Parente & Strausbaugh-Hutchinson , 2015) . As marketers continue to spend more and more on sales promotions, it is increasingly important for them to consider and understand how consumers evaluate and respond to these offers as well as what influence the offers have on consumers’ brand attitude.

This is especially significant for small businesses as their resources including marketing budgets are usually substantially less than their large counterparts (Atanassova & Clark , 2015) . Further, the need for information about low-cost ways to increase sales and profits has long been an issue for small businesses (Tuten & Ashley , 2011) . Therefore, it is essential that small businesses develop a marketing mix that incorporates strategies that generate the greatest return. One such strategy is the usage of sales promotions. However, in order to accomplish this, small businesses owners and managers must understand the sales promotion landscape and recognize that it extends beyond simple discounts or coupons.

What Are Sales Promotions?

Small businesses have a plethora of options to promote their brands and products including, but not limited to, advertising, personal selling, public relations, product placement, database marketing, direct marketing, and sales promotions. Consumer-oriented sales promotion differs from other forms of promotion as it provides “a direct inducement that offers an extra value or incentive for the product…to the ultimate consumer with the primary objective of creating an immediate sale” (Haugh , 1983 , p. 44) . In other words, the goal of this type of promotion is to maximize sales by offering additional value and/or incentives to motivate consumers to act now. An incentive can be monetary or non-monetary. Monetary incentives include a temporary price reduction, coupon, cent-offs offers, refunds, and rebates while non-monetary include contests, sweepstakes, added product, samples, bonus packs, bundling, buy one get one offers, or premiums (free gift) among others. Sales promotions are often used as a means to stimulate trial of new products, increase consumption, and drive short-term sales (Parente & Strausbaugh-Hutchinson , 2015) .

SALES PROMOTION FRAMEWORK

The literature on sales promotion is abundant and provides some useful direction and guidelines for practitioners. Some experts claim that sales promotions are a valuable way to introduce new products by reducing perceived risk or costs (Parente & Strausbaugh-Hutchinson , 2015) and may actually increase brand preference with no negative influence on brand attitude (Rothschild & Gaidis , 1981) . Yet others contend it may decrease brand loyalty, decrease perceived brand quality, and erode brand equity by focusing on price (Keller , 1998) . In addition, a relatively small number of existing investigations were long-term studies (12-16 weeks) while the vast majority were short-term studies. As brand attitude develops over time, further longer-term studies in excess of 16 weeks are needed to better understand this phenomenon. Empirical research on the relationship between sales promotions and resulting brand attitude is also limited. Yi & Yoo addressed this deficiency in their 2011 study, but additional empirical studies still need to be conducted. While resulting in parsimonious models, much of the literature examines the influence of only one or two variables on deal evaluation or brand attitude. Moreover, a recent review of topics covered in the Small Business Institute Journal , identified marketing studies as underrepresented (Mesa & Holt , 2021) .

The purpose of this article is three-fold: 1) address the need for additional marketing-related research in SBIJ , 2) summarize the sales promotion research and findings, and 3) provide small business owners and managers a framework that offers a more complete understanding of the sales promotion landscape while providing guidance for implementing an effective sales promotion strategy. This framework adds to the current literature stream by examining how the variables collectively, rather than singularly, influence consumer perceptions of the deal value as well as consumer attitude toward the brand. Specifically, it looks beyond the sales promotion type to other factors that influence whether consumers perceive a given sales promotion as a good deal. It expands on previous research by introducing purchase involvement and consumer type, which classifies consumers based on how they respond to price, as moderating variables into a single cohesive framework. This framework, as illustrated in Figure 2 , posits that consumer evaluation of deal value and resulting brand attitude is influenced by the type of offer and moderated by the way the offer is presented (framing), consumer familiarity with the brand, consumer purchase involvement, promotion frequency, and consumer type.

Sales Promotion Type

As noted previously, consumer sales promotions can be divided into two categories: monetary and non-monetary. Research concludes monetary offers do not need to be as large as non-monetary offers to be effective (Campbell & Diamond , 1990) . In fact, larger monetary offers may actually make the potential buyer skeptical resulting in a negative evaluation of the offer and potentially the brand. Coupons have been found to be evaluated more favorably than temporary price discounts (Chen et al. , 1998) . Promotions that offer a free gift are evaluated more favorably than a price discount even when the actual value of free gift and price discount are the same (Darke & Chung , 2005) . Unbundled discounts are perceived as a better value than bundled discounts, free offers (i.e. buy one get one free) are determined to be a greater value than discounts on inexpensive products, and discounts are considered more attractive than rebates (Munger & Grewal , 2001) . Additionally, in terms of price reduction, consumers perceive discounts stated as percentage off as a greater value on high-priced products while dollar/cents off discounts were evaluated more favorably on low-priced products (Chen et al. , 1998) . Regardless of the type, consumers perceive both monetary and non-monetary sales promotions as high in instrumental value given they provide economic incentive (Gardner et al. , 2022) .

Sales Promotions and Perceived Deal Value

A profusion of literature exists that examines consumers’ perceived value of the various forms of sales promotions. Value is "determined by adding the utility of benefits received – the worth the customer gets – and by subtracting the price paid – what and how customers give up in exchange (Smith , 2020 , p. 482) or “the trade-off of the product’s perceived quality relative to its perceived price” (Chen et al. , 1998) . Consumers’ perception of deal value is contingent on promotion type since different promotion types are perceived as offering different benefits (Yi & Yoo , 2011) . For instance, monetary promotions such as price discounts, percentage off offers, and coupons are perceived as offering utilitarian benefits including monetary savings, improved product quality, and shopping convenience while non-monetary promotions like bonus packs, premiums, and sampling offer more hedonic benefits -opportunities for self-expression, entertainment, and exploration (Chandon et al. , 1999) .

Additionally, the form of sales promotion influences not only the type of perceived benefits but also whether the consumer views the offer in terms of a loss or gain (Campbell & Diamond , 1990) . Further, consumer perception of price, quality, and value as well as purchase intentions is influenced in part by the promotion type (Chen et al. , 1998) .

Sales Promotions and Framing

Extant research suggests that the type of offer is not the only predictor of deal evaluation. A significant number of studies have attempted to explain the influence of a variety of price framing variables on deal evaluation. These framing variables moderate the relationship between sales promotions and consumer perception of value of the offer. Framing in this context refers to how consumers make decisions based on how available information is presented (Smith , 2020) .

Prospect theory developed by Kahneman & Tversky (1979) , considered to be the seminal framework in explaining how decisions are made and one of the most widely cited theories (Betts & Taran , 2006) , is used across a number of academic disciplines including economics, finance, management, psychology and, of course, marketing. It is derived from efforts to explain the shortcomings of expected utility theory that posits that people weigh their options based on probability and then select the alternative that offers the highest absolute value (Betts & Taran , 2006; Kahneman & Tversky , 1979) .

Prospect theory recognizes that people’s decisions are often inconsistent with the rules of expected utility and provides an alternative explanation as to how people make decisions. It states that people evaluate each alternative as either a gain or loss in comparison to some reference point (internal or external) (Kahneman & Tversky , 1979) . It further asserts that people are more motivated to avoid losses than to seek gains (Kahneman & Tversky , 1979) . This implies decision-making is greatly influenced by the faming of the situation and that the “framing of alternatives is one of the major drivers of choice” (Betts & Taran , 2006) . Researchers have applied prospect theory to multiple sales promotion phenomenon such as evaluation of sales promotions type (coupons, price discounts, bundling, percentage off/ dollars off, etc.), framing of offer (i.e. tensile claims, plausibility, reference price), and influence on quality perceptions, as well as others (Betts & Taran , 2006) .

As presented by Kahnmeman and Tversky (1979) in their seminal work on framing, framing affects our judgments and therefore our preferences. This concept of framing has been extensively applied to marketing literature and is defined as how the offer is communicated to the consumer (Krishna et al. , 2002) . In other words, what information does the presentation of the promotion supply the consumer? Is the offer presented for a limited time only? Does it provide the discount price along with the original price (reference price)? Are quantities limited? Is the offer stated in relative or absolute terms? Is the offer plausible? Even when the value of the offer is the same, consumers may interpret the varying presentations of the offer differently (Munger & Grewal , 2001; Smith , 2020) .

Common framing presentations include reference price (Krishna et al. , 2002) , restrictions (Inman et al. , 1997; Tan & Hwang Chua , 2004) , plausibility (Tan & Hwang Chua , 2004) , and tensile/objective claims (Mobley et al. , 1988) to name a few. Further, positive frames have a greater influence on deal evaluation than negative ones (i.e. Buy One Get One offers v 50% off or free shipping in lieu of a discount) (Smith , 2020) . Marketers can utilize framing to “improve perceptions of value by presenting their products and promotions in the most favorable light” (Munger & Grewal , 2001) .

Reference Price and Plausibility

When making decisions regarding value, consumers often compare the offer price with some reference price. Reference price is defined as “any price in relation to which other prices are seen” (Biswas & Blair , 1991) . It is the price that consumers expect to pay or consider fair for a given product. Reference price can be internal or external. Internal reference price is derived from consumers’ past experience with the product and stored in the consumer’s memory (Pride & Ferrell , 2018) . External reference price is derived when consumers are unfamiliar or have limited experience with a specific product category or brand, and rely on external cues to determine reference price (Pride & Ferrell , 2018) . For example, a marketer can create an external reference price by including the original price (external cue) and new discounted price in a sales promotion advertisement.

The presence of an external reference price may influence consumers’ perceived deal value (Krishna et al. , 2002) . A marketer may set an external reference price at the Regular Price, Manufacturer Suggested Retail Price (MSRP) or an arbitrarily inflated price. The use of the Regular Price as an external reference price is viewed more favorably and increases perception of deal value more than Manufacturer Suggested Retail Price and arbitrary reference prices, “suggesting that consumers are leery of such attempts to set references prices” (Krishna et al. , 2002) .

Transaction utility theory is an extension of prospect theory. In essence, transaction utility contends that “a consumer’s behavior depends not just on the value of the goods and services available relative to their respective prices, but also on the consumer’s perception of the quality of the financial terms of the deal” (Thaler , 1983) . Two types of utility are assumed: acquisition utility and transaction utility. Acquisition utility is the result of evaluating the value equivalent of the product to the reference price (Thaler , 1983) . This evaluation is thought of in terms of economic gain or loss. Acquisition utility is positive if value is determined to be greater than reference price and negative if price exceeds value (Thaler , 1983) . “Promotions which are seen as reduced losses will have a different impact on the reference price than those which are perceived as gains” (Campbell & Diamond , 1990) .

Transaction utility “represents the pleasure (or displeasure) associated with the financial terms of the deal” (Thaler , 1983) . It is derived from the difference between the selling price and the reference price. Collectively, the two utilities aid the consumer in determining if the transaction is a bargain thus resulting in purchase of the product or not a good deal thus resulting in a rejection of the purchase offer (Thaler , 1983) . Darke and Chung (2005) apply transaction utility theory to their investigation of sales promotions in the form of price discounts and framing of the reference price. Discounts would increase acquisition utility, as they would provide consumers the same economic benefit at a lower price (Darke & Chung , 2005) . Discount price should also increase the quality of the deal if the discount price is below the established reference price. Inclusion of an external reference price in the framing of the sales promotion offer would ensure positive transaction utility as long as the reference price is believable (Darke & Chung , 2005) . However, marketers are cautioned that frequent price discounts may lead to consumers lowering their own internal reference price and inferring the lower price is a result of lower quality (Darke & Chung , 2005) .

Plausibility defined as the size of the deal, interacts with reference price. An offer deemed “implausible” or too large would be less attractive (Krishna et al. , 2002) and consumers may infer that the regular price was inflated (Chen et al. , 1998) . However, the use of “regular price as the external reference price, enhances the offer value of large plausible deals and implausible deals, but not small plausible deals” (Krishna et al. , 2002 , p. 115) .

Restrictions

Marketers often place restrictions on sale promotions. “Restrictions serve to activate a mental resource that is used in rendering a judgment regarding a promoted product” and the favorableness of the offering (Inman et al. , 1997 , p. 77) . Restated, consumers evaluate sales promotions based on the presence of a restriction. A sales restriction is defined as “a tactic that curtails a consumer’s freedom to purchase a market offering” (Inman et al. , 1997 , p. 69) . The most common restriction is a time restriction or expiration date – this week only, 4 days only, etc. The purpose is to limit availability (Tan & Hwang Chua , 2004) while creating a sense of urgency. Marketers may choose to impose a variety of other restrictions as well. A purchase limit restricts the quantity a consumer can purchase. A purchase condition restriction requires a purchase or some other prerequisite in order to get the offer (i.e. buy three and get the four for half off). Additionally, marketers may employee non-explicit or vague scarcity restriction (Tan & Hwang Chua , 2004) such as “While supplies last.” The use of time, quantity, and purchase limit restrictions has been found to have a positive influence on consumer perception of deal value (Inman et al. , 1997) when no other informational cues are present. However, this was not the case with vague scarcity restrictions (Tan & Hwang Chua , 2004) .

Tensile Claims

The use of ambiguous phrases such as Save up to ___%, Starting at $_____ or As low as $________ are referred to as tensile claims (Mobley et al. , 1988) . Tensile claims are subject to broad interpretation whereas non-tensile claims (Save 50%, Only $5.00) are not, as they are specific, concrete offers. Since tensile claims are ambiguous, they create a certain level of uncertainty making it difficult for the consumer to evaluate the value of the offer. Due to the ambiguity of tensile claims, they run the risk of being viewed as a gimmick and may potentially lead to mistrust of not only the promotion, but the brand as well. Consumers tend to evaluate non-tensile claims more favorably than tensile-claims (Mobley et al. , 1988) .

Sales Promotions and Brand Attitude

A limited number of studies address the relationship between sales promotion and attitude towards the brand. However, the results of those studies are inconsistent. For example, some studies conclude sales promotion do not negatively influence brand evaluation (Davis et al. , 1992) and may actually increase brand preference (Rothschild & Gaidis , 1981) . On the other hand, others conclude that evidence supports that there are potential adverse effects of sales promotion including decreased brand loyalty and perceived decrease in brand quality (Keller , 1998) . In addition, sales promotions have been found to influence brand attitude over time, but that influence varies by promotion type (Yi & Yoo , 2011) . Furthermore, research indicates non-monetary promotions such as free gifts, bonus packs, contest, and buy one get one offers tend to elicit a more favorable brand attitude than monetary promotions which include price discounts, coupons, and rebates (Yi & Yoo , 2011) . Repeated monetary promotions are especially susceptible to less favorable brand attitudes by lowering consumers’ reference price resulting in negative price-quality inference (Yi & Yoo , 2011) . Consumers use the lower selling price to infer the quality of the product is also lower (Raghubir & Corfman , 1999) .

Sales Promotions and Familiarity with Brand

Businesses often offer discounts to introduce and encourage trial of new products or in efforts to get customers to switch to less familiar brands (Blattberg & Neslin , 1989) . When attempting to evaluate unfamiliar brands or product categories, consumers make price-quality inferences (Darke & Chung , 2005) . In the absence of quality assurances, consumers interpret the discounted price as their reference price (Darke & Chung , 2005) . What’s more, consumers may actually interpret the discount price, not the initial price, to be the true and correct price of an item (Ortmeyer et al. , 1991) . Consumers may then attribute the lower price to lower quality resulting in a negative attitude toward the brands.

Sales Promotions and Purchase Involvement

Purchase involvement could further influence consumer evaluation of deal value and resulting consumer brand attitude. Level of involvement is “the degree of interest in a product and the importance the individual places on the product” (Pride & Ferrell , 2018 , p. 201) . Consumers often employ low involvement levels with the purchase of inexpensive products such as convenience products and those products with little or no social risk as evidenced by the limited amount of time, energy, and consideration given to the purchase (Pride & Ferrell , 2018) . High involvement levels tend to be associated with high importance products, highly visible products, and expensive products. “Involvement has a motivational role in consumers’ attention and comprehension processes” (Krishna et al. , 1991) . Further, the absence of a negative effect for a given promotion is at least partly accredited to consumers’ normally low level of involvement with inexpensive products (Davis et al. , 1992 , p. 147) . Therefore, sales promotions for low involvement purchase situations would have a significant influence at the point of choice, but no impact thereafter (Davis et al. , 1992) .

Sales Promotions and Consumer Type

Individual traits and characteristics lead to different consumers behaving in different manners within the same buying situation. As a result, it’s difficult to predict customers’ reactions, even when presented with the same offer or promotion type (Yi & Yoo , 2011) . For this reason, it is important to consider such characteristics when investigating whether or not or the degree to which sales promotions influence consumer brand attitude. Marketers can divide customers into three categories based on how they respond to price: price-sensitive, value-conscious, and prestige-sensitive.

Price-conscious consumers purchase based on price and actively seek out low prices (Pride & Ferrell , 2018) . This consumer would be sensitive to all deal types and respond favorably to sales promotions, especially monetary promotions (Yi & Yoo , 2011) . The price-sensitive consumer would be less likely to view a promoted brand unfavorably even if the promotions occur frequently.

Value-conscious consumers are also concerned about price. However, value of the product is a primary consideration as well. “These consumers may perceive value as quality per unit of price or as not only economic savings but also the additional gains expected from one product over a competitor’s brand” (Pride & Ferrell , 2018 , p. 612) . Nonmonetary sales promotion like bonus packs, free gifts, and buy one get one offers provide such benefits and therefore would likely be evaluated favorably by value-conscious consumers.

Prestige-sensitive customers are not concerned with price. These “buyers focus on purchasing products that signify prominence and status” (Pride & Ferrell , 2018 , p. 613) . Monetary sales promotion would likely not be viewed favorably by the prestige-sensitive customer as the emphasis is on quality, not price. As stated previously, consumers often adjust their reference price due to repeated monetary sales promotions (Raghubir & Corfman , 1999) . This consumer may attribute this lower price to lower quality ultimately resulting in a negative or unfavorable brand attitude.

Sales Promotion Frequency

The frequency of sales promotion usage may have varying effects (Rothschild & Gaidis , 1981) . First, the occasional, infrequent use of promotion will have little impact on consumer behavior as “the shaping process occurs by a method of successive approximation” (Rothschild & Gaidis , 1981) . Following this logic, a one-time promotion will do little to alter the consumer’s original price-quality inference of a given brand. However, the more frequently the brand is promoted using a monetary offer, the more likely the consumer will perceive the discounted price as the reference price resulting in a negative price-quality inference (Darke & Chung , 2005) . Further, frequent monetary promotions can adversely affect consumer perception of brand quality by lowering the reference price (Yi & Yoo , 2011) , effectively training customers to not pay full price. Monetary or price-related promotions can actually increase price sensitivity (Kalra & Goodstein , 1998) . In other words, too frequent use or overuse of a promotional tool may result in consumer price-sensitivity and “teaching” consumers to purchase base on price instead of brand quality or features (Kalra & Goodstein , 1998; Raghubir et al. , 2004) .

IMPLICATIONS/DISCUSSION

Given all the factors influencing consumer evaluation of a deal offer and the potential to influence brand attitude, developing an effective sales promotion strategy can be a challenging task for small business owners and managers. As extant research demonstrates, the use of sales promotion certainly can have a positive effect on trial, brand awareness and sales. However, sales promotions can also inadvertently result in negative value and brand perceptions if not done correctly. The following considerations are offered to aid small business in informing their approach to and implementation of sales promotions strategies.

First, having a clearly defined positioning strategy is necessary in order to align the brand with appropriate sales promotion strategies. Brands positioned as premium or luxury should consider not using or rarely using monetary sales promotions as doing so poses the potential risk of devaluing the brand (Yang et al. , 2016) . Recognizing this, some premium brands such as Apple and Bose implement minimum advertised pricing policies to, in part, protect their brand value (Israeli & Zelek , 2020) . Others rarely if ever offer coupons or discounts, but rather provide a free gift with purchase. As a result, these brands are increasing their perceived value by providing additional value (free gift) as opposed to making the deal more attractive by reducing the overall price of the product (Yang et al. , 2016) . These brands understand that using monetary sales promotions has the potential to alter consumers’ reference price which can lead to a devaluing of the brand and hurt long-term brand associations (Buil et al. , 2013) , especially when used on a regular basis. This change in reference price can result in consumers viewing the “regular” price of the product as too high or equating the lower price to lower quality thus reducing the overall perceived value of the product and the consumer’s attitude towards the brand. On the other hand, non-monetary sales promotion not only do not damage a brand image, they may actually strengthen brand equity (Montaner et al. , 2011) . That being said, monetary sales promotions are often well received for brands positioned as non-premium, entry-level, and/or affordable. Coupons, discounts, and other monetary sales promotion provide utilitarian benefits to consumers (saving money) and result in increased sales. Additionally, the lower price encourages trial, providing opportunity to explore new products (Chandon et al. , 1999) by lessening consumer risk.

Understanding the customer goes hand-in-hand with a well-defined positioning strategy in determining the best overall approach to an organization’s sales promotion strategy. Price sensitive consumers will buy the lowest price-point product that meets their needs. They may be won over with big discounts or coupons, but it will likely only be temporary. As soon as the deal is over or a competitor brand offers a bigger deal, the price-sensitive consumer will defect to the competitor brand (Yoo et al. , 2000) . Value-conscious consumers may be enticed by both monetary and non-monetary offers as they are looking for a balance of price and quality. However, non-monetary offers such as bonus packs (additional product at no additional costs), free gifts, or bundling, provide additional value to the purchase without lowering price. Lastly, monetary offers tend not to appeal to prestige sensitive customers as prominence of the brand is the priority and price is of little to no importance. The reduction in price as a result of these offers may adversely alter this customer’s perception of the premium quality of the product, potentially leading the brand to a lower ranking in the customer’s consideration set or being removed all together.

The purpose or goal of the sales promotion is the next consideration. Common sales promotions goals include stimulating trial, increasing brand awareness, increasing sales, encouraging repurchase, enhancing brand image, identify prospective customers, and countering competitors’ promotional efforts. As discussed previously, sales promotions can take multiple forms. The particular form of sales promotions that will be most effective depends heavily on the purpose or the goal of the promotion. A sales promotion designed around the goal of stimulating trial will look different from one with the goal of encouraging repurchase or enhancing brand image. For instance, if the goal is to stimulate trial of a new non-premium branded product, coupons, discounts, and samples should be considered. However, for a goal of repatronage, a loyalty/reward program or coupon for future purchase would be appropriate. A franchise building contest or sweepstakes is a viable option for stimulating brand interest, building brand awareness, and enhancing brand image.

Forethought should be given to how often the brand intends to use sales promotion as part of its overall promotion strategy. Will they be a regular, integral part of promotion efforts or will they be used on a more infrequent basis? Frequency of monetary sales promotion usage may influence consumer perception of deal value and brand attitude in multiple ways. First, frequent usage may negatively influence consumers’ evaluation of plausibility or believability of the offer, especially when combined with tensile claims. Additionally, frequent usage teaches consumers to wait for a deal and not pay full price as it has been found to increase price sensitivity (Bemmaor & Mouchoux , 1991) . Further, frequent promotion of price, increases the importance of price over other brand attributes (Kalra & Goodstein , 1998) . As discussed above, consumers may conclude that the reduced price of a product due to frequent monetary promotions is the true price, thus becoming the consumer’s new reference price. As consumers often use price to infer quality, they may equate this lower reference price with a reduction in brand quality (Yoo et al. , 2000) . Therefore, frequent monetary sales promotion run a greater risk of devaluing a brand than similar frequency of non-monetary sales promotion.

Selection of the sales promotion type should be informed by the brand position, target market’s sensitivity to price, sales promotion goal(s), and intended frequency. Common monetary consumer sales promotions include coupons, discounts, cents off, rebates, and refunds. Popular nonmonetary consumer sales promotions include contests, sweepstakes, loyalty/reward programs, samples, free trials, premiums (free gifts), and bonus packs.

Lastly, consideration should be given to how the sales promotion will be framed in effort to improve the overall perception of the deal value and brand itself. The question here is how will the sales promotion be presented (what information will be included/excluded and in what manner will it be delivered) to the consumer. Regardless of the quality of the brand, sometimes less is more when it comes to sales promotions. Steep discounts especially when paired with tensile claims (Up to 75% storewide) may result in a negative evaluation of the deal and result in a lower than desired response to the promotion. Price sensitive consumers may initially show interest in such offers since they shop strictly based on price. However, the plausibility of such offers may be called in to question and result in consumers perceiving the offer as gimmicky or unattractive (Chen et al. , 1998; Krishna et al. , 2002) triggering the old adage, “if it sounds too good to be true, it probably is.” Smaller, concrete offers (20% off or $10 off $50) are more believable and are likely to be received more positively. Further, the use of restrictions (i.e. time restrictions, purchase limits or purchase conditions) can aid in creating a sense of urgency and may improve consumer perception of deal value (Inman et al. , 1997; Tan & Hwang Chua , 2004) while vague scarcity restrictions (i.e. while supplies last) can reduced the perceived value of the deal (Tan & Hwang Chua , 2004) .

Let’s look at how these considerations could be applied to two small, local clothing retailers. Retailer A is a boutique store located in a downtown area that carries premium women’s brands. Retailer B is a clothing consignment shop located in a neighborhood shopping center that carries both women’s and children’s clothing. Even though both businesses are clothing retailers, their positioning strategies, target markets and promotion goals as described in Figure 4 are quite different.

Given that Retailer A focuses on luxury brands and its target market places greater concern on brand quality than price, it runs the risk of devaluing the brand by employing monetary sales promotions, especially if used frequently. Further, monetary sales promotions are not appropriate for promotion goals such as enhancing brand image. Taken all of these factors into consideration, Retailer A should opt to utilize a non-monetary sales promotion such as a franchise-building contest. A photo contest framed as described in Figure 4 would encourage interaction with the retailer’s current customer and thus help enhance the store’s image. Additionally, requiring participants to tag three friends can aid in increasing awareness for the store as well. In contrast, Retailer B, a no frills, affordable family clothing stores could benefit from frequent monetary sales promotion such as discounts, price reductions, and similar offers given its target market is price sensitive. As its target market is more concerned with price, monetary sales promotions would not negatively impact attitude towards the brand and be evaluated as a good deal as long as the offers are perceived plausible. This type of sales promotion is appropriate given the goal is to increase sales. In addition, framing the offer with a time restriction (this week only) creates a sense of urgency, further motivating customers to act.

CONCLUSION: ALL SALES PROMOTIONS ARE NOT CREATED EQUAL

As sales promotions continue to play a more strategic and complex role and receive an increasingly significant proportion of the promotion budget, the need for business owners and managers to understand how consumers perceive and respond to these offers continues to increase as well. Given the variety of sales promotion types, marketers have a number of options from which to choose. The ultimate goal of any consumer sales promotions is to stimulate sales, encourage trial, and generate brand awareness. However, marketers must understand not all sales promotions are created equal, at least not in the eyes of consumers. Whether a sales promotion is deemed as a good offer is contingent upon more than just the promotion type. Rather, business owners and managers must be cognitive of the roles of framing, consumer type, familiarity with the brand, consumer purchase involvement, and frequency of promotion and consider the influence of each variable on the consumer’s perception of the offer and attitude towards the brand.

LIMITATIONS AND FUTURE RESEARCH

While this research provides a broad, inclusive framework of sales promotion based on existing literature findings, it is not exhaustive. For instance, it does not factor in the manner in which the sales promotion is distributed or communicated (online, social media, television, direct mail, etc.) to consumers. Future research could examine whether the communication channel impacts consumer perception of the deal and/or brand attitude. The use of social media as a communication channel is especially salient “given the low costs and higher levels of efficiency” (Broekemier et al. , 2015 , p. 4) it affords businesses compared to other communication channels. Further, this article focuses exclusively on two cognitive outcome variables while ignoring behavioral outcomes such as repurchase intention. Additionally, this model does not take into consideration potentially negative behavioral outcomes such as entitlement (Melancon et al. , 2021) and alienation resulting from framing of sales promotions; providing yet additional opportunities for future studies.

Submitted : February 10, 2022 MDT

Accepted : September 21, 2022 MDT

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Influence of Sales Promotion Techniques on Consumers’ Purchasing Decisions at Community Pharmacies

Younes ben said.

1 Department of Industrial Pharmacy, Sechenov First Moscow State Medical University (Sechenov University), Moscow 119991, Russia; moc.liamg@diasnebsinuoy (Y.B.S.); ur.tsil@amm-avopiso (N.V.P.)

Nicola Luigi Bragazzi

2 Postgraduate School of Public Health, Department of Health Sciences (DISSAL), University of Genoa, 16132 Genoa, Italy

3 Department of Mathematics and Statistics, Laboratory for Industrial and Applied Mathematics (LIAM), York University, Toronto, ON M3J 1P3, Canada

Natalia Valeryevna Pyatigorskaya

This research aims to identify the most prevalent and impactful sales promotion tools used by pharmaceutical companies on consumers’ purchasing decisions at community pharmacies. A cross-sectional study design was carried out using the non-repeated random sampling technique. Standardized questionnaires were administered by means of face-to-face interviews or via emails. The relative importance of prevalence (RIP) and the mean evaluation of effectiveness (MEE) were determined for all studied marketing tools for the different groups of respondents (pharmaceutical sales representatives (PSRs), community pharmacists, consumers, and the entire sample). Inter-individual differences in RIP and MEE were assessed by computing the coefficient of variation, whereas inter-group differences were determined by one-way analysis of variance (ANOVA) with the Scheffé test as a post-hoc test. Research findings showed that, according to all respondents, the consumer promotion technique had the strongest impact on consumers’ purchasing decisions while merchandising was the most common sales promotion technique at community pharmacies. PSRs and pharmacists identified trade promotion as the most effective and prevalent technique. Furthermore, research findings showed that, according to all respondents, the following sales promotion tools had the strongest impact on consumers’ purchasing decisions: arrangement and design of showcases among the studied tools for merchandising; buy 1 and get 2 among the studied tools for consumer promotion; and gifts among the trade promotion studied tools. The same tools were identified as the most prevalent by all respondents. Free samples of promoted products appeared to be the most prevalent tool, but at the same time was the least effective. In conclusion, the results of the present research enable an understanding of which sales promotion tools are commonly used at community pharmacies and which ones have the strongest impact on consumers’ purchasing decisions.

1. Introduction

The pharmaceutical market of the Kingdom of Saudi Arabia (KSA) is one of the largest in the Middle East. It is highly developed and characterized by a wide range of products. It was valued at $5209.5 billion in 2016 and is expected to expand at a compound annual growth rate (CAGR) of 9.0% over the period 2016–2026 [ 1 ]. Due to the fact that the dynamic expansion of the pharmaceutical market of the KSA is still ongoing [ 2 ], an increasing level of trade competition is observed. This explains why most pharmaceutical companies invest time and money in the field of marketing and try to find more effective promotion tools to further increase their sales and revenues [ 3 , 4 , 5 ].

Nowadays, the pharmaceutical industry uses a range of promotion techniques at the retail level of the pharmaceutical market [ 6 ] to try and reach consumers indirectly by below the line (btl) marketing techniques that stimulate sales [ 5 , 7 ].

The marketing techniques of sales promotion can be divided into three main groups depending on the focus of their impact: (1) consumer promotion (stimulating consumer demand), which represents the implementation of the “pull” promotion strategy of a pharmaceutical company; (2) trade promotion (motivating pharmacists’ trading activity), which implements the “push” promotion strategy [ 8 ]; and (3) merchandising (visual demonstration of goods and management of retail space).

The technique of consumer promotion is aimed to increase sales and allow the company to “pull” the buyer. This technique includes both non-price incentive tools (gifts for purchasing the promoted product, free samples, etc.), and price incentive tools (discounts, discount/bonus accumulative programs, offers buy 1 and get 2, etc.) [ 9 , 10 ].

The “push” technique of motivating pharmacists’ trading activity (trade promotion) is intended to drive a product through marketing channels to the consumer [ 8 , 11 ]. It employs different tools designed to motivate the pharmacist to dispense the promoted product to consumers: trade stimulating programs (the pharmacist receives gifts when a certain level of either retail sales or wholesale purchases of the promoted product is reached); btl events such as the secret buyer; free drug samples; etc. [ 10 , 12 ]. Pharmaceutical companies try to build the pharmacists’ loyalty toward the brand [ 12 , 13 ] by organizing events designed to enhance the professional knowledge of pharmacists (scientific conferences, seminars, lectures, etc.) and various training activities (workshops, master classes, etc.) aimed to deepen the active sales skills of community pharmacists [ 12 , 14 ].

The essence of merchandising is to build effective marketing communication between a product and consumers. Merchandising aims to increase the volume of sales. It is always customer oriented, and, according to its principles, everything in the pharmacy should be in sight, accessible, attractive, and convenient for the customer. Merchandising includes a set of tools that create the unique atmosphere of the pharmacy by using light, sound, and color effects; showcase design; the special positioning of showcases, products, and advertising materials, etc. This technique involves using point of sales (POS)-materials and determines their most effective location in the pharmacy. POS-materials serve to attract the consumers’ attention to the products and thereby is more effective. At community pharmacies, POS-materials are presented through various channels such as posters, flyers, shelf-talkers, dispensers, stickers, wobblers, etc. [ 15 ].

To the best of our knowledge, no previous research has been planned and implemented to identify the most prevalent sales techniques stimulating marketing tools at the retail pharmaceutical markets of the KSA, nor to determine which ones among them most effectively influence consumers’ purchasing decisions.

2. Methodology

The objectives of this research were as follows: to identify the prevalence of tools for the sales promotion techniques used in community pharmacies; and, to determine the most effective sales promotion tools that impact the most on the consumer’s purchasing decision.

2.1. Study Design and Sample

A cross-sectional study design was carried out in the community pharmacies using the non-repeated random sampling technique. To obtain statistically reliable results, the sample included the following: 340 community pharmacists, 50 pharmaceutical sales representatives (PSRs), and 400 pharmacy consumers. The socio-demographic characteristics of the sample are presented in Table 1 .

Socio-demographic characteristics: gender, age, job experience, level of education.

2.2. The Questionnaire

After a literature review on the topic under scrutiny, a data collection tool (a questionnaire) was developed ad hoc by the authors. The questionnaire was designed and specifically adapted based on the group of respondents (PSRs, community pharmacists, and pharmacy consumers). The questionnaire consisted of two question subsets. The first part included items formulated to explore the prevalence of marketing tools. Respondents were asked to choose the tools used in the community pharmacies from a proposed list. The questions of the second subset were formulated to estimate the effectiveness of the studied marketing techniques. Respondents were asked to evaluate each of the proposed marketing tools according to the strength of the impact on consumer purchasing decisions.

The questionnaires also contained socio-demographic questions. Face and content validity of the questionnaire were assessed by a group of experts from the Sechenov First Moscow State University, Moscow, Russia. Data were collected by means of questionnaires administered via face-to-face interviews in community pharmacies in Riyadh or via mail through Sphinx online software.

2.3. Statistical Analysis

Data obtained from the survey were coded and analyzed using the “Statistical Package for Social Sciences” (SPSS for Windows, version 24.0, IBM, Armonk, NY, USA).

The relative importance of prevalence (RIP) and the mean evaluation of effectiveness (MEE) for each marketing tool were determined for each different group of respondents (PSRs, pharmacists, consumer, and the entire sample). Based on the results obtained, sales promotion techniques and their tools were ranked for prevalence and effectiveness.

Inter-individual differences in terms of RIP and MEE were assessed by computing the coefficient of variation, whereas inter-group differences were determined by the one-way analysis of variance (ANOVA) and the Scheffé test as the post-hoc test. A p -value < 0.05 was considered statistically significant.

The determined values of RIP and MEE allowed us to rank all of the studied techniques (in the case of trade promotion technique, the opinions of consumers were not studied due to the fact that consumers were not faced with its implementation) ( Table 2 and Table 3 ).

Relative importance of prevalence and ranking of sales promotion techniques.

The mean evaluation of effectiveness and ranking of sales promotion techniques.

3.1. Merchandising

Among the numerous merchandising tools, the following were analyzed in the study: POS-materials; arrangement and design of showcases; arrangement of advertising materials; product-magnets; special arrangements of goods; light, sound, and aroma effects.

The study of the prevalence of merchandising tools revealed that the specific arrangement and design of showcases was considered to be the most common, according to all respondents (RIP = 85.38%). POS-materials ranked second, according to all respondents (RIP = 82.02%) and to the group of pharmacy consumers (RIP = 88.63%), with PSRs (RIP = 89%) and pharmacists (RIP = 73.24%) considering this tool to be the most widespread among the tools of merchandising. The least prevalent, according to all respondents (RIP = 55.70%), was the tool using light, sound, and aroma effects. PSRs employed neither light, sound, aroma effects, nor product-magnets ( Figure 1 ). The values of the coefficient of variation indicated the complete absence of inter-individual differences in the PSRs group (V = 0%) for the named two tools, confirming that these tools were not used at all. In all other cases, inter-individual differences were found.

Prevalence of the tools of merchandising. Abbreviations: PSRs (pharmaceutical sales representatives).

All tools of this technique were shown to have a significant effect ( p < 0.001) of the factor of the respondents’ category on the variation of prevalence from ANOVA analysis. The degree of influence varied from ɳ 2 = 12.50% to ɳ 2 = 27.45%. The Scheffé test revealed significant differences between groups of pharmacy consumers and pharmacists for all tools of this technique ( p ˂ 0.001).

The study of the effectiveness of merchandising tools showed that, according to all respondents (MEE = 4.32 ± 1.64 points), the specific arrangement and design of showcases had the greatest impact on consumers’ purchasing decision. Similar results were obtained in all other groups of respondents: PSRs (4.70 ± 1.57 points), pharmacists (4.42 ± 1.51 points), and pharmacy consumers (4.19 ± 1.73 points) ( Figure 2 ).

Effectiveness of merchandising tools. Abbreviations: PSRs (pharmaceutical sales representatives).

According to all respondents (3.13 ± 1.80 points), the least effective tool of merchandising was using light, sound, and aroma effects. Regarding the least effective tool, the opinions of the pharmacists and pharmacy consumers coincided (3.27 ± 1.74 points and 2.97 ± 1.86 points, respectively), and PSRs considered using product–magnets as the least effective (2.50 ± 0.93 point) ( Figure 2 ). The values of the coefficient of variation (34.14–64.19%) indicated the presence of inter-individual differences in the evaluation of effectiveness of the studied tools.

ANOVA analysis showed significant inter-group differences ( p ˂ 0.001) for the factor of respondents’ category on the variation of the evaluation of effectiveness, except for the POS-materials (ɳ 2 = 6.4%, p ˂ 0.001). The Scheffé test revealed significant inter-group differences for the effectiveness of the tool product-magnets between PSRs and consumers (1.30 points) and between PSRs and pharmacists (1.45 points) from one another ( p ˂ 0.001).

3.2. Consumer Promotion Technique

Among the tools for consumer promotion, the following were analyzed in the study: discounts; discount accumulative cards; bonus accumulative cards; promoted product and gift; buy 1 and get 2; and free samples.

Findings showed that the most prevalent tools for consumer promotion were free samples of the promoted product (RIP = 77.09%) and buy 1 and get 2 (RIP = 76.39%), according to all respondents. Community pharmacists considered free samples of the promoted product (RIP = 74.41%) as the most prevalent; consumers preferred buy 1 and get 2 (RIP = 83%); and PSRs named promoted product and gift (RIP = 89%) as the most prevalent one. The least prevalent tool (RIP = 55.51%) was discounts, according to all ( Figure 3 ).

Prevalence of the tools for consumer promotion. Abbreviations: PSRs (pharmaceutical sales representatives).

The coefficient of variation showed significant inter-individual differences in all groups of respondents for all tools of this technique, except for the tool discount accumulative cards (V = 0%) in the group of the PSRs. All interviewed PSRs gave negative answers regarding the use of this tool. ANOVA determined a significant influence of the factor of the category of respondents on the variation of the prevalence of all tools of this technique ( p ˂ 0.001). The Scheffé test pointed to significant differences ( p ˂ 0.001) between the groups pharmacy consumers/pharmacists and pharmacy consumers/PSRs for all tools, except for free samples.

The study of the effectiveness of consumer promotion tools revealed that, according to all respondents, the marketing tool buy 1 and get 2 (4.16 ± 1.71 points) had the greatest impact on the consumers’ purchasing decision, and the least effective tool was free samples of the promoted product (3.01 ± 1.77 points). Free samples of the promoted product ranked last in all groups of respondents in terms of effectiveness. PSRs put discounts (4.76 ± 1.67 points) in first place with a big difference from other tools, while pharmacists considered that the marketing tool buy 1 and get 2 (4.80 ± 1.53 points) had the strongest impact on the consumers’ purchasing decisions. According to the consumers’ answers, two tools of this technique were distinguished to have greater effectiveness: discount accumulation programs (3.91 ± 1.38 points) and discounts (3.83 ± 1.87 points) ( Figure 4 ).

Effectiveness of the tools for the consumer promotion technique. Abbreviations: PSRs (pharmaceutical sales representatives).

The values of the coefficient of variation showed significant inter-individual differences in all groups of respondents for all tools. The factor of the category of respondents had a significant influence ( p < 0.001) on the variation of the evaluation of all tools of this technique, except for free samples, as highlighted by ANOVA.

3.3. Trade Promotion (Motivating Pharmacists’ Trading Activity)

In the case of trade promotion techniques, only the opinions of PSRs and community pharmacists were studied because pharmacy consumers did not have to implement this technique in practice. The opinions of the respondents in the group of PSRs (RIP = 71%) and pharmacists (RIP = 66.32%) fully coincided: this technique ranked first in prevalence. It was found that the most prevalent tool within this technique was gifts when a certain level of retail sales (or wholesale purchases) of the promoted product was reached (RIP = 99% in the group of PSRs and 79.12% in the group of pharmacists). Btl events designed for motivating the pharmacist to dispense the promoted product (RIP in PSRs group = 50%) were not employed by pharmaceutical companies at the retail pharmaceutical market of Riyadh ( Figure 5 ).

Prevalence of the tools of the trade promotion technique. Abbreviations: btl (below the line); PSRs (pharmaceutical sales representatives).

The findings of the values of the coefficient of variation showed inter-individual differences in both groups of respondents for the tools of this technique, except for btl events and gifts in the group of PSRs. Inter-group differences ( p ˂ 0.001) were found for two tools of this technique: btl events and gifts.

Evaluation of the effectiveness of the tools for trade promotion showed a complete agreement of respondents of both groups (PSRs and pharmacists): gifts was named as the most effective tool. PSRs rated it with the highest possible score (6.00 ± 0.00), thereby identifying it as having the strongest motivational effect on pharmacists to dispense the promoted product. Btl events were considered to be the least effective tool for trade promotion ( Figure 6 ).

Effectiveness of the tools of the trade promotion technique. Abbreviations: btl (below the line); PSRs (pharmaceutical sales representatives).

The values of the coefficient of variation showed significant inter-individual differences in the evaluation of the effectiveness of all tools, except for gifts in the group of PSRs. The factor of the category of respondents had a moderate influence on the variation of the evaluation of the tools btl events and gifts, as pointed to by ANOVA.

4. Discussion

The findings of our research showed that consumers considered merchandising to be the most common marketing technique at community pharmacies. This could be explained by the fact that tools of merchandising are more apparent and obvious for consumers than tools of other promotional techniques. This fact is consistent with the essence of merchandising, which is to build effective marketing communications between a product and consumers. This finding matches those in the literature. For example, Dwight and Kulumbekova [ 15 ] noted merchandising as the main marketing tool most commonly employed at community pharmacies. At the same time, our research revealed that consumers considered that merchandising tools had the least impact on their purchasing decisions. Similarly, PSRs named merchandising as the least effective and the least prevalent sales promotion technique used at community pharmacies by pharmaceutical companies. This finding is confirmed by data available in the literature that tools of merchandising affect only 5.75% of consumers at a pharmacy [ 16 ].

Our research found that the most prevalent tool for consumer promotion was free samples of the promoted product. This result closely aligns with Zaki’s [ 17 ] conclusion that free product samples are the most accepted giveaways in the KSA and are considered to be the most suitable donation [ 17 ]. Similarly Al-Areefi et al. [ 18 ] claimed that in Yemen, free product samples were widely used alongside other gifts from pharmaceutical companies [ 18 ]. Notwithstanding the above, the findings of our research indicated that free samples of the promoted product were considered to be the least effective tool for consumer promotion by respondents of all groups. This means that free samples of the promoted product have little impact on the consumers’ purchasing decisions.

According to our findings, the least prevalent tool for consumer promotion was discounts. This could be explained by the fact that fixed state prices are used at the retail level of the pharmaceutical market in the KSA. In fact, we found that the most effective tools for consumer promotion were price incentive tools. Therefore, pharmacy consumers and PSRs considered that discounts and discount accumulative programs had the strongest impact on consumers’ purchasing decisions, while pharmacists named the offer buy 1 and get 2 to be the most influential.

Our research showed the complete concurrence of PSRs and pharmacists’ opinions regarding the trade promotion tools: gifts when a certain level of retail sales (or wholesales purchases) of the promoted product is reached was named as the most effective and, at the same time, as the most frequently used. In other words, pharmaceutical companies mostly employed the tool which had the greatest motivational effect on pharmacists to dispense the promoted product, which in the end, strongly impacts on the consumers’ purchasing decisions. These findings match those in the literature. After all, more than half of pharmacy purchases are made as a result of direct or personal sales when a pharmacist plays a crucial role in a consumers’ purchasing decision [ 5 , 14 , 17 , 19 , 20 ].

However, despite its methodological strengths (ad hoc questionnaire, non-repeated random sampling technique, and representative sample), our study is not without limitations. The major shortcoming was, that given the exploratory nature of our investigation, we limited statistical analyses to a coefficient of variation, ANOVA, and post-hoc test without performing regression analyses or structural equation modeling, which would enable the understanding of the determinants of inter-individual and inter-group differences, make more robust causal inferences and build predictive models helpful to the stakeholders.

5. Conclusions

Most pharmaceutical companies invest time and money in the field of marketing and try to find the most effective promotion tools to increase their sales and revenue.

Previous research discussing pharmaceutical marketing in the KSA has failed to identify the most effective sales promotion techniques that had the strongest impact on consumers’ purchasing decisions.

Thus, this research fills a gap in knowledge in the existing literature by identifying the most prevalent sales promotion techniques used by pharmaceutical companies at the retail market of the KSA and by determining the most effective among them, that is to say, those that had the strongest impact on consumers’ purchasing decision according to the opinions of the different participants involved in the promotion process: PSRs, community pharmacists, and pharmacy consumers.

The study findings indicated that, according to PSRs and community pharmacists, the most effective and, at the same time, the most prevalent technique was trade promotion. Consumers named merchandising as the most common technique, but at the same time, they considered that the tools of consumer promotion technique had the strongest impact on their purchasing decisions.

The research findings identified that, according to all respondents, the following sales promotion tools had the strongest impact on consumers’ purchasing decisions: arrangement and design of showcases among the studied tools for merchandising; buy 1 and get 2, and discounts among the studied tools for consumer promotion; and gifts among the trade promotion studied tools. The findings showed that the same tools were named as the most common by all respondents. The tool free sample of promoted products appeared to be the most prevalent, but, at the same time, was the least effective.

Undertaking this research was of paramount significance not only because it fills important gaps in the existing scholarly literature, but it also offers pharmaceutical companies a better understanding of which sales promotion techniques have the strongest impact on consumers’ purchasing decisions, thereby helping companies focus on the most effective marketing methods to boost their sales revenue as well as to reduce their marketing expenses. This could lower the product costs passed on to consumers. At the same time, our findings could be useful to healthcare decision- and policy-makers in the process of developing the necessary policies for regulating pharmaceutical promotion in the KSA.

Author Contributions

Conceptualization, Y.B.S. and N.V.P.; Methodology, Y.B.S., N.L.B., and N.V.P.; Software, Y.B.S., N.L.B., and N.V.P.; Validation, Y.B.S., N.L.B., and N.V.P.; Formal analysis, Y.B.S., N.L.B., and N.V.P.; Investigation, Y.B.S., N.L.B., and N.V.P.; Resources, N.L.B.; Data curation, Y.B.S., N.L.B., and N.V.P.; Writing—original draft preparation, Y.B.S. and N.V.P.; Writing—review and editing, N.L.B.; Visualization, N.L.B.; Supervision, Y.B.S., N.L.B., and N.V.P.; Project administration, N.L.B.; Funding acquisition, N.L.B.

This research received no external funding.

Conflicts of Interest

The authors declare no conflicts of interest.

15.5 Sales Promotion and Its Role in the Promotion Mix

Learning outcomes.

By the end of this section, you will be able to:

• 1 Define sales promotion.
• 2 Discuss the importance of sales promotion in the promotion mix.

Sales Promotion

Sales promotion is a promotional strategy focused on inducing sales in the short term. Of all the promotional activities, sales promotion is solely focused on a direct call to action to buy something. Sales promotion can be targeted to intermediaries through a push strategy or directly to consumers through a pull strategy. Marketers often use sales promotion in tandem with other promotional strategies. When McDonald’s advertises, for example, “Free fries on Friday when you purchase a menu item through the app,” it is using advertising along with sales promotion to induce consumers to use the app and to increase sales on Fridays.

When products are at the introductory stage of the product life cycle, sales promotion can be effective at inducing trial of a product. The greater the competition, the more a sales promotion strategy becomes important for getting consumers to switch or try a new or different product. Product manufacturers often use sales promotion in-store to set apart the brand or product at the time of purchase. As you walk past the cheese aisle at the grocery store, you might see Sargento offering a buy-one-get-one (BOGO) deal. This is a sales promotion geared toward getting the customer to buy more of Sargento or possibly try Sargento for the first time.

Importance of Sales Promotion in the Promotion Mix

Many of the strategies in the promotion mix are informative in nature. However, when other strategies are combined with sales promotion, there is a direct and immediate call to action to purchase the product. Companies needing to create sales in the short term will benefit from sales promotion. Utilizing sales promotion is a very effective strategy for generating trial of a product in the introductory stages of the product life cycle (PLC).

Spreading of Information

Sales promotion is very effective at spreading information about new products and product modifications. Creating awareness of the brand to new markets and customers is another effective use of sales promotion.

When MyPillow has an advertorial during Fox News and provides a code for a reduced price of its renowned pillows, the advertorial serves to tell new customers about the products as well as provide an incentive to purchase the product immediately.

Stimulation of Demand

One of the key elements to good sales promotion is that it stimulates sales in the short term. Sales promotion gives customers an immediate incentive to purchase a product.

Sonic Drive-In (see Figure 15.3 ) offers half-price drinks and slushes every day from 2:00 to 4:00 as a “happy hour” special. The use of this sales promotion tactic does two things: first, it incentivizes consumers to buy drinks, and second, it provides sales during the slow times of the day.

Customer Satisfaction

Today’s customer is presented with thousands of messages. Companies are driven to get noticed, increase sales, and keep their customers satisfied. Sales promotions are one method a company may use to increase customer satisfaction. A survey from RetailMeNot “showed that coupons can affect brain chemistry and can make customers happier.” The research concluded that an online shopper who received a $10 coupon was 11% happier and had 38% higher oxytocin levels than those who didn’t get a discount. 4 Providing the occasional discount can chemically make a customer happier, resulting in a more satisfied customer, who may spend more in the future and may become a loyal shopper. 5

Stabilization of Sales Volume

Sales promotion can also be used to help stabilize sales volume. Because sales promotion works to incentivize purchase of a product in the short term, companies often use this promotional tactic to drive sales and meet targets. Typical sales promotion tactics used to increase sales include buy-one-get-one-half-off and other specific discounts that are available when used by a certain time. The time element provides the company with the target for the sale, and the customer is provided with an incentive to purchase by a certain time.

Marketing Dashboard

Cost of customer acquisition.

We often think about profitability based on the difference between what we spend to create a product or service and the amount a customer pays for that product or service. However, we have to remember that there are costs to acquiring customers. In this chapter, you learned about two promotional activities that create costs to reach customers: sales and sales promotion.

Within the sales process, an organization pays a salesperson salary and/or commission to make sales. This is an example of a cost to acquire a customer. As you can imagine, we want our cost to acquire to stay low. For example, if we sold multimillion-dollar airplanes, it would be reasonable to spend thousands of dollars on a salesperson to make that sale. However, if we were selling several-hundred-dollar televisions, our cost to acquire a customer must be much lower.

Sales promotion is another promotional expense. For example, if a pizza brand provides samples at Costco, this might encourage a customer to purchase pizza. And if that customer keeps buying pizza, the cost of the pizza sample was worth it for the value that the customer will bring over the life of the relationship. Other categories of promotional costs include advertising, public relations, social media, search, and direct marketing.

The formula for cost of acquisition is the total cost of marketing activities divided by number of customers acquired.

In this formula, you will see an assumption that all customers are worth the same amount, but as savvy marketers, we know that this is untrue. This is why we need to use a variety of marketing metrics when evaluating campaigns.

Give the cost of acquisition calculation a try for yourself. What is the cost of acquisition in the example provided below?

What additional information do you need to determine whether the cost of acquisition is appropriate for the product or service?

The price of the product/service, total sales, expenses, and margins associated with the product or service

Let’s suppose that this example is for a national bookseller. The bookseller has an average profit per customer of $90 over the customer’s lifetime. Would the cost per acquisition that you calculated provide a good value for the bookseller? Why or why not?

Yes. It is worth it to spend $5.74 to acquire a customer worth $90 on average over the lifespan of the relationship;

Knowledge Check

It’s time to check your knowledge on the concepts presented in this section. Refer to the Answer Key at the end of the book for feedback.

• Advertising
• Personal selling
• Public relations
• Sales promotion
• Stimulate demand
• Spread information
• Increase customer satisfaction
• Create brand awareness
• Provide free publicity
• Increased customer satisfaction
• Providing information
• Increasing brand awareness
• Developing junk mail

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• Book title: Principles of Marketing
• Publication date: Jan 25, 2023
• Location: Houston, Texas
• Book URL: https://openstax.org/books/principles-marketing/pages/1-unit-introduction
• Section URL: https://openstax.org/books/principles-marketing/pages/15-5-sales-promotion-and-its-role-in-the-promotion-mix

© Jan 9, 2024 OpenStax. Textbook content produced by OpenStax is licensed under a Creative Commons Attribution License . The OpenStax name, OpenStax logo, OpenStax book covers, OpenStax CNX name, and OpenStax CNX logo are not subject to the Creative Commons license and may not be reproduced without the prior and express written consent of Rice University.

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Disclaimer: Constellation Research does not endorse any solution or service named in its research.

Sales Promotion

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• Karen Gedenk 3 ,
• Scott A. Neslin 4 &
• Kusum L. Ailawadi 4  

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University of Cologne, Germany

Karen Gedenk

Tuck School of Business at Dartmouth, Hanover, USA

Scott A. Neslin & Kusum L. Ailawadi

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Gedenk, K., Neslin, S.A., Ailawadi, K.L. (2006). Sales Promotion. In: Krafft, M., Mantrala, M.K. (eds) Retailing in the 21st Century. Springer, Berlin, Heidelberg. https://doi.org/10.1007/3-540-28433-8_22

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