Impact assessment of Sales Promotion on long term shareholder wealth in Retailing Industry
Introduction
Retailing has been an important industry in any country. History would indicate that its form has changed with time as competition was no more a local phenomenon. Retailers started moving from being “neighbourhood stores” to expand their horizons nationally as well as internationally. Technology brought revolution in the retail industry with the advent of internet. Online retailers today have become a common part of everyone’s life. Mobile commerce too has started growing with the innovation of “App Stores” brought by Google and Apple. In this face of retailing, competitors have pushed themselves to gain more market share by trying
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This research aims to test the impact of sales promotion on generation of profits and shareholder wealth maximization.
Research Objectives
The research undertaken would have 3 main objectives:
1. To study and understand the sales promotion activities carried out by retailers
2. To study its impact on sales and profits of the company
3. To study the impact of such promotional activities on shareholder wealth
Research Questions
The research will try to address the below questions in a sequential manner in order to assess actual impact:
1. What sales promotion activities are carried out by participants in the retail industry?
2. What are the effects of sales promotion on the sales of the retailers?
3. What are the effects of the sales generated by sales promotion on the profits of the retailers?
4. What are the effects of sales promotion activities on long term shareholder wealth?
Literature Review
Marketers have come to identify that advertising alone is not always enough to move their products into the hands of consumers. Sales promotion is used to ensure that customers are aware of the products that organizations offer. Sales promotional activities were originally intended as short term incentive aimed at producing immediate consumer buying responses. Consumer promotions are short-term incentives targeted directly at consumers and they include: buy-one-get-one-free, price discount, event sponsorship, coupons,
During the past decade, retail markets have undergone many changes in their processes, services, and formats. The last part of distribution of the market strategy, retailing serves as a bridge between the final consumer and the mass producers of products. Retailing has reached every corner of the globe, and Wal-Mart has been eying areas where the
Promotion Decision- Retailer’s use and or all five promotions tools- advertising, personal selling, sales promotion, public relations
“Retail is the business of selling goods made by others to individual consumers. It is a huge industry, dominated by Wal-Mart, which touches every corner of the globe. Due to the decline in the global economy, the future of many retailers is uncertain as consumers begin to spend less. The retail industry is the last step in the process of getting products to customers efficiently, and should not be confused with the wholesale activities which precede it. The difference between the two is that wholesalers are companies that sell their products to businesses, whereas in retail, the goods are sold
Undoubtedly, due to fierce competition discounts and promotions on products and services helps the company to thrive and make them a global leader in the market. In this case, whether it help corporations to impact the market is matter of discussion. However, this essay will examine both pros and cons of the argument before reaching to a reasonable conclusion.
Promotions, marketing, and advertisements are typically created to acquire and retain consumers and to sell large quantities of a product. Every consumer may have a different perception of the same marketing tactic. This paper will discuss a promotion that was experiences personally, to what extent it changed or influenced my behavior, if the decision to purchase or not purchase would have been made either way, if it would have been different in some way, and what the seller could have done differently so that I would have done what they wanted.
Trade promotion is defined as the process of planning, budgeting, presenting and executing incentive programs, which occur between the manufacturer and the retailer to enhance sales of specific products. These promotions help the manufacturer or channel member to push the product through the distribution channel. (Clow, & Baack, 2014.) For example, a manufacturer like that of Hot Fire pays a retailer to feature the product in the retailer’s weekly newspaper advertising, not to mention covering expenses to build retailer product promotional displays within the store. Both tactics are considered trade promotions. Before any consumer promotions can be directed to the end-user with
- Sales increase: a) cross-promotions of each company’s brand and utilization of each company’s channels, and b) cooperation in international businesses.
1. What are the sales promotion objectives? ( 50 words 1 or 2 objectives )
The retail sector is one of the important sector in which there are more chances of growth for developing the economy. Today in the current scenario retailing including US$ 6.60 trillion (Rs. 2.64 crore) market share turnover in India. So we can say that the retail industry is big collaborative profit potential factor which is an ingredient of its GDP (Gross Domestic Product) and in day to business environment, retailers are increasing and which provides quality goods to the customer along with the different schemes and services.
Many people strive to find the greatest deal on that one item they want. This is why companies price their products competitively. The store with the cheapest prices will usually get more customers. However, pricing your products lower than someone else does not always work. Companies also need to communicate why the product is worth the price to their customers. If consumers sees a product as a good value, they will be more inclined to purchase it (Sunday & Bayode, 2011). So, to get more customers, companies will put discounts on products in their stores. These companies do this in hopes of getting more sales. Do sales promotions really get results though?
‘Business Week’(1991)believed that the reasons that the marketing costs is transferred from advertisements to promotions lie in the number of consumers who only buy famous brands decreased from seventy-seven per cent in 1975 to sixty-two per cent in 1990. Many corporations now believe that promotions lead to consumers’ allergy to prices. Thus it
Sales promotion tools are the lifeblood of marketing products/services to consumers. Without them, people would not be as likely to purchase every new fad that comes their way, and corporations would be wasting their money on products people were nervous to buy. For example, if you were used to using one particular type of cat food because you know your cat enjoys eating it, how likely would you be to switch the food? Probably not very likely, due to the fact that you had already looked at the nutrition facts, the price, and the seafood taste that cats are sure to love. Now, what if you received a ten dollar off coupon (for cat food that only costs twelve dollars). What would you do? Would you reconsider the food you were going to buy that week because of this coupon? Maybe the new food is just as good now that you are really thinking about it, and it only is going to cost a total of two dollars, so no harm done if you go ahead and make the purchase. This is exactly what a good sales promotion does to consumers, it makes them take a second look at their buying choices, and hopefully convinces them that it would be a good idea to try their product. I live in the United States, and the three most heavily used sales promotions are contests, loyalty programs, and sponsorships.
claim that sensitivity to different types of sales promotion might explain different promotional responses. Following this rationale, the primary objective
At the beginning of the 21st century, retailing has experienced a significant change due to the increase of competition strategies.
Retailing is the largest private industry in India and second largest employer after agriculture. This sector contributes to around 10 per cent of GDP and 6-7 per cent of employment. With over 15 million retail outlets, India has the highest retail outlet density in the world. This sector witnessed significant development in the past 10 years – from small unorganized family owned retail formats to organized retailing. Liberalization of the economy, rise in per capita income and growing consumerism have encourage larger business houses and manufactures to set up retail formats; real estate companies and venture capitalist are investing in retail infrastructure. Many foreign retailers have also entered the market through different routes such as wholesale cash-and-carry, local manufacturing, franchising, test marketing, etc. With the growth in organized retailing, unorganized retailers are fast changing their business models and implementing new technologies and modern accounting practices to face competition (Andrews, 2003).