new color TV set. At other times, it would offer a free watch, or calculator or ra-
dio, along with the purchase of a new TV set. This steady promotion made Akai
a very popular brand in India, and competitors such as Sony were not free to
compete in the same way.But usually, when a brand is price promoted too often, the consumer begins to
devalue it and buy it mainly when it goes on sale. So there is risk in putting a well-
known brand leader on promotion over 30 percent of the time.^49 Dominant brands
offer deals less frequently, because most deals only subsidize current users. Brown’s
study of 2,500 instant coffee buyers concluded that:
■ Sales promotions yield faster and more measurable responses in sales than adver-
tising does.
■ Sales promotions do not tend to yield new, long-term buyers in mature markets
because they attract mainly deal-prone consumers who switch among brands as
deals become available.
■ Loyal brand buyers tend not to change their buying patterns as a result of com-
petitive promotion.
■ Advertising appears to be capable of deepening brand loyalty.^50
There is also evidence that price promotions do not build permanent total category
volume.
Small-share competitors find it advantageous to use sales promotion, because they
cannot afford to match the market leaders’ large advertising budgets. Nor can they
obtain shelf space without offering trade allowances or stimulate consumer trial with-
out offering incentives. Price competition is often used by a small brand seeking to
enlarge its share, but it is less effective for a category leader whose growth lies in ex-
panding the entire category.^51
The upshot is that many consumer-packaged-goods companies feel they are forced
to use more sales promotion than they wish. Kellogg, Kraft, and other market lead-
ers are trying to return to “pull” marketing by increasing their advertising budgets.
They blame the heavy use of sales promotion for decreasing brand loyalty, increasing
consumer price sensitivity, brand-quality-image dilution, and a focus on short-run
marketing planning.
Farris and Quelch, however, dispute this conclusion.^52 They counter that sales pro-
motion provides a number of benefits that are important to manufacturers as well as
consumers. Sales promotions enable manufacturers to adjust to short-term variations
in supply and demand. They enable manufacturers to test how high a list price they
can charge, because they can always discount it. They induce consumers to try new
products instead of never straying from current ones. They lead to more varied retail
formats, such as the everyday-low-price store and the promotional-pricing store. They
promote greater consumer awareness of prices. They permit manufacturers to sell more
than they would normally sell at the list price. They help the manufacturer adapt pro-
grams to different consumer segments. Consumers themselves enjoy some satisfac-
tion from being smart shoppers when they take advantage of price specials.
MAJOR DECISIONS IN SALES PROMOTION
In using sales promotion, a company must establish its objectives, select the tools,
develop the program, pretest the program, implement and control it, and evaluate
the results.
Establishing Objectives
Sales-promotion objectives are derived from broader promotion objectives, which are
derived from more basic marketing objectives developed for the product. The specific
objectives for sales promotion vary with the target market. For consumers, objectives
include encouraging purchase of larger-size units, building trial among nonusers, and
attracting switchers away from competitors’ brands. For retailers, objectives include
persuading retailers to carry new items and higher levels of inventory, encouraging^599