Sales Promotion Boom in Retail Stores

As India sees a Retail wave (Organised retail, which is 3% of the whole currently, is pegged to grow to $64 billion by 2015), within the Retail chains springing up around the country, we will witness a Sales Promotion boom. More of advertising money is now going to be channelled into sales promotion. There are very strong signs around that point to the fact that this is already happening. Most supermarket shelves are abuzz with promos inducing consumers to buy the brand with the promo. Categories include, soaps and detergents, juices and beverages, biscuits and confectionery and their like. Most shoppers too hunt for bargains on supermarket shelves.

The reasons for Sales Promotions to rule the roost are -
  1. The growing power of retailers

  2. Declining brand loyalty

  3. Increased promotional sensitivity among buyers (saves money)

  4. Brand proliferation/commoditisation of brands

  5. Fragmentation of consumer markets (mass media based advertising is ineffective)

  6. Short Term focus of Marketing on immediate sales increases

  7. Increased accountability (easily ascertained for Sales Promotion where results are tangible unlike effects of advertising)

  8. Greater competition (trade based sales promos gives brands an edge)

  9. Increased clutter on media vehicles due to large number of advertisement resulting in lesser visibility

Comments

Naveen said…
Hello Sir,

I liked sales promotion related blog and the various reasons u gave for the justification of the same. I have got one more example to share and i dont know u r aware of the same or not. Its on the same lines and the power organised retailers exert on the FMCG companies. Recently it happend between Big Bazaar, Food Bazaar and Frito Lays that have Lays, Kurkure and Lehar namkeen under its stable.

The case is the dilution of the brand name that happens when 1 shop at Biyani outlets. Retailers were demanding hefty discounts as all the items under the category were sold at bundled pricing or 2+1 free or 30% discount and combination of above all and various other formats. The brand was not happy with the prmotions as it was retailers who were giving promotion and the imagery of the brand getting hurt that it's a discount brand and thus imagery getting diluted. The same packet at the local kirana shop will be available w/o discount. The brand decided it will not give discount and the retailer decided it will not sell Frito Lays product and the same were removed from all Biyani outlets. The clear winner is Bingo and the private labels. So this shows the power retailer exudes in todays scenario.

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