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STRATEGIC VERSUS

TACTICAL NATURE OF
SALES PROMOTIONS

MOHIT S. KELKAR
PGDM-Exec
2014-15
K. J. Somaiya Institute Of Management Studies &
Research

CONTENTS

Introduction
Previous Research on Sales Promotions
Sales Promotions Complexity
Strategic versus Tactical Goals
To What Extent can SP be Strategic?

SP and Consumer Psychology


Managing Environmental Contingencies
Planning
Managers Perspective

Descriptive Study
Conclusion

INTRODUCTION

Sales promotions labelled as short-term or


tactical instruments
SP characteristics :
Communication traits
Diversity of Sales promotion tools
SP market affiliation
Consumer behaviour impact dimension
The strategy versus tactical goals potentially
associated with SP tools is rooted not only in the
marketing concept, but also in the IMC
framework.

PREVIOUS RESEARCH - THE


SHORT VERSUS LONG-TERM
EFFECT

Profitability of SP contentious issue

Increased promotional activity reduces


brand loyalty and detracts brand quality
image

Fundamental features of SP
Incentive or inducement (For immediate
sales boost)
Effects are short term
Secondary compared (Compared to

SALES PROMOTIONS
COMPLEXITY

Diamond & Johnsons Three Dimensions


based on consumers attributes ratings
Price
Effects other than Price
Efforts.
Consumer-oriented SP can also be classified
as
Consumer reward immediate or delayed
Brand or Retailers objective (encourage
repeat purchases or reinforce brand image)
SP A Marketing device

SALES PROMOTIONS
COMPLEXITY

SP effectiveness dependent on

mix of consumers
deal-proneness
consumer expertize etc.
Psychological meaning to customers & brand
positioning

Quality-price tier
Type of product
Type of brand
Consumer markets growth stage
Product life cycle stage
Choice context

STRATEGIC versus TACTICAL


GOALS

Strategic goals
Long term
Marketing should be thought, planned &
managed strategically
Integrated Market Communication (IMC)
Revenue, profitability & sustainability matter
Depends on Organisations activities and
resources.
Tactical goals
Short term
To accomplish limited goals & quick fix action

To What Extent can SP be


Strategic?

SP and Consumer Psychology


Reward for personal information and proof of
purchase (Form filling)
Reward for continuation of purchase (Loyalty
Schemes)
Free trial offer. (Mothers Day)
Interacting with consumers to promote sales and
to impart knowledge of the product.
Two Conditions to influence consumer behaviour
for long term
Attitude Formation. (Case 1)
Causal Attribution. (Case 3)

To What Extent can SP be


Strategic?

Managing Environmental Contingencies


Expanding the target market
- Introduce the brand to new segments.
To gain competitive advantage
- The main distinction between tactical and
strategic use of SP is when there is a pattern of
organizational behaviour steadily built over time
contrasted with a sudden and episodic move
influenced by the opponent
To nurture relationship and network
- The connection between one brand and
another can help bring about a long-term

To What Extent can SP be


Strategic?

Planning

In order to pursue, consolidate or change an agreed positioning


and market segmentation strategy several decisions have to be
made, In this planning process, the following challenges must
be tackled:

Establish SP scheduling, deal frequency and to choose adequate


match of prize to target consumer
To be imaginative, creative and cost effective in developing
sweepstakes, lotteries and contests
To minimize the negative attributions associated with price promotions
To determine what success measures will be used and to assign loyalty
schemes effectively

Managers Perspective

Management team must act in accordance with the conviction


of strategic relevance of SP.

Descriptive Study

Research Objectives

Methodology

A survey was conducted (Manufacturing & Retail each)

Analysis is done based on the data obtained from Survey (Factor &
Cluster analysis)

Results

What goals managers assign to each SP tool and in what extension


those goals are more strategic or tactical

Based on the analysis, it is seen that managers allocate a given


promotional instrument to a specific task & they believe that different
tools are able to achieve different goals. Retailers positioning of the SP
tools partially matches with manufacturers perspective.

Discussion

Price promotions, such as price cuts and cash refunds, were


appropriated for quick reactive response, and for yielding short-term
results and some promotional instruments were only feasible within a

Conclusion

In terms of SP we can say that it is not wise to keep


blaming the tools when the responsible one is the user.
Some of the SP tools are structurally compatible with the
strategy framework
Their effectiveness in expressing the strategic dimension
is tied in to the way they were planned and implemented.
Focusing on the long term and applying the organizations
resources to enhance consumers brand value is a very
challenging task as far as SP implementation is
concerned. In fact, the easy way is to manage SP as a
short-term device.
Potentially SP can be strategic, but to make SP perform
strategically is surely a hard job.

THANK
YOU
MOHIT S. KELKAR
PGDM-Exec 2014-15
mohit.kelkar@somaiyya.ed
u