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GROWING SIGNIFICANCE OF SALES PROMOTION

GROWING SIGNIFICANCE OF SALES PROMOTION
         According to Blattberg and Neslin “Business firms would be better off if they do not go for sales promotion and sell the products on list price, thereby earning maximum profits, which is supposed to be the ideal situation for any business.”  According to “Prisoner’s Dilemma” theory each competing firm has a fear that if the other firm introduces sales promotion then this firm would increase its market share and it would be the loser. Sales promotion is also understood as a catalyst and as a supporting facility to advertising and personal selling. It is becoming difficult for manufactures and dealers to anticipate sales in future, because of increasing number of brands. This is leading to excess inventories and the sales is supposed to be the quickest way to clear the piled up inventories. Classical condition theory, described by Pavlov, “demonstrated that hungry dogs would always salivate in the presence of food. When a bell was sounded almost immediately following the food, after sufficient number of times, the sound of bell alone caused the dogs to salivate.” Ope-rant conditioning theory by B.F. Skinner explains that “behavior is a function of its consequences.” If a behavior is reinforced it is more likely to occur. Purchase behavior that result in more favourable outcomes is encouraging the customers to repeat the behavior in future. The following significance of sales promotion is due to the following factors:

(1) Inter-firm rivalry due to increasing competition.

(2) Growing consumerism in the country.

(3) Spread of mass media.

(4) Managing shelf space against competition.

(5) Desire to have immediate Positive Impact on Sales.

(6) Advertising has become more expensive.

(7) Emphasis on sales volume directly contribute to the revenue of firms.

(8) Excess stocks compel firms to reduce inventories.

(9) Increase in impulsive buying.

(10) To get benefit of the economic of scale.

      All the above factors have contributed to the adoption of more and more sales promotion tools in their promotion-mix strategies by competing firms.

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