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The potential benefits of using sales promotions could range from attracting new customers from competitors to persuading customers to switch to brands with higher profit margins or simply inducing existing customers to buy more. According to Petite and Petite (1995), promotions can be divided into two groups: “value-increasing” and “value-adding” promotions. Valetudinarians promotions such as price deals, coupons, and refund offers are the most popular promotional techniques used by retailers.
Value-adding promotions including free gifts, samples, loyalty schemes, or competition are often overlooked. These types of sales promotions may play a more positive role of adding entertainment value for what is paid (Wakefield & Barnes, 1996). Liechtenstein, Nanometer, and Burton (1995), on the other hand, classified sales promotions into price or non-price promotions. Notwithstanding, price-based value increasing promotions have the potential to erode the image of the company as consumers often use price as a surrogate measure of quality (Tells & Agate, 1990).
In contrast, value added promotions tend to offer the customer “something extra,” which might provide the customer with extra incentives to purchase the product Petite & Petite, 1995). Along that line, the central An Examination of Sales Promotion Programs in Hong Kong premise of the research by Chanson, Wanting, and Laurent (2000) is that the value that sales promotions have for brands or for customers is related to the value. Several researchers (Henderson, 1987; Schneider & Currie, 1991) claim that sensitivity to different types of sales promotion might explain different promotional responses.
Following this rationale, the primary objective of this study is to focus on the sales promotion techniques offered by Hong Kong cosmetic and toiletry retailers ND to determine to what extent these techniques are preferred by their consumers. Although sales promotions take up a very large share of total marketing expenditure, they remain an area of less strategic consideration or attention than any other aspect of the promotion mix (Cravings & Anderson, 1998).
The consumer goods manufacturer sees sales promotions as a necessary evil. The advocate of brand advertising proclaims that sales promotions are a bad thing since they do not contribute to the brand building needed for future success and profitability (Dates, 2004). At the same time, those involved in running the sales promotions focus on the tactical issue of getting the greatest amount of short-term sales for the least promotional investment (Davies, 1992).
Over the years, sales promotion has become a ubiquitous element of consumer marketing. However, not all promotional activities are effective. For instance, Lila (2006) claimed that instant-reward sales promotion was preferred over delayed- reward sales promotion and the preference for somersault sales promotion was stronger than for other-product sales promotion. Gilbert and Jakarta (2002) analyzed the promotional deals used in U. K. Parameters and found that price discount had significant influence on consumers’ buying behavior.
In contrast, sampling and “buy one get one free” techniques had no significance on a consumer’s reported buying behavior. In food retailing, Petite (1998) found non-price sales promotion techniques like competition were an effective method for moving stock. However, in the case of financial services, Petite and Petite (1995) suggested glittering prizes. A large number of reviewed literature essentially focused on the functions of sales promotion activities (e. G. , Gilbert & Jakarta, 2002; Lila, 2006; Petite, 1998; Petite &
Petite, 1995). However, a relatively small number of the studies explicitly examined the retailers’ capability of managing “sales. ” There are two articles that relate to this perspective. Beets and McCormick (1995) examined a wide range of factors that might influence “sales. ” These include the external environment (e. G. , legal, economics, competitive, culture), retailers (e. G. , strategic, merchandise), consumers (e. G. , individual perception, motivation), and behavior (e. G. , buying, complaints). The second 470 L. Yang teal. Vigorous (cost-effective and cost-ineffective managers of “sales”) of New Zealand tillers, Merciless and Fame (1999) found the cost-effective managers used more accurate demand forecasting, good coordination of media, careful planning of the promotion, and timely availability of stock rather than cost-ineffective managers of “sales. ” The literature has thus far indicated that not all sales promotion techniques are effective in influencing consumers’ buying behavior. To be successful, effective management of sales promotion programs is essential.
There are a number of studies on sales promotion at product category and service level, such as on service Wakefield & Barnes, 1996), FMC (Blather & Insulin, 1990; Raja, 1992), supermarket industries (Shih, Chemung, & Preponderates, 2005), and even on specific goods like tobacco (Gulping, Pierce, & Restroom, 1997). Nevertheless, there is a lack of studies relating to evaluating the sales promotion techniques employed by cosmetic and toiletry retailers and the consumer’s preference of these promotions, especially in the Asian context.
This study will fill in this gap by revealing the sales promotion practices and customers’ responses to them in Hong Kong. METHODOLOGY Hong Kong is a free enterprise society. It has been touted by advertisers as the capital of sales promotion, given the myriad of promotional activities that appears in the newspapers, outside the undergrounds, inside commercial enterprises, and in letter boxes. Hong Kong is a large import market for cosmetics and toiletries in Asia as it has a very small manufacturing sector.
Cosmetic and toiletry products are mainly distributed through department stores, supermarket chain stores, cosmetics specialty shops, and, more recently, through concept stores and beauty salons. Hong Kong consumers spend an average of HOOK $900 per month on these products (Line, 007). Popular product ranges include skin whitening products, hair coloring products, color cosmetics, nail care products, and skin and slimming treatments (Echoing, 2005).