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I want to start this post by making clear that when a sales promotion is carried out well, properly planned and analyzed, performed in a short period of time and knowing the concrete objectives, it can emerge in success for the company and it’s going to allow an increase in its sales, even when the campaign finishes, in many cases.
That being said, sales promotion also entails some risks that can bring negative effects such as:
Risks of sales promotion
1) Spoiling your clients
If someone can get your product at a lower price for a certain period of time, it’s complicated for him/her to accept the following price rise without changes in the purchase behavior. This is why one of the main rules of a promotion is to be short in duration.
2) Not building customer loyalty
With this strategy, usually you are not going to get the loyalty of the customers, because most of the people who are attracted by promotions are the ones most sensitive to price, so although you may gain new clients, once your prices are at their normal rates again, you can say bye to a big amount of them.
3) Moving the purchase ahead
Many times, especially in food or hygiene products, if something has a promotion, the reaction of people is to buy more of it, more than you need right now. This implies that once the promotion finishes, you don’t have to buy any of it for a long time because you have plenty.
4) Mislead feelings
If a promotion lasts too long, especially if it exceeds discounts of 15-20%, the customers may start thinking about the regular prices of the company, wondering how it is possible to survive with such low prices for so long, concluding that they have big profit margins and that the normal price is ridiculously high.
In conclusion, sales promotions are all right and in some cases necessary and essential for a company in a concrete moment, but you have to be aware of its attached risks and have a plan to minimize them.