Is Promotion a Cost or a Benefit to an Organization
Promotion is a benefit to an organization. A successful promotion campaign will stimulate a consumer’s attitude towards a product and increase brand awareness, and may influence their decision to buy it; hence increasing sales for the organization. Higher sales are a positive for the company. Is promotion a cost to an organization.
When the product is bad, or has an inferior sales team, promotion is a cost to the organization. Its effects are only felt in the short term, and are ineffective for long term goals (Burrow, 2012). So as much as the organization will invest in promoting the product, the net productivity of the promotion will be small in the long-run, costing the organization. Moreover, the organization will have to overlook the loss in profit and the cost of incentives and advertising for the sake of the promotion. In the long-run, this may hurt the organizations growth in terms of profit margins. Furthermore, when consumers get used to buying a certain good because of a related sales promotion, it may become difficult for the organization to make consumers pay for the same good at the regular price. The reluctance from the consumer may cost the organization in terms of sales volume when the promotion scheme is over. I think that promotion is both cost and benefit to the organizations but its benefit is greater than its cost.
Promotion is a necessary cost. For new brands or brands that do not have a high market following, it is necessary to have promotions to influence buyers buy it. With time, the brand will make a breakthrough, thanks to the promotions. Without such incentives, a new product may have poor sales volume, resulting to losses for the firm; thus, it is advisable to spend some money on promoting it to gain more sales. Generally, the benefits a firm gets from promotions are more than the costs incurred during the promotion.
Burrow, J., & Bosiljevac, J. (2012). Marketing. Mason, Ohio: South-Western Cengage …