This blog is going to assess and determine the effectiveness of businesses using promotional offers on Facebook to increase the sales of its products and services. Firstly, the blog will analyse the positive impact of sales promotion on Facebook. Secondly and to provide balance to the arguments it will then look at a couple of potential negative impacts, and then finally it will highlight a couple of case studies whereby companies have successfully used this means of marketing to drive sales.

Sales promotions are typically viewed as being a temporary incentive that encourages the trial and sale of a product or service (Kotler, 1988; Webster, 1971). Well-executed sales promotion programmes on Facebook have proved a very effective method of increasing brand awareness, with the aim of increasing overall sales. One powerful example of this was demonstrated when Amazon ran a sales promotion in 2014 as shown in the figure below. The large spike in the middle of the month was income generated from a Bookbub free promotion.

Having an effective sales promotion often results in many customers switching from one brand to the discounted one. The general consensus appears to be that brand switching is a major source of volume for businesses, (Gupta, 1988) which has become very prominent on Facebook as users switch from brand to brand often depending on their price. For example, Totten and Block (1987) show an example where 83.2% of the incremental volume due to a promotion comes from switchers. This has major implications for many businesses and should be an attractive reason to offer promotions on Facebook. However, the sales promotion needs to be the right balance between being attractive enough for the customer to choose the alternative product and still being profitable for the business.

However, this is not always the case and indeed some research has suggested that an increased use of brand promotions can have a negative effect on a business. One way in which this can occur is through decreased brand preference. Aaker (1996) found that promotions have the potential to damage brand equity by focusing the customer’s attention too heavily on price and away from the quality of the product. Similarly, Keller (1998) suggested other disadvantages of sales promotions such as decreased brand loyalty, decreased quality perceptions and increased price sensitivity. At the same time and as shown by the Amazon example above not all sales and price promotions have long lasting effect. Its impact can be sudden and productive but once the promotion is over the effect on sales diminishes and in some cases sales return to their pre promotion levels.

Nevertheless, despite some negativities sales promotions remains a powerful marketing tool, increasing brand awareness and customer base for a company and one which is widely used on Facebook as its able to target a businesses specific customers

One specific type of sales promotion on Facebook involves coupon’s, which are certificates that give consumers discounts on goods or services when they are redeemed with retailers or manufacturers. They are often used to achieve specific sales and marketing goals, and have become popular with small business owners as they are cheap to distribute, and have been historically effective. They are particularly popular with customers as they offer immediate value and savings. One advantage of specifically using coupons as a means of sales promotions is that the consumers perceive coupons as a temporary special offer and not a reduction in price, so when the coupon is taken off, the customer does not have a negative effect on the sales. Facebook offers to businesses a targeted customer group to promote these coupons

The use of sales promotion on Facebook generally entices new customers to try a product or service for the first time. Schindler (1989) found that people who redeem coupons feel good about themselves saving money. When a customer feels good about a product or a service they have received they are likely to tell their family and friends about their positive experience, which will increase the sales of a business. According to, Heskett, Sasser and Hart (1990) those with pleasant recollections of an experience with a brand tell six people, demonstrating effectiveness of promotions.

Lets now look at a couple of examples of successful Facebook promotional campaigns. One of the objectives when creating an effective sales promotion, it is important to always place the customers’ expectations and needs at the centre. One successful example of this was when the company Tailor Threads co-operated with Good Morning America and ran a promotion for Fathers Day. They offered their Facebook fans 50% off all purchases. They have over 300,000 fans and were able to get almost a thousand orders from that promotion (Jackson, 2012).

A second case study involves the company Coastal Contacts also conducted a successful effective sales promotion, when they offered a flash promotion on their Facebook page. They offered a ‘10,000 glasses give away’ where customers who become first-time Facebook fans receive a free pair of eyeglasses. By doing so they were able to increase their social media base, and their number of customers, and in doing so could then on sell to these new customers moving forward (Jackson, 2012).

The article below gives advantages and disadvantages of using sales promotions, and also when a business should consider using them as a means of increasing brand sales.

http://www.yourarticlelibrary.com/sales/advantages-and-disadvantages-of-sale-promotion/50916/

References:

Aaker, D. (1996). Building Strong Brands. New York, 1(1), pp.1-60.

Chevalier, M. (1975). Increase in Sales Due to In-Store Display. Journal of Marketing Research, 12(4), p.426.

Gupta, S. (1988). Impact of Sales Promotions on When, What, and How Much to Buy. Journal of Marketing Research, 25(4), p.342.

Heskett, J.L., Sasser, W.E. and Hart, C.W.L., 1990. Breakthrough Service

Jackson, T. (2012). 12 Promotional Tactics To Boost Sales. [online] BrandMakerNews. Available at: http://brandmakernews.com/business-brand/promote-your-brand/7690/12-promotional-tactics-to-boost-sales.html [Accessed 12 Apr. 2016].

Keller, K. (1988). Strategic Brand Management. Upper Saddle River, 1(1), pp.1-20.

Kotler, P. (1988). Analysis, Planning, Imple- mentation and Control. Marketing Management, 1(1), pp.1-80.

Schindler, R. (1989). The Excitement of Getting a Bargain. Some Hypotheses Concerning the Origins and Effects of Smart-Shopper Feelings. Marketing Research and Public Opinion Polling, 16(1), pp.447-453.

Totten, J. and Block, M. (1987). Analyzing Sales Promotions : Text and Cases. Commerce Communications, 1(1), pp.1-50.

Webster, F. (1971). Modern promotional Strategy. Marketing Communication, 1(1), pp.1-70.