Sales Promotional Strategies and Buying Behavior in an Emerging Market at the Post Recession Period

Introduction

The recession in 2008 has influenced shopping behavior and it continues to put stress on consumers. In response to the recession, consumers are changing their definition of value and purchasing patterns. Nielsen report indicates that with the recession, consumers are trying to rebalance their family budget, becoming more value conscious, showing a new norm of purchasing behavior, and they are using promotional offers to their advantage (Nielsen, 2012). Even in a tough economy, consumers around the world favor value over price when choosing where to shop. The key findings of Nielsen’s 2011 Global Online Survey of more than 25,000 Internet respondents across 51 countries show that consumers around the world continue to spend a lot of efforts to save money when shopping for consumer-packaged goods. 61% of global online consumers rated “getting a good value for the money” over “low price” (58%) as the most influential reason to choose where to shop. Since offering great sales and promotions (55%) is also among the highly influential factors that influence the global online consumers’ decision to shop, retailers who offer good values through sales promotions or via larger-sized economy packaging stand to gain the most from consumers in a tough economy (Nielsen, 2011).

According to the key findings of Acosta (2012) research consumers are clearly looking for ways to save on their everyday groceries and 59% of consumers indicate that over half of their shopping basket is filled with items that are on deal (Acosta, 2012). As manufacturers and retailers increase promotional levels in recent years, consumers have become accustomed to buying products on promotion. Consumers know that if a product is not on promotion this week, it likely will be next week and 65% of shoppers indicate that they “expect certain products to be on sale and, if they are not, they will wait until they are on sale to purchase” (Acosta, 2012). Given the recent economic realities, the “value-conscious” shopper becomes more visible trend than ever before and this trend is expected to continue. To increase the value of the offering, either the retailer may provide more benefits or reduced the costs of the offering. Reducing the cost of the customer to purchase a product involves activities such as lowering the actual price, increasing the convenience of the purchase etc. (Ravald & Grönroos, 1996). On the other hand, increasing the benefits of the offering involves adding something to the core product that the consumer perceives important, beneficial and unique. Sales promotions play an important role in creating value for consumers. For instance, premiums and loyalty programs can be used to increase the value of the offering through providing more benefits; whereas price packs, coupons, and discounts can be used to reduce the cost of acquiring the offering. Thus, retailers need to adopt new strategies to cope with the new “value-conscious” shopping behavior.