Abstract

The aim of the article. Sales promotion is a broadly used instrument of marketing communications. Although manufacturers are obviously more interested in promoting their products, significant part of promotions seems to originate at the sales point. The aim of the paper is to study the features of sales promotion application in Ukrainian nonfood chain stores. The results of the analysis. The research presented in this paper is focused on sales promotion in personal care stores that operate in Ukraine including Watsons, Cosmo, Eva and ProStor. Data on more than 2 700 promotions was collected and analyzed by author to study the stores’ policy regarding sales promotion. Several methods of statistical inference including two-way ANOVA were used. It was discovered that sales promotion policy of analyzed stores, despite of the same field, vary vastly by several parameters. Thus, although retailers altogether tend to use discounts over quantity promotions, some of chain stores apparently use quantity promotions significantly more often than the others. Since retailers can’t change quantity of product in a package, they usually offer discounts on condition that consumer buys several products, that are usually framed as so-called BOGOF («buy one, get one free») promotions, «2+1», etc. Hence quantity promotions induced by retailers generally imply relatively big monetary incentives (i. e., 25, 33, 50%). According to this study, average depth of retailer’s one item discounts is (5,86 ± 1,1)% less than depth of quantity promotions. Overall depth of monetary promotions (both discounts and quantity promotions) also depends on retail chain. While Kosmo and ProStor offer consumers 20% discount most of the times, Eva and Watsons propose 25% discount more often than any other. But discount at Watsons, unlike other store chains, are rarely raised higher than 25%, hence Watson’s promotions have the lowest depth on the average. Differences among retail chains indicated in sales promotion policy are valid for both retailer’s private labels and manufacturers’ trademarks. But there was also discovered a significant difference between promotion’s depth of private labels and other brands in two of four studied retail chains (Eva and ProStor). Products under private labels usually have lower prices as the main competitive advantage and higher discounts may support that advantage as well. Moreover, retailers are evidently more interested in promotion of their own goods. Yet depth of discounts on private labels wasn’t found significantly different from depth of discounts on other brands at retail chains that operate longer and have strong brand names themselves (Watsons and Kosmo). Conclusions. Presence of significant difference among retail chains promotion’s depth considered as a strong evidence of relative independence of retailers in decision making regarding the type and depth of the promotion of any brand (not only private labels). Generally depth of promotions is higher for private labels, arguably due to positioning and higher profit rate. Yet retail chains that operate longer seem to maintain depth of all brands on the same level. Further research should consider relations between depth of promotions and brand awareness, brand positioning, etc. For better understanding of retailer’s promotion policy loyalty programs should be analyzed and compered.

Keywords: sales promotion, market promotion, consumer promotion, discounts, promo events, retail

JEL Classification: L67, L81, M31.

Cite as: Yusupova, O. (2016). Monetary sales promotion of non-food products by retail chains in Ukraine. Marketing and Management of Innovations, 1, 94-105. https://doi.org/10.21272/mmi.2016.1-08

This work is licensed under a Creative Commons Attribution 4.0 International License

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