Promotion of Both New and Existing Products Can Standout Without Price Reduction

Assessment 1:

Promotion of both new and existing products can standout without
price reduction

over others. Retail marketing is all the activities operated by retailers which commonly uses marketing mix, such as product, price, place and promotion; in order to influence consumer stimuli towards the products. Price reduction frequently uses in the retail marketing plan to persuade customer buying decision making to the products and allows the retailers to segment their customers for particular goods and services (Kotler and Armstrong, 2012). Therefore, retailers often use, promotion and pricing strategies to communicate with customers and build strong customer relationships with the retailers (Kotler and Armstrong, 2012). As stated by Shepherd (2003), even the best may not sell without a good promotion plan. For this reason, the promotion has been used to increase the consumers’ awareness and provide new information about the new products, for instance, Apple offers, trade promotion for the latest products so people can choose to trade their previous version plus a little extra cost in exchange for the newest version of the product. In this way, Apple can build more sales and raise the awareness of the new product at the same time. Also, for the existing products, the objective of promotion is similar. Promotion of existing products often use by retailers who want to get rid of the old stocks, also aiming to increase in the demand of that particular goods or services. We generally see this with the low value or impulse purchase products, such as, Mark and Spencer put the product which is on the promotion near the entrance or counter to increase the potential of consumers purchasing the products. In spite of this, only promotion alone can standout without a price reduction if retailers have some understanding of the influence factors of consumer behaviour through the stimulus-response model of buyer behaviour as shown in figure 1 (Philip Kotler and Gary Armstrong 2012). The personal factors can influence the consumer’s stimulus and buyer decision process to which the promotion can affect consumer behaviour without price reduction strategy.

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Figure 1. The Stimulus-Response model of buyer behaviour (Philip Kotler and Gary Armstrong 2012)

Kotler and Armstrong (2012) commented that, there are five personal characteristics of an individual which influence a consumer behaviour. Firstly, the occupation of an individual, this affect purchasing decision on goods and services; for example, Bankers and managerial managers favour expensive suits and would not purchase the one that has discount because they can afford a high quality products without worrying about the price.
        Secondly, age and life-cycle stage also influence consumer behaviour. The consumption of goods and services changes as their maturity through the stage of life. Many teenagers purchase everything base on they want over the price and value that they pay for the products, comparing with the adults (Baylor Business Review, 2004). Also, the demographic factors and life changing event influence buyer behaviour. For instance, a divorced gentleman likely to spend money on goods and services impatiently because he does not need to worry about family or others so his buying behaviour will base on his demand.
        Thirdly, the economic situation of an individual; the amount of purchasing goods and services mainly depends on the earning/income of consumers. For example, millionaires, people who earn extremely high income, their decision does not influence by product’s price because they have an excessive amount of money to the point that it is no longer influence their buying behaviour.
        Another important personal characteristic is the lifestyle, this is the person’s way of living, includes an individual’s activities, interests, and opinion. Each individual has different lifestyle which will determine the influence of their behaviour. For example, people who interested and obsessed with the antique products are willing to pay an absurd amount of money for their favourite product, same goes with oenophile; the wine lovers who will pay a lot of money for the wine, especially at auction.
        Lastly, an individual’s personality. As stated by Keller (2013) the personality often described in term of traits, such as self-confidence, dominance, defensiveness, and aggressiveness. Each individual also has different personality which reflect to the individual’s identify. People who has high self-confidence or dominance personality do not prefer discounted products which can affect their personality; using discounted products such as clothing may lead to the lack of confidence, in contrast, using products with its original respectable price can increase the level of self-esteem which is motivation, this is also another part of the factor that can drive consumer behaviour (Maslow, 1970).
        These personal factors influence consumer behaviour on purchase both new and existing products without the need of pricing strategy. Thus, the retailers can promote specific type of consumers who can satisfy their demand without associated in price reduction. Therefore, it is possible for the product to be promoted without price reduction.
        The next step in the stimulus-response model is called the buyer’s black box as shown in Figure 1 (Philip Kotler and Gary Armstrong 2012). As mentioned, buyer’s characteristics affect the stage of consumer decision making can be identified, but each consumer has different on the attentiveness of the innovation. The individual differences in innovativeness can influence the consumer decision making process.