6 November 2019

How businesses target you the consumer

by Dr Jee Teck Weng

Malaysians love sales. This is evidenced by the large number of people who throng the shopping malls or departmental stores whenever there is a sale going on. Good examples of such scenario are the sales happening around festive seasons such as Hari Raya, Chinese New Year and Christmas, or the ever popular MATTA Fair and ICT Expo. But have you ever wondered what techniques businesses employ to drive consumers to their sales promotions?

While promotional sales activities are commonly perceived to be associated with special offers and discounts that contribute to huge savings for the consumer, they are not a standalone marketing tactics. Instead they are carried out in concert with other marketing activities such as advertising, packaging and branding, in the run up to and during certain promotional activities.

A sales promotion normally comes in the form of price discounts or rewards such as eligibility to a lucky draw if a consumer spent a certain amount on purchases. However, while such techniques may result in the increase in the retailers’ overall sales and profitability, they are only effective in the short run. This in turn enables retailers and marketers to better stimulate consumer demand, while enabling customers to experiment with trial products and/or services.

At the same time, such sales promotion techniques also enable retailers and marketers alike to better improve their products and/or services offerings. This is normally achieved by collecting meaningful marketing related intelligence from customers such as products and/or services usage, motivation to use, and willingness and ability to pay.

As a start, retailers and marketers can observe the selection and implementation of sales promotion techniques for selected items during a particular promotional activity conducted by their competitors. In return, it should inevitably guide retailers and marketers towards better implementation of sales promotion activities that would drive profitability in the short run.

However, it should also be noted that not all sales promotion techniques are equally effective in assisting retailers and marketers in moving the products from the shelves to the consumer’s trolley. Besides, not all sales promotion techniques are equally preferred by the consumer at large. This is due to two main factors which are highlighted below.

Monetary benefits

Recent studies conducted on consumer preferences of sales promotion techniques in the country revealed that Malaysian consumers tend to prefer sales promotion techniques such as price discounts and premiums which save them the most amount of money. Price discount can be observed on the labelling of a particular product and/or service package, or on a point of purchase display. Such price discount commonly happens during weekend sales, fairs and expos, school holidays, as well as during the various festivities.

Premiums, on the other hand, refer to promotional items offered at lower prices or even given out free when consumers purchase a promoted product. They are also known as BOGO, or ‘buy-one-get-one’ free. Premiums are special offers during a certain promotion period. This is similar to the bonus pack promotion technique where, for example, a complimentary 200 gram of X brand drink is packed with one kilogram of the same product.  However, bonus packs are special factory packs.

Malaysian collectivism

The Malaysian society is known to be a collectivist society – it accentuates the broader goals of the society over the goals of its individual members. Malaysians are known to be more concerned about how they can fit into society, hence, they behave in accordance with social norms.

They are less likely to feel embarrassed to enjoy price discounts and premiums because these are valued socially. To them, sales are opportunities to get more from retailers and manufacturers. Retailers and manufacturers are aware of this and make the most of sales promotion techniques to move their products.

In view of the points mentioned above, sales promotion techniques that are based on monetary benefits to the consumer can help retailers to increase their sales and profit margins. This is provided that they are planned and implemented properly.

Retailers and manufacturers must also be ready to invest in regular intelligence gathering on how Malaysian consumers view specific sales promotion techniques as consumer attitudes and behaviours are not cast in stone. This becomes even more pertinent when consumers are wondering about the likely effect of the Sales and Services Tax (replacing Goods and Services Tax) on their cost of living after its nationwide implementation.

Jee Teck Weng is a marketing lecturer from the Faculty of Business, Design and Arts at Swinburne University of Technology, Sarawak Campus. He can be reached via email at tjee@swinburne.edu.my