Answer to Question 1
Major developments that have given rise to sales promotion are:
1 . Balance-of-Power Shift. Retailers have more power over manufacturers due to the decrease in network television effectiveness and the advent of optical scanning equipment. Retailers no longer need to depend on manufacturers for data and use the facts they now possess to demand terms of sale rather than merely accepting manufacturers' terms.
2 . Increased Brand Parity and Price Sensitivity. As product categories have matured, most new offerings represent only slight changes from existing products, thus resulting in greater similarities between competitive brands. With fewer distinct product differences, consumers have grown more reliant on price and price incentives as ways of differentiating parity brands.
3 . Reduced Brand Loyalty. Similar brands make it easier for consumers to switch among brands, and many consumers rarely purchase brands other than those on deal.
4 . Splintering of the Mass Market and Reduced Media Effectiveness. As consumer lifestyles have diversified and advertising media have narrowed in their appeal, mass media advertising's efficiency has weakened. Also, advertising effectiveness has declined with simultaneous increases in ad clutter and escalating media costs.
5 . Short-Term Orientation and Corporate Reward Structures. The reward structure in firms organized along brand manager lines emphasizes short-term sales response rather than slow, long-term growth, and sales promotion is incomparable when it comes to generating quick sales response.
6 . Consumer Responsiveness. Consumers respond favorably to money-saving opportunities and other value-adding promotions.
Answer to Question 2
b
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