Promotional Expenditure-Benefits and drawback
Marketing is often listed as a single line item on a business expense account. This may infer that expenses for marketing are straight forward and easy to categorize. To the contrary, marketing is one of the most misunderstood and complicated areas of planning and running a business. Marketing is often referred to as a “necessary evil” for a business. Without it, sales will likely struggle and with it can come significant costs. Sometimes marketing expenditures are needed just to insure product awareness and to stay even with the competition rather than greatly expanding sales.
Marketing experts often prefer to consider expenses for marketing as investments rather than expenses because successful marketing efforts will increase sales.
Benefits & Drawback
Benefits to society from promotional expenditure :
- It informs people about new products and this helps to increase competition firms.
- Creating mass markets, promotion can help in reduce average costs of production through economies of large-scale production.
- It allows income for TV, radio and newspaper businesses.
Drawbacks to society from promotional expenditure:
- Waste of resources
- Promotion is a powerful tool which encourages consumer to buy goods which they dont even need.
- It promotes consumerism ( people who are judged by quantity of goods they own)
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Promotions are very important aspect of marketing. However, it has to be used in a process of evaluating consumer response. Some of the scenarios where this is typically used is for bundling options to increase the sales and keeping market share in unseasonal time this is called as Push promotion strategy. Also when used with the Advertisement, it gives a good measure of viewer and watchers of the advertisement. This is typically called as pull strategy of promotions. However, if promotion not used judiciously may be at disadvantage.