Sales promotions

Published Date: 23 Mar 2015

In the United Kingdom, most of the companies that are known as the big advertising spenders allocate more money on sales, promotions than advertising. Due to the movement towards relationship marketing and integrated marketing communications, growth of direct mail and increasing cost, advertising lost its dominant importance over other communication mix in last two decades. The ratio of advertising budget against promotions budget is 30:70 (advertising: promotions) which was 60:40 in 1990s in UK (Kotler, 1997). This fact underlines the importance of sales promotions. However, sales promotions fail to be successful unless they are clearly targeted, well communicated and original.

Companies can use sales promotions for different purposes such as: increasing a particular product's usage, improving sales of existing product, retaining and rewarding loyal customers and helping to introduce new products, data capturing. Depending on the time and the way that these sales promotions methods are employed, they could be tactical or strategic tools (Pickton & Broderick, 2001). More often sales promotions are used as tactical tools to have short term outcomes- for example, as a response to competitors' activity or improving the sales of a product or service. Alternatively, some sale promotional techniques can be combined with customer relationship management programmes which seek more strategic and long term approaches (Hackley, 2005). For example, free samples and contest entry forms are used to capture customer information in order to create a customer database which adds value to business as importance of direct database marketing is rapidly increasing. Furthermore, customer retention programs and rewarding loyal customers with sales promotions assist to create a brand loyalty over long run.

Mintel's (2008) report discovered that high street pubs and bars spend more money on sales promotions than any other communication mix. Particularly with the effects of credit crunch, reluctance of spending money on alcoholic drinks and night-outs made it indispensible to lower prices or add extra value through sales promotions to lure potential customers. This is one of the most important reasons why sales promotions became very important in bar industry in recent times. In order to retain customers, some bars and restaurants started to give price cuts, 2 for 1 offers and meal deals. To respond to competitors move and overcome the reluctance of spending money on entertainment, other bars and restaurants also used sales promotions. This current economic climate created a great opportunity for bars and restaurants to gain competitors' customers by the way of using sales promotions to bring customers in to experience their service. If they can make good use of the opportunity, those customers can be loyal customers.

Marketing communications are vital for a company's success. Regardless what product or service is offered by an organization, messages should be sent to potential customers through marketing communication methods. In most cases, combinations of those methods are used in marketing plan. Product life cycle is a tool that helps managers to plan their communication mix. Sales promotions can be employed in each stage of a product or service's life cycle. Sales promotions help to strengthen the messages that are sent through advertising, public relations and other promotional activities. However, their purpose of use depends on what stage they are used. In introduction stage, they tend to encourage potential customers to try the service in order to create awareness. In growth and maturity stages, the main aim of the sales promotions is to build brand loyalty and reinforce the messages (Varey, 2002) that are given in introduction stage and increase the usage of a product or service. More in depth uses and analysis of product life cycle will be discussed in chapter 2 and chapter 4.

Pitcher & Piano, a bar chain with branches located throughout the UK and owned by Marston's Public Limited Company, is one of the many bar chains which emphasise the importance of sales promotions by employing these tools as both a tactical and a strategic tool very often.

There are three types of sales promotions: customer sales promotions, trade sales promotions and employee sales promotions (Wright, 2000). This study will mainly focus on customer sales promotions. The purpose of this research is, by using relative literature on the topic and with the help of primary data, to examine the usage of customer sales promotions and the methods and discover whether these methods are used to influence a service or brand's performance in bar industry in short term or long term.

1.3 Brief Background of Pitcher & Piano

Pitcher & Piano is a bar chain with branches located throughout the UK. Since 1996, the brand operates as a part of Marston's Public Limited Company. The first Pitcher & Piano was opened in 1986 in Fulham. When Pitcher & Piano Fulham opened its doors to public, it was one of the first wine bars in the UK. This new wine bar concept was an alternative to traditional British pub culture. The concept became very popular and over time other brands like All-Bar-One, Slug & Lettuce emerged. There are 27 Pitcher & Piano bars around UK now. Recently, company decided to sell some of their branches in London in order to focus on the branches where the venues are owned by the company and that are profitable. Main competitors of Pitcher & Piano are All-Bar-One, Slug & Lettuce, Grand Union and Living Room. Pitcher & Piano bars offer a wide range of wines, spirits and beers as well as party snacks and food. Even though Pitcher & Piano bars all operate under the same brand name each bar has its own strengths tailored to the customers' demand in the area. While some are led by food sales, others are renowned for their party atmosphere and drinks. Hence, individual branch has its own promotions which are decided by house general manager depending on their customer base and target.

In 2004, to help government to tackle increasing binge-drinking related crime, along with some of other pub groups, the company decided not to consider "Happy Hours" or similar promotions campaigns (Evening Standard, 2004). However, heavy competition, current economic climate and plans for creating customer database for direct marketing pushed the company to use sales promotions methods again.

1.4 Rationale of the Chosen Topic

During the current economic climate, most companies use sales promotions to encourage recession-hit people to spend money on their products and services. In this context, the bar industry is one of the most interesting industries since the priority of entertainment lost its place to the primary needs such as satiating hunger. Therefore, it caused bar industry to employ sales promotions as tactical tools extensively. Particularly, in bar industry, heavy competition made it compulsory to use sales promotions in order not to lose customers to other bars at the same time attract competitors' customers.

Furthermore, having worked in bar industry for five years, out of which 4 years in Pitcher & Piano, the researcher has gained knowledge and understanding of various usages of marketing communication mix, particularly, sales promotions in bar industry. This experience also helped the researcher to observe how the company reacts to internal and external changes. Even though sales promotions are common tools employed by marketers as a tactical weapon, it has become more complex and also interesting for the researcher to analyse them during the current economic climate within bar industry. That is the main reason why the topic, which is to examine methods of sales promotions employed by Pitcher & Piano and analyse effects of these methods on the company's performance, was chosen to. This research will help the researcher to gain a valuable knowledge about marketing the communication mix and more importantly, sales promotions.

1.5 Aims and Objectives of Research

The main aim of the research is to explore different methods of sales promotions, when and where to use appropriate methods, either as a strategic tool or tactical tool, and understand their pros and cons in the hospitality industry. In order to understand the methods, this research will evaluate the above mentioned bar Pitcher & Piano that use sales promotion frequently. In this context, the objectives of this research can be described as follow;

- To find out what kind of sales promotions used by Pitcher & Piano,

- To evaluate the outcomes of the employed sales promotion techniques,

- To assess the effectiveness of the given methods and suggest areas in need of improvement where necessary,

- To analyse the use of sales promotion in the context of tactical or strategic tools.

1.6 Significance of the Study

This research provides several significances such as;

This research will provide information to marketers on the uses of consumer sales promotion in bar industry and help them to have an understanding of some of the consumer sales promotion methods. This research can help other researches on this particular topic, sales promotion and related topic.

In general, the usage of sales promotion amongst all communication mix is rapidly increasing, particularly in bar industry, in the UK. However, sales promotion always perceived as a supporting activity of advertising and public relations. Many academics underlined its efficiency of achieving short term goals. Nevertheless, its long term impacts have been ignored. Although the debate is on-going whether sales promotions are strategic or tactical tool, in the context of question industry examined in this research, they can be specifically interpreted as strategic tools in such activities as building customer database, encouraging trial use and repeat purchase.

1.7 Brief Structure of the Study

This study consists of 5 sections. Each section includes some explanations and opinions to help enlightening the subject matter. This study attempts to find out the uses of customer sales promotion in bar industry and whether these promotions are employed as tactical or strategic tool.

Chapter - 1: This chapter contains the introduction on the changing nature of sales promotion within promotion mix and a brief view on related models and topics. This chapter also includes the usage and the importance of sales promotion's in brief and succinct background information about Pitcher & Piano. Finally, aims and objectives, rationale and significance of the study are covered in this section.

Chapter - 2: In this chapter, all current and related topics are examined. Different opinions that have been expressed by academics on strategic uses of sales promotion are discussed. Furthermore, various consumer sales promotion methods, communication methods in service industry, importance of sales promotions in direct marketing and usage of product life cycle for promotional mix are explained with the help of existing vast literature on these topics.

Chapter - 3: This chapter explains the methodology that is employed by researcher while doing this research. Approaches of the researchers and the methods adopted to collect and analyse the primary data are critically argued. Finally, shortcomings which are faced by researcher in the research process are included in this chapter.

Chapter - 4: This chapter represents the analysis of the data collected and the findings of this research. In this chapter, it is also focused on that to what extend the findings are related to the literature review. The researcher also

Chapter - 5: This chapter includes conclusions and recommendations. Conclusions are made with the help of literature review, analysis and the primary data. Recommendations were given to bar industry to advise on the strategic use of sales promotion methods.

2. LITERATURE REVIEW

This section will attempt to explain the current argument on the topic and present different views by academics. It will help to understand concepts and models relating to sales promotion in the context of question as well. However, the usage of these models and concepts in practice will be related in data analysis section with the help of observed examples and primary data.

2.1 Sales Promotions

2.1.1 Sales Promotion and Current Debate on Sales Promotion

Sales promotion is one of the four aspects of promotional mix along with advertising, personal selling and public relations. Sales promotions which, are also known as below the line promotions, are methods that are used by marketers to attract consumers. Sales promotions have been in use in trading for a long time. Shopkeepers and stallholders had been employing on the spot offers to convince people to purchase a product (Mullin and Cummins, 2008).

Sales promotions are, traditionally, defined in the most textbooks as activities such as deals, discounts, coupons, loyalty programs, refunds, contest, sampling and special displays that are encouraging the target audience to act in a particular way by reducing the perceived value of the product being promoted usually to achieve short term goals (Fill, 2006; Pickton and Broderick, 2001). According to Institute of Sales Promotion (2004; cited in Yeshin, 2006, p1), sales promotion is defined as ' a planned and implemented marketing activity that both enhances product and service appeal and changes customer behaviour positively in return for an additional benefit for purchase or participation.' Lamb et al. (2004, p323) also interpret sales promotion as 'generally a short run tool used to stimulate immediate increase in demand'. Most definitions underpinned the immediate encouragement to buy the product and service at the time. Nevertheless, the definitions do not convey the same message whether it has short term or long term effects. Most of the definitions above agree that sales promotion is a short term tool. Similarly, Shimp (2000, p508) considers that sales promotion has a short term nature by stating that 'in contrast to advertising, which typically, though not always, is relatively long term in orientation and best suited to enhancing buyer attitudes and augmenting brand equity, promotion is more short-term oriented and capable of influencing behaviour (rather than just attitudes or intensions).' Fill (2006, p635) is another supporter of this school of thought. He believes that 'just as advertising seeks to work over the long term, sales promotion can achieve short term upward shifts in sales.' When comparing advertising and sales promotion, Kotler (2008, p85) underlined that 'whereas advertising offers a reason to buy a product or service, sales promotion offers reasons that would achieve immediate sale.'

However, Yeshin (2006) opposes to the views stated above and claims that objectives of sales promotion have dramatically changed in recent years. Wilmshurt and Macay supported Yeshin (2006) by stating that 'companies have increasingly realized, however, that whilst sales promotion has tactical uses it has strategic implications' (2002, p211). According to Gupta et al. (1997 cited in Yeshin, 2006), many empirical researches have focused on identifying short-term effects of sales promotion. Thus, most practitioners and, in particular, academics failed to see long term effects of sales promotion. Schultz et al. suggested that sales promotion can be strategic by stating 'sales promotions are marketing and communications activities that change the price / value relationship of a product or service perceived by the target, thereby generating immediate sales and altering long - term brand value' (1998, p7). Kotler and Armstrong (2008, p502) suggest that 'in general, rather than creating only short term sales or temporary brand switching, sales promotions should help to reinforce the product's position and build long term customer relationship.' In addition, they (Kotler and Armstrong, 2008, p.502) claim that 'if properly designed, every sales promotion tool has the potential to build both short term excitement and long term consumer relationship.' Mullin and Cummins (2008) believe that a good sales promotion should prompt a customer to consider a product or service and help them to make a decision after the promotion campaign. Brassington and Pettitt's (2003, p720) definition covers all the characteristics of sales promotion. They believe sales promotion is 'a range of tactical marketing techniques designed within a strategic marketing framework to add value to a product or service in order to achieve specific sales and marketing objectives. This extra value may be of a short-term tactical nature or it may be part of a longer-term franchise-building programme.' Finally, Boone and Kurtz (2001, p509) noticed the shift in the usage of sales promotion in recent years by stating that 'today, however, marketers recognize them as integral parts of many marketing plans, and the focus of sales promotion has shifted from short-term to long-term goals of building brand equity and maintaining continuing purchase.' They supported their argument with frequent-flyers programs that can create a base of loyal customers. It should be noted that sales promotion is a great tool to get immediate affects. However, sales promotion's capability of creating a long term affects should not be ignored.

While the debate, whether sales promotion is short term or long term, is still on-going, the use of sales promotion has increased enormously in last two decades. Smith and Taylor state that the importance of sales promotions over advertising have been increased because of various reasons which are;

a)the movement towards relationship marketing, b) the growth of direct mail, c) the emergence of promotion-literate consumers who expect promotions with certain product types, d) during recessions, price-conscious customers search for value-for-money promotions, e) powerful retailers favour suppliers whose products sell quickly, f) high television advertising costs force marketing managers to look for more cost effective below-the-line tools. (Smith and Taylor, 2004 p. 356)

Even though they are widely used by many companies, some academics disagree to use them extensively. Many of them underline the facts that extensive and repetitive promotions of a product can damage the brand value, sales and cash flow (Schultz et al., 1998).

2.1.2 Strengths and Weaknesses of Sales Promotions

Each communication mix can accomplish a certain objective that other elements cannot (Burnett and Moriarty, 1998; Shimp 2000). For example, advertising cannot change a product or service's sales trend in short term however sales promotion can.

What sales promotion is capable of accomplishing;

Motivate sales force to sell a new, improved or mature product. When personal selling methods becomes boring and monotonous, exciting sales promotions can stimulate sale force's enthusiasm and make the job easier for them (Shimp, 2000).

Stimulate sales in maturity stage of a product or service. By changing price / value relationship, it can encourage more people to use a product or service (Schultz et al., 1997).

Counteract a competitor's communication campaign. Competitors' advertising and sales promotion campaign can be neutralized by using counter sales promotion campaigns (Shimp, 2003).

Encourage consumers to try a new service or product (Fornell et al., 1985). When a product or service is being introduced into the market, it is very important to encourage people to experience it (Mela et al., 1997). Consumers would not know if the product or service is high-quality unless they try it. Many consumers would not try a new product without any sales promotion activity.

Retain existing customers through repeat purchases. Sales promotion can be used to prevent existing customers to go to competitors. Shimp, (2000, p516) states that 'strategic use of sales promotion can encourage at least short-run repetitive purchasing.' Besides short-term repetitive purchasing, continuous sales promotion programs such as loyalty card scheme encourage customers to repeat purchase.

Reinforce the messages given with advertising and public relations campaigns. Sales promotion can be a main tool for an organization's communication plan. However, it can also help to emphasise messages given with any other communication tools (Burnett and Moriarty, 1998).

Help to build a customer database. The importance of direct marketing is increasing. In order to build a database to contact consumers directly, sales promotion are used to capture their contact details. Some sales promotions require customers to provide their details in return of a free products or discounts (Mullin and Cummins, 2008).

What sales promotion is not capable of accomplishing;

Inability to change opinion about an undesired product or service. Consumers would not purchase a product or service if they do not like it. Sales promotion usually will fail to help to compensate a low quality product or bad service (Boone and Kurtz, 2001).

Unable to compensate for poor advertising. Sales promotions cannot fix a problem caused by weak brand image or lack of brand awareness. It can help in the short run. However, it is unrealistic to expect a good result in long run.

Sales promotions can have negative effects on long term (Jedidi et al., 1999). If sales promotion is used repeatedly, it can create confusion on perceived value of a product or service. Thus, customers would not buy the product or service once the promotion is over and wait for the new promotion.

2.1.3 Consumer Sales Promotions and Methods

According to Fill (2006), sales promotions are used for various reasons such as reaching new customers, reducing distributor risk, rewarding behaviour, retention, adding value and assisting segmentation. There are three types of sales promotions depending on who they target: consumer sales promotions, trade sales promotions and employee sales promotions (Srinivasan and Anderson, 1998; Wright, 2000; Fill, 2006; Boone and Kurtz, 2001). The focus of this study will be on consumer sales promotions, as it is mentioned in Chapter 2 and on discovering what types of sales promotions methods are used by Pitcher & Piano and whether they are tactical or strategic.

Pickton and Broderick define consumer targeted sales promotion as 'pull promotional activities designed to encourage demand by end-customers that will pull products through distribution channels' (2001, p539). Objectives of sales promotion and analysis of whether the objective is strategic or tactical are given in the Table-1. Consumer targeted promotions are used for improving sales of existing products, encouraging repeat purchase, trial of new products and brand loyalty, giving a response to competitors move and capturing customer database information. There are different tools of consumer targeted promotions. The most popular and widely used ones are sampling, couponing, premiums, money-off, bonus-packs, prize draws and refunds. However, Pitcher & Piano uses sampling, premiums (2 for 1s, 3 for 2s), money-off and contests and sweepstakes more often, for example, last summer, Pitcher & Piano customers could win Bacardi's global music festival tickets on completion of registration forms (Appendix 1).

Price-offs offer consumer discount on the regular price of a product. They are used to accomplish different objectives. They can be used to reward the existing customers. In this case, price-offs collaborated with loyalty card schemes (Hobbs and Rowley, 2008). Another use of price-offs is to encourage consumers to stockpile the product. It is a good way of pre-empting competitors. Those customers who stockpiled the product are out of marketplace until they consume the product. They would not buy competitors' brand during that time (Shimp, 2000).

Price-offs can be offered to customers on a specific time of the day. For example, "happy hours" in pubs and bars is a good example of it. The objective behind is that to pull the customers inside the venue at slow periods to increase volume (Reid and Bojanic, 2006).

Combination offers or bundling are one of the most popular methods that are employed by restaurant and bar industry (Kotler et al., 1996). Two or more products or services are combined together and offered on a price that would be more if they are purchased separately. Such examples are restaurants' 3 course meal deals, two for one deals and drink and meal at a specific price deals.

2.1.3.2 Premiums

Premiums are products or services that are offered free or at relatively low cost when buying a product; such as buy a meal get the drinks free or purchase this meal and get a baseball cap free (d'Astous & Jacob, 2002). Premiums are typically given to consumers as a reward for behaving in a particular way, usually visiting a store or buying a product or service (Burnett and Moriarty, 1998). They can also be used to add value to product and represent an advantage over competitor's products (Pickton and Broderick, 2001). The main target of premiums is to encourage the trial of a product. There are two types of premiums which are direct premiums and mail premiums. Incentives are provided at the time of the purchase with direct premiums. Direct premiums can be given to customers in the store, be placed with the package, be inserted in the package or the container itself can be the premium (Yeshin, 2006). Mail premiums require consumers to provide a proof of purchase of a product or service before being handed. Some of the mail premiums are given free after the customer sending the proof of purchase and some requires customers to save a specific number of coupons or special labels (Burnett and Moriarty, 1998).

2.1.3.3 Sampling

Sampling means offering standard or trial-sized samples of a product for free or at a reduced price in order to either create an awareness of a new product / service or increase the consumption of an existing one (Shimp, 2003). Sampling is usually used to aid when a new product or service is launched. Although it is very effective, it is the most expensive way of introducing a product or service. If the consumers are not targeted properly, the losses can be big (Kotler et al., 1996). Thus, companies should avoid giving samples to consumers who would never purchase the product or service in future. Samples are widely used in hospitality sector as well (Reid and Bojanic, 2006). Some restaurants and bars offer samples of their potential customers or people whose opinion is respected in the area. One of the reasons for that is to create a positive word of mouth about the service.

2.1.3.4 Coupons

Coupons are the legal certificates by manufacturers that offer customers discount when buying a specified products (Schultz et al., 1998). They can be mailed or emailed (direct mail), given with newspapers, magazines or with another product. According to Kotler et al. (1996), coupons are very popular in restaurant and bar industry. Srinivasan and Anderson (1998) suggest that the value of the discount should be decided very carefully. If the face value is low, consumers are reluctantly to redeem the coupons. However, if the face value is raised, more people redeem it on a price lower than they would have redeemed. Moreover, excessive uses of the coupons can make customers feel they are getting poor value, if they purchase the product or service without a coupon.

2.1.3.5 Contests and Sweepstakes

Different forms of competitions such as contests, sweepstakes, prize draws, where they can win a prize without having to spend extra money, are used in order to attract customers (Boone and Kurtz, 2001). This kind of competitions creates an excitement amongst consumers. A sweepstake is a sales promotion technique where customers are required to submit their names and e-mails in a drawing in which they have the chance to win cash, trips or a product or service. The winners are determined purely on the basis of their luck (Egan, 2007). Because of its low cost comparing with other methods, simplicity and ability to accomplish a variety of marketing objectives, the usage of sweepstakes have increased recently (Shimp, 2000) Contests are also another technique for sales promotion. Unlike the sweepstakes, in order to win a prize, contestants compete with others on the basis of skills or ability (Fill, 2006). They are usually asked a contest problem or proof of purchase. The winners are selected by judges.

Regardless the type of sales promotion, all the sales promotion campaigns should go through an ethical consideration. Consumer oriented promotions such as coupons, contests and premium offers fail to be ethical if the consumers are promised a reward for acting in a certain way wished by promoter and the reward is never given (Shimps, 2000). For example, contests that are making people believe the winning odds are high when they actually are not or lowering the quantity or quality of a product or service when they are on promotion and advertising it as normal. Consumers can also be guilty of unethical behaviour. For example, filling coupons with fictitious names and addresses in order to get the reward.

2.2 Marketing Communications and Integrated Marketing Communications (IMC)

Marketing communication is an important aspect of an organization's overall marketing mission and key determinant of its success. Marketing communication is the process of reaching and acknowledging target audiences about a product or service. According to Thomas and Housden, there are four main objectives of marketing communications which are 'to initiate a relationship (prospecting), to develop the relationship into a sales transaction (conversion), to maintain the relationship (loyalty building) and to resurrect a lapsed relationship (re-activation)' (2002, p13). Companies apply different approaches and methods in order to communicate with their target audiences. Advertisements, salespeople, store signs, point-of-purchase displays, product packages, direct-mail marketing, publicity releases, sponsorships, sales promotions are all various forms of communication devices for marketers (Shimp, 2000). All these devices are used to create awareness or to promote a product or service.

Any activity that an organization is involved in can deliver messages to their consumers. These messages can either be planned or unplanned. Planned messages are sent to consumers through communication mix. Unplanned messages would include all other communications such as store cleanliness, distributors, employee attitudes and the exterior surroundings of your business, in other words, any elements related with the company that are capable of delivering implicit messages. For example, unfriendly bartender, dirty glasses in a bar, untidy back bar can all deliver negative messages that can have more impact than all the planned marketing communication messages (Burnett and Moriarty, 1998). The term marketing communication mix and promotion mix from 4Ps of marketing mix are used interchangeably in existing literature. Therefore, they are also used interchangeably throughout this research.

In 1980s, many academics and practitioners treated each communication tool as separate and distinct. This approach, sometimes, could create some confusion for customers. For example, messages from advertising campaign could fail to match with the messages from public relations campaign, since the sources of the messages were different. Thus, this could give two different messages to consumers about the same product, service or organization.

It should be noted that each communication tool can reach audiences various ways and some of them can complement one another and reinforce each other's effects (Burnett and Moriarty, 1998). Therefore, in the last decade of 20th century there was a huge shift to integrated marketing communication (Kitchen and Pelsmaker, 2004), which, unlike the traditional communication approach, seeks to unify all marketing communication tools in order to send a consistent message to target audiences. Boone et al. (2001) suggests that in the integrated marketing communications concept, messages are receiver-focused rather than product-focused and to create a synergy, IMC coordinate all promotional activities. With the emergence of IMC, companies' started to spend less money on advertising and more on below the line communications. According to Levinson (2001; cited in Kitchen et al., 2004), two decades ago US companies spent 75 per cent of their marketing budget on advertising. However, nowadays 75 per cent of marketing budget goes into trade and consumer promotions. This fact underlines the importance of the sales promotions within IMC.

2.3 Communications in Hospitality Industry

According to Reid and Bojanic (2006), hospitality and tourisms firms are one of the big spenders of advertising and sales promotion. However, many academics suggest that sales promotions are used more frequently in service industry. Competition in retailers and, particularly, supermarkets primarily focuses on pricing. However, in hospitality sector, competition is based on intangibles such as quality of service, reputation and atmosphere (Fisk, 2004). Therefore, Wakefield and Bush (1998, p209) claim that 'service marketing communications are likely to emphasise issues relative to the physical environment (i.e. the location, personnel and atmospherics, etc.) and prices. The latter may take the form of a sales promotion which facilitates consumer search and evaluation of the value provided by the service'. Furthermore, Mintel (2008) also found that pubs and bars in UK make use of advertising at a very low level.

One of the most significant communication methods for pubs and bars is consumer promotions and these promotions are spread to customers through word of mouth. Another way of communication method for local pubs is their position in the high street. Mintel (2008) advises that highly visibility of local pubs to potential customers makes local media advertising unnecessary.

With the increasing popularity of social network on the Internet, pubs and bars started setting up profiles for their businesses and try to reach their customers through Facebook - like social networks. For example, Pitcher & Piano's marketing department requested from each house manager to create a profile for their branch and publish its promotions and any other events in the venues through these profiles i.e. Pitcher & Piano Chester branch has 453 friends and publish their student nights, drinks and food offers on their profile (Appendix-6).

2.4 Product Life Cycle and Communication Mix

In order for firms to position themselves strongly in the marketplace, it is crucial to create right communication strategies. Product life cycle is one of the most long-standing and useful tools for marketers. In particular, it is vital when planning communication mix. It is helpful in determining baseline strategies for communication mix. Product life cycle is not only used for products. It can also be applied to services.

As all of the living creatures have a life cycle, so does every product or service, which is identified as product life cycle. All hospitality and tourism organizations evolve through a distinct life cycle as well. Product life cycle concept suggests that once the new product or service launched, it gets into a "life cycle" and will eventually end up with disappearing from the market. From launching to death of the product or service, there are four stages; introduction, growth, maturity and decline (Kotler and Keller, 2006). In order to sustain the sales of a product or service, companies employ suitable marketing mix for each stage. Promotion is one element of marketing mix which can change the cycle of a product (Pickton and Broderick, 2001; Woods, 2007). Although, all of the promotional activities are in use at one point of the product life cycle, sales promotions can be used from introduction to decline stage of a product's life cycle.

2.4.1 Introduction Stage

Once the product or service is launched, the first stage it enters is called introduction stage. In this stage, almost all types of communication tools are exercised to inform the public in order to create product awareness, interest and desire (Varey, 2002). One of the main advantages of high street pubs or bars is that since their location is highly visible in the area, while the construction works are carried out, it creates some interest in the local community naturally. This naturally created curiosity should be used by hospitality managers to gain advantage over competitors within the area (Reid and Bojanic, 2006). The interest of the local community can be supported by activities such as, "coming soon" sign outside the construction area or signs indicating when the venue is expected to open and what kind of business it will be.

Apart from these activities, advertising campaigns in local newspapers is another method of communicating with potential customers. In introduction stage, the main aim is to reach as many people as possible and inform them about the new venue. Therefore, there is a big emphasis on advertising and public relations activities. For example, one of the duties of a Pitcher & Piano manager, when launching a new venue, is to cruise around and talk to local businesses and people whose opinion are respected in the area such as doctors, lawyers and restaurant reviewers (Reid and Bojanic, 2006) about the upcoming venue. Almost all of the local businesses are given exclusive invitation for the pre-opening night. Managers can also attempt to make deals with some of the large local businesses (i.e. price-offs or discounts for their employees) where they believe it is crucial to retain them. The main reason behind that is to increase store traffic as it is vital for a pub or bar to create atmosphere and local businesses can promote the venue through word of mouth, providing they have a good experience.

Sales promotion is also another tool for managers in the introduction stage. However, whether the managers will use sales promotions or not relies on the entry strategy that is chosen. According to Lancaster et al., there are 2 entry pricing strategies in the introduction stage (2002). Depending on the product or service's distinctiveness, companies pursue either a skimming or penetration strategy. Skimming strategy involves a high price policy that focuses on a small section of consumers, usually higher-income groups, who are ready to afford it and have no worries of wasting money. This group of people, who are also called innovators, has no more than small influences on the other groups. However, they can state an approval of the product or service's reliance (Harrell, 2002). Companies tend to reduce prices in order to get possible new groups of costumers, who are called early adopters. Their opinion about the product will lead companies what sort of strategies to follow. In other words, they are the vital group of costumers that shapes the life cycle of the new product.

Skimming strategy is suitable where the product or service is new-invented, innovative or much-improved and demand is expected to be high. For example, opening a new cocktail bar on a high street where there are only restaurants and traditional pubs and bars. Whereas, penetration strategy is suitable where demand is elastic and the number of alternative products is high. Penetration strategy aims to encourage as many as new buyers by pursuing low price policy (Lancaster et al, 2002). Nonetheless, neither a skimming strategy nor a penetration strategy has a big influence on maximizing profits. They are only marketing strategies which make profitability of the product or service last longer.

If a pub or bar chooses a penetration strategy, which is usually the case for Pitcher & Piano because of the competitors in the area and having a relatively old concept, the use of sales promotions is one option for the managers in order to encourage potential customers to experience the product or service. Advertising and public relations activities are supported with free drinks offers, price-offs, 2 for 1 deals. When combined with advertising and public relations, sales promotions that are used in introduction stage can be classified as long term tools as they play a big role in creating awareness. Furthermore, they give potential customers an opportunity to experience the product or service. If they leave the venue with a good experience, it is the first step to gain those customers, make them loyal to the venue and assurance of their next visit.

Another important communication activity in introduction stage is to build direct mail database which in later stages will be critical for the success of a product or service. Email addresses can be gained in exchange for some types of discounts deal and most of the businesses send out exclusive sales promotions vouchers to their customer database.

2.4.2 Growth Stage

Once a product or service establishes itself in the market place and sales start increasing, it enters into a new stage in its life cycle which is called growth stage. If a product or service reaches its growth stage, it is also the assurance of the acceptance to the market. There are distinct uses of promotional mix in this stage as well. Advertising and public relations campaigns emphasise on, yet again, creating brand loyalty, brand name recognition, persuading customers to buy the product or service (Egan, 2007).

In this stage, similar products or services are expected to be seen, particularly if the introduction stage has satisfied the market. For example, if Pitcher & Piano notion is taken as a product, it was one of the first bars to bring the wine bar concept in the UK. Because of its success, Pitcher & Piano - like bars had been opened. Brands such as Slug & Lettuce and All-Bar-One enter the market offering a similar service.

Promotional activities increase slightly to meet competition and inform the potential customers (Kotler et al. 1996). At this stage, new features and values are added to the service. For example, bars feature special events and offer live music or a DJ on specific nights. Sales promotions are used to reach more customers. This can be done by using customer database. Exclusive promotions are sent to loyal customers to increase their custom. Loyalty card schemes are introduced in this stage in order to retain existing customers. Hobbs and Rowley (2008, p370) states that 'in the hospitality industry customer retention is typically associated with repeat patronage, which leads to enhanced profitability'. Some of these schemes entitle customers to have instant discount on the point of sale and others offer free product or service after a certain number of purchase. Cuthbertson and Laine (2004) suggest that loyalty cards help to generate information that is used to plan an organization's sales promotion campaign. Furthermore, there is a huge effort put on to extend customer database and increase loyalty card holders. Most hospitality businesses, particularly bars and restaurants, collaborate with internet sites that provide restaurant reviews such as toptable.com, restaurant-guide.co.uk and eatanddrink.co.uk and publish their promotions on those sites to reach more customers. Collaboration with some of the leisure businesses is arranged in similar manner. Exclusive discounts are offered to their customers. Sales promotions in growth stage can have long term effect since they are used to support advertising and public relations campaigns which convey brand loyalty and brand recognition messages.

2.4.3 Maturity Stage

Growth stage should be followed by maturity stage. It is regularly the longest stage of a product or service. Besides reminder advertisements, sales promotions are used in the form of coupons and discounts in this stage. Sales promotions tend to be more price-orientated than value adding in maturity stage. These promotions rarely have long term affects. They are used to make customers to purchase the service more, to keep existing customers and to lure competitors' customers. Nevertheless, Reid and Bojanic (2006, p380) suggests that 'if a large number of hospitality and tourism operations in a given geographic area offer coupon discounts, consumers can become conditioned to coupons as a way of life, with the result that they will patronize only those operations that offer such discounts'. In this case, it can be perceived as a pricing strategy rather than sales promotions, as the customers expect to have the same quality of service and will choose to patronize whichever offers lower price.

In maturity stage, since the emphasis is on defensive marketing in order to retain existing customers and increasing the amount of custom from them (Hobbs and Rowley, 2008), usage of loyalty card and direct mail based promotions increases extensively (Pickton and Broderick, 2001).

2.4.4 Decline Stage

After maturity stage sales of a product or service start to decrease. This is a sign that the product or service is in its decline stage. Communication budget is kept at its lowest in order to reduce the cost and maximize the profit. Although there are still sales promotions or advertising activities, they are not as extensive as first three stages. Companies tend to use their customer database for advertising and sales promotions as it is one of the cheapest options. Once the product is in decline stage, companies attempt to seek new technologies or products derived from existing product or service. Particularly in hospitality industry, in this stage, companies refurbish the venue as people get bored of the decoration and atmosphere offered by the venue and start the life cycle from the beginning.

2.5 Direct Marketing and Sales Promotions

Direct marketing is a different approach to marketing. Tapp describes direct marketing as 'a method of marketing based on individual customer records held on a database. These records are the basis for marketing analysis, planning, implementation of programmes, and control of all this activity' (2005, p4). With the major advances in computer technology and databases, companies can maintain enormous databases that can contain millions of customers and prospects with a low cost. Along with these advancements, the need for better targeting, its ability to improve targeting and declining effectiveness and increasing cost of the traditional media (Evans et al., 2004) has accelerated the growth of direct marketing, particularly direct mail, in the last decade (Thomas and Housden, 2002). Direct mail is one of the methods that is used in direct marketing. Companies can send tailored advertisements and sales promotions to a prospect or customer. Although some practitioners disagree agree, direct mail can get good results for restaurant and bar industry (Reid and Bojanic, 2006). Particularly, special events and promotional offers can be delivered to prospects and customers. There are various advantages of direct mail marketing. These are listed as such by Reid and Bojanic (2006).

* It can be highly selective while deciding who to contact and reduce the number of people that should not be contacted.

* The effectiveness of the campaigns is easy to be evaluated.

* It is easy and quick to create direct mail pieces.

* It can contain as much information as possible. This information is not conveyed only with text. Good design and production of the direct mail pieces can deliver a lot of information in one mail. As other media channels restrict, there are not any limits for time or space.

3. Research Methodology

This chapter explains the methodology that is employed by researcher while doing this research. Approaches of the researchers and the methods adopted to collect and analyse the primary data are critically argued. Finally, shortcomings which are faced by researcher in the research process are included in this chapter.

Research is defined by Saunders et al. as 'something that people undertake in order to find out things in a systematic way, thereby increasing their knowledge' (2007, p5). Saunders et al. (2007), then, accordingly describe business research as carrying out systematic research with the aim of discovering something about business. As earlier definitions of research suggest researches should have a systematic behind it. These systems are usually called research methodology.

Researches can be classified in different ways. They can be classified by their purpose, process, logic and outcome accordingly (Collis and Hussey, 2009).

On the basis of its objectives or purposes, there are three different types of research. These are descriptive, causal (explanatory) and exploratory researches (Zikmund, 2000).

3.1 Research Classification by Purpose

3.1.1 Descriptive Research

Descriptive researches are conducted to describe what is happening in a subject area where some understanding has already been gained. Descriptive research is used to signify and gain information on the characteristics of a particular problem or issue (Collis and Hussey, 2009). Descriptive research, unlike the exploratory research, attempts to examine a problem in the question. The overall understanding should be gained on the phenomena before the data collection. This type of research tend to answer who, where, when and how many questions (Branninck and Roche, 1997; McNeill and Chapman, 2005).

3.1.2 Causal (Explanatory) Research

Causal researches attempt to find out the cause and consequences of an action. In causal research, the hypotheses are tested according to their cause and effect relationship (Kotler et al., 2008). According to Malhotra and Birks, causal researches in marketing are suitable for the following purposes:

1 To understand which variables are the cause (independent variables) and which variables are the effect (dependent variables) of marketing phenomena.

2 To determine the nature of the relationship between the causal variables and the effect to be predicted.

3 To test hypotheses. (2007, p79)

Causal research seeks to find an answer for how and why questions (Branninck and Roche, 1997; McNeill and Chapman, 2005).

3.1.3 Exploratory Research

Exploratory researches are used when exploring a topic which is little known by researches (Kumar, 2005). According to Collis and Hussey (2009), the purpose of exploratory research is to discover patterns and new ideas and create hypotheses which can, later, be analyzed by casual or descriptive researches. Exploratory researches are more flexible and less structured. The main focus of exploratory research is to seek insights and familiarity on the phenomena for a better examination (Saunders et al., 2007). Collis and Hussey suggest that 'typical techniques used in exploratory research include case studies, observations, historical analysis, which can provide both quantitative and qualitative data' (2009, p5). It is also believed that exploratory research can rarely provide a definitive conclusion to the problem in question. However, it can provide a path for future researches on the phenomena. Exploratory researches usually answers what questions (Brannick and Roche, 1997).

This research is an exploratory research on the basis of its purpose. Even though there is a vast knowledge about sale promotions, their uses in hospitality industry, particularly in high street pubs and bars, are little known. Thus, further investigation to sales promotions and its relativity to bar industry was conducted.

3.2 Research Classification by Process

Depending on their inquiry mode, there are two types of researches; quantitative and qualitative (Kumar, 2005).

3.2.1 Quantitative Research

Quantitative research uses numbers and statistical methods. It tends to base the results on numerical measurements. Collis and Hussey describe quantitative research as 'objective in nature and concentrates on measuring a phenomena' (2009, p7). Quantitative research is highly structured. Thus, it is easier to analyse the data and draw conclusions.

3.2.2 Qualitative Research

Qualitative research attempts to explain the phenomena in terms of meaning people give to them. Qualitative research involves case studies, interviews, personal experience and observations (Thomas, 2003). This type of research is regarded as subjective in nature.

This research employs a qualitative approach since previous researchers have different perceptions over the problem in question; therefore, the problem is subjective. In addition, the researcher makes use of a case study, interviews and observations which are generally used to collect qualitative data.

3.3 Research Categories by Outcome

Researchers can have two approaches to research when drawing conclusions: deductive approach and inductive approach (Ghauri et al., 1995). These categories are based on the logic of the research (Collis and Hussey, 2009).

3.3.1 Inductive Research

In inductive research, conclusions are drawn from empirical observations. This type of approach is generally used in social research. A researcher with inductive approach will attempt to discover data and, by relating those data to the literature, build new theories (Saunders et al., 2007). Inductive approach tends to be focused on small sample of subjects rather than general subjects. The researcher originates the theory from empirical observations and specific measures, then discovers some similarities and finally proposes some general conclusions (Eriksson and Kovalainen, 2008). Inductive approach usually requires qualitative data since it seeks to find out why something is happening rather than what is happening. Much of the Observation Pattern Tentative Hypothesis Theory

Source: made by researcher based on the understanding of the topic.

3.3.2 Deductive Research

Deductive research is a study which involves developing a theory structure prior to the research and then testing the theory through empirical observation (Collis and Hussey, 2009). This type of approach is generally used in scientific research. Thus, it usually relies on quantitative data. The main purpose of deductive research is to test hypotheses and theories and draw conclusions by moving from general to the specific. Theory Hypothesis Observation Confirmation

Source: made by researcher based on the understanding of the topic.

While doing this research, the researcher adopted the inductive approach as the problem in the question requires observation of the usage of sales promotion and find similarities with literature and collected data. Finally, the researcher draws conclusions from the data analysis and makes some recommendations for further studies.

3.4 Case Study Research

3.4 Positivism, Phenomenology and Realism

3.4.1 Positivism

Positivism is an epistemological position that can be taken by researchers when conducting a research. The conclusions and findings of the research can be accepted as a natural law or a generalization theory (Saunders et al., 2007). The researcher needs to be vastly structured when using the positivist approach in an attempt to ease the quantifiable observations, which guides the researcher to a statistical analysis of the findings. Positivism keeps away from the unknown and also the thought that theory consists of general observations. Positivism tends to go towards an objective viewpoint and the quantification of data at the same time assumes that the researcher is outside the subject matter.

There are several benefits of using a positivist approach which includes giving a broad coverage of the variety of situations; it can be a reasonably fast and cost-effective way of collecting data and also can be of considerable importance to policy decisions. On top of that, there are weaknesses which enclose this process, which include; the method is nonflexible and non-natural and not useful in understanding processes or the implication those attached to actions. It is most likely not helpful in generating theories and policy makers may find it hard to deduce from it what should happen in the future.

3.4.2 Phenomenology

Phenomenology is the study of structure of consciousness (Stanford Encyclopaedia of Philosophy, 2003) and defined as the way that people perceive the world around them (Saunders et al., 2007). Its main structure of an experience based on intentions, structure of consciousness that is being directed toward something, as it is an experience of or about some object. According to Stanford Encyclopaedia of Philosophy (2003), 'it is experience which is believed to direct an object by virtue of its content or meaning together with appropriate enabling conditions'. It can be understood that the easiest and surest way would be to draw the solid individual phenomenological problems from the concept of phenomenology. Phenomenology is basically such and such; hence it encompasses such and such problems. Within phenomenological inquiry there are contradictory definitions of its nature and tasks. Nevertheless, even though these differences in defining the nature of phenomenology could be brought to an agreement, it would remain doubtful whether the concept of phenomenology consequently attained, a kind of average concept that could direct towards the most concrete problems to be chosen. Explanation of the idea of phenomenology is the same like exposition of the idea of scientific philosophy.

The weaknesses of this approach include; it consumes much of the time from gathering the resources and implementing them, it is difficult in analyzing and interpreting the results, it is cluttered because of the pace, improvement and endpoints are difficult to control and policy makers give the study a low credibility rating.

Such an understanding is important to the researcher as he or she may be including or excluding data that creates bias in the sample and thereby invalidates the research findings. Therefore issues such as dependence versus involvement and field work or experimental approach have been included when considering the philosophical approach of research strategy.

3.4.3 Realism

Belief of realism is that reality exists without being dependent of human thoughts and beliefs. Realism distinguishes the significance of understanding people's socially constructed interpretations and meanings within the context of seeking to understand broader social forces or processes that influence the nature of people's views, when it is applied to the study of social subjects (Saunders et al., 2007). This indicates that it is a necessity for the researcher to work together with people being researched and findings are the result of the interactive process focusing on meanings and understanding of the situation or phenomenon under study. Realism agrees the fact that there are large social forces that have an effect on people behaviours.

3.5 Data Collection Methods

Data collection method is critical for the researcher. Depending on the nature of the research question and methodology, researcher can choose to use primary or secondary data (Brannick and Roche, 1997).

3.5.1 Secondary Data

Secondary data is the data that already is collected for different purposes other which can help researchers to answer their research questions (Saunders et al., 2007). Secondary data can be gained from letters, memos, diaries, autobiographies, internal reports, newspapers, magazines, photographs, books, journals and internet blogs. However, according to Brannick and Roche (1995), before using the data the researchers must make sure the data is reliable and valid. In order to test the validity and the reliability of the data, the researcher should ask the following questions: 'Who collected the data?; Why did they collected the data?; When did they collected the data?; What did they collect?; How did they collect it?; and is the data consistent?'(Brannick and Roche, 1995, p215).

Throughout the research, the secondary data collected from books, journals, the Internet, company's memos, marketing notices and internal mails.

3.5.2 Primary Data

The data that is collected at its source is known to be primary data (Collis and Hussey, 2009). It is original data collected by the researcher for understanding, analysing and drawing conclusion on the problem at hand (Ghauri et al., 1995). This data can be gathered by different methods. These methods are observations, surveys and questionnaires, and interviews. In this research, the researcher utilized observations and interviews.

3.5.2.1 Observations

Observation is a method of collecting primary data where the researcher watches or views actions and try to gain information on those actions that are related to the research problem (Boone and Kurtz, 2001). Observation methods are used in business research when the researcher requires data on what people do. There are two types of observations. Participant observation helps to find out qualitative data on the research topic. Its main objective is to discover the meaning of actions people give to them. On the contrary, with structured observations, the researcher generally tries to gain quantitative information on the topic (Saunders et al., 2007). In participant observations, the researcher can have different roles. The researcher can be complete participant, complete observer, observer as participant and participant as observer (Bryman and Bell, 2007).

Complete participant is when the researcher tries to be a full functioning member of the social setting and operates covertly and his or her aim is to obtain information without concealing his true identity and intention to other members (Cassell and Symon, 1994).

Participant as observer participates in the social setting with other members and reveals the intension of his or her participation (Bryman and Bell, 2007).

Observer as participant acts almost as an interviewer. There is very little participation (i.e. asking them questions). The main aim is to observe the social setting and the researcher's identity is concealed to other members (Cassell and Symon, 1994).

Complete observer is when the researcher wants to discover the behaviour of a member of the social setting without interacting with them and not revealing his or her intention (Saunders et al., 2007).

In this research, one of the methods the researcher facilitated in order to obtain primary data is participant observation since the research requires quantitative data. The researcher chose to be a complete observer as he attempted to view the way that house managers use sales promotion. In addition, customers' reactions on sales promotion were observed by using this method.

3.5.2.2 Interview

Interview is a method that is used to collect qualitative primary data (Lee and Lings, 2008). Saunders et al. define interview as 'a purposeful discussion between two or more people' (2007, p310). The data collected through interview is more likely to be valid and reliable than any other methods. The researcher can gain very detailed information by asking the interviewee open ended questions. Another advantage of the interview method is that any misunderstanding can be eliminated immediately. Interviews can be classified as structured, semi-structured and unstructur