Sales Promotion

Topics: Brand, Sales promotion, Marketing Pages: 41 (13361 words) Published: June 18, 2011
Pierre Chandon, Brian Wansink, & Gilles Laurent

A Benefit Congruency Framework of Sales Promotion Effectiveness Are monetary savings the only explanation for consumer response to a sales promotion? If not, how do the different consumer benefits of a sales promotion influence its effectiveness? To address the first question, this research builds a framework of the multiple consumer benefits of a sales promotion. Through a series of measurement studies, the authors find that monetary and nonmonetary promotions provide consumers with different levels of three hedonic benefits (opportunities for value expression, entertainment, and exploration) and three utilitarian benefits (savings, higher product quality, and improved shopping convenience). To address the second question, the authors develop a benefit congruency framework, which argues that a sales promotion’s effectiveness is determined by the utilitarian or hedonic nature of the benefits it delivers and the congruence these benefits have with the promoted product. Among other results, two choice experiments show that, as predicted for high-equity brands, monetary promotions are more effective for utilitarian products than for hedonic products. The authors then discuss the implications of the multibenefit and the benefit congruency frameworks for understanding consumer responses to sales promotions, reexamining the value of everyday-low-price policies, and designing more effective sales promotions. arketers and academics often view the reliance on sales promotions, especially monetary promotions, as a suboptimal consequence of price competition caused by myopic management (Buzzell, Quelch, and Salmon 1990). These critics argue that, in the short run, the proliferation of monetary promotions erodes their capacity to rent market share, which explains why so many are unprofitable (Abraham and Lodish 1990; Kahn and McAlister 1997). In the long run, it is feared that sales promotions increase price sensitivity and destroy brand equity—both with retailers and consumers (Mela, Gupta, and Lehmann 1997). As a result, many industry experts are calling for more effective and cost-efficient promotions that rely less on price (Promotion Marketing Association of America Inc. 1994), and some go so far as to recommend eliminating most promotions by switching to an everyday-low-price policy (Kahn and McAlister 1997; Lal and Rao 1997). The central premise of this research is that the value that sales promotions have for brands is related to the value, or benefits, that sales promotions have for consumers. Adopting this consumer perspective leads to the fundamental question of why consumers respond to sales promotions. Most econometric or game-theoretic studies assume that monetary savings are the only benefit that sales promotions have for the consumer. If this is true, an everyday low price may indeed represent an efficient solution for providing consumers with these savings while minimizing search costs


Pierre Chandon is Assistant Professor of Marketing, INSEAD. Brian Wansink is Associate Professor of Business Administration, of Nutritional Science, of Advertising, and of Agricultural and Consumer Economics, University of Illinois, Urbana-Champaign. Gilles Laurent is Professor of Marketing, Groupe HEC. The authors thank Adam Brasel, Jer-Yuan Chao, Maryse Delamotte, Seabum Park, Pierre Volle, and Anne Macquin for help with the data collection. The article is based on Pierre Chandon’s dissertation and has benefited from the comments of Donnie Lichtenstein, Laurence Capron, James Hess, Stephen Hoch, Kent Monroe, Scott Neslin, and Terence Shimp. Journal of Marketing Vol. 64 (October 2000), 65–81

for the consumer and logistical costs for the firm. Conversely, if, as this research argues, sales promotions provide consumers with an array of hedonic and utilitarian benefits beyond monetary savings, everyday low prices cannot fully replace sales promotions without the risk of...
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