Advertising vs sales promotion: a brand management perspective
George S. Low Jakki J. Mohr
Assistant Professor of Marketing, M.J. Neeley School of Business, Texas Christian University, Fort Worth, Texas, USA Associate Professor of Marketing, School of Business Administration, University of Montana, Missoula, Montana, USA
Keywords Brands, Advertising, Sales promotion, Decision making Abstract Brand managers in packaged goods firms are under pressure to increase or maintain high sales promotion spending at the expense of media advertising. This study investigates the antecedents and outcomes of brand managers' advertising and sales promotion budget allocations by adopting a bounded rationality perspective. Based on survey data collected from 165 brand managers in the USA, higher advertising (vs sales promotion) allocations are associated with: single, relatively high priced brands in the early phases of the product life cycle; and more experienced brand managers who are subject to less retail influence. Also, brands with higher budget allocations to advertising, relative to sales promotion, tend to have more favorable consumer attitudes, stronger brand equity, and higher market share increases and profits. Managerial implications and areas for future study are discussed.
The addictive power of promotion is such that manufacturers must devote ever larger proportions of their marketing budgets to this ``short-term fix'' and ever smaller proportions to the long-term health of their brands (Kahn and McAlister, 1997, p. 20).
Risks of high spending
Research showing evidence of the risks of high sales promotion spending is starting to appear (e.g. Mela et al., 1997; Papatla and Krishnamurthi, 1996), as managers in many grocery products firms try to reduce their mammoth sales promotion budgets. Procter & Gamble led the way by cutting trade promotion spending... [continues]
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