Documentos de Académico
Documentos de Profesional
Documentos de Cultura
Loyalists Switchers
Nonstockpiling Stockpiling
Switchers (S6) Switchers (S7)
Deal Profitability by Consumer
Responsiveness Segment
• Promotion insensitives
– no additional sales on deal
– unprofitable
• Stockpiling loyalists
– sales on deal borrowed from future sales
– unprofitable
• Nonstockpiling promotion sensitives
– sales depressed when there are competitive promotions
– profitable iff
MD(SD/SN) > MN
Deal Profitability by Consumer
Responsiveness Segment
• Stockpiling promotion sensitives
– sales depressed due to own deals and competitive deals
– even more profitable than NPS if
MD(SD/SN) > MN
• On-deal-only consumers
– profitable by definition
л = SD x MD
Deal Profitability by Consumer
Responsiveness Segment
• Putting a brand on deal is:
– unprofitable if consumers are promotion-insensitive or
stockpiling loyalists
– profitable if consumers are on-deal-only
– either profitable or unprofitable if consumers are
nonstockpiling or stockpiling promotion-sensitive
Considerations in
Developing a Sales Promotion
• Short term impact
– Sales
• Long term effect on the brand
– Brand equity
– Profitability
• Competitive reaction
– Retaliatory promotions
• Quick fix?
Franchise-Building and
Nonfranchise-Building Promotions
• CFB promotions
– communicate distinctive brand attributes
– reinforce brand identity
– encourage repeat purchase and brand loyalty
– convert consumers to loyal customers
• Non-FB promotions
– accelerate purchase decision process
– generate immediate increase in sales
– borrow customers from other brands
Sales Promotion and Brand Equity
• A brand has equity if consumers have positive,
unique, and accessible associations
brand equity desirability
marcom costs
trade leverage
prices
brand extensions
price competition
profits
Sales Promotion and Brand Equity
• Requirements for successful branding
– Consistent quality
– Differentiable advantage
– Communication of the differentiable advantage
• The problem: commoditization
– Difficult to make a product that is truly different
– Difficult to sustain a differentiable advantage
• Widely held technical expertise
• Ever faster dissemination
• Reverse engineering
Sales Promotion and Brand Equity
• The usual response to commoditization
– Compete on price
– Shift marcom $ from advertising to sales
promotion
• The result
– Increased price sensitivity
– Decreased brand loyalty
– Decreased brand equity
Sales Promotion and Brand Equity
• But…
– Consumers still need the information that brands
convey
– Consumers may no longer be loyal to one brand,
but they are loyal to brands
– Successful brand differentiation is still possible,
through marketing communications
Research Findings
• Above average price brands (nonprice message)
– Advertising ?? differentiation
?? price competition
– Advertising ?? differentiation
?? price competition
– Advertising ?? differentiation
?? price competition
OUR FIRM