The effect of sales promotion on post-promotion brand preference: A meta-analysis
Introduction
Sales promotions are typically viewed as temporary incentives that encourage the trial of a product or service (Kotler, 1988, Webster, 1971). Not surprisingly, most research on their use explores the effect of promotions at the time in which they are offered (Blattberg and Neslin, 1989, Leone and Srinivasan, 1996). Relatively less attention has been devoted to investigating the consequences of sales promotions for brand preference after the promotion has ended. Furthermore, scholastic opinion on whether promotions help or hinder a brand in subsequent choice periods is mixed. Some researchers assert that sales promotions can undermine brand preference. Aaker (1996, p. 187) states that promotions have the potential to damage brand equity by focusing the consumer's attention too heavily on price. Similarly, Keller (1998) warns of a number of disadvantages of sales promotions such as decreased brand loyalty, increased brand switching, decreased quality perceptions and increased price sensitivity. Conversely, other researchers contend that sales promotions can increase brand preference (e.g., Davis et al., 1992, Rothschild and Gaidis, 1981). Thus, the extant literature is unclear as to whether sales promotions detract from or enhance brand preference.
Despite the widespread use of promotions in marketing practice and the equivocal research findings, there has been no systematic attempt to integrate extant research to determine the nature of the relationship between the use of sales promotions and brand preference once the promotion is rescinded. To address this, we conduct a meta-analysis to evaluate the results of previously published research that links the use of sales promotion to indicators of post-promotion brand preference. In addition to examining the central tendency of association between sales promotion and brand preference, we also identify conditions that might moderate this relationship. In the following section, we review the relevant literature and define our analytical domain. We then describe our methodology and provide a detailed presentation of our results. We conclude with a discussion of the implications emanating from this research.
Researchers have investigated several aspects of consumers’ responses to sales promotions. Inquiry has primarily focused on whether, and by how much, promotions increase choice at the time of the promotion (Goodman and Moody, 1970, Massy and Frank, 1965). Related research investigated the ability of variables such as promotion type (Schneider and Currim 1991) and promotion value (Leone and Srinivasan 1996) to moderate the relationship between promotion and choice. While relatively fewer studies have been conducted, researchers have also examined if sales promotions have an impact that extends beyond the time they are offered. In so doing, rationale has been forwarded both to predict that promotions will decrease preference for a brand and that they will increase preference for a brand. Making prediction even more difficult, the mechanisms associated with a positive post-promotion effect and those associated with a negative effect may operate simultaneously (Blattberg and Neslin 1989).
Promotions may increase post-promotion preference via purchase reinforcement (Blattberg and Neslin, 1989, Pauwels et al., 2002). For existing brand users, promotion reinforcement occurs by reminding existing customers to buy the brand thereby buttressing their preference for it. For non-users, promotions may induce trial thereby bolstering attitudes and the likelihood of repurchase. The case that sales promotions will decrease post-promotion brand preference has been summarized from a behavioral standpoint as the promotion usage effect (Blattberg and Neslin 1989). Consumers may make negative attributions about the brand as they look for explanations as to why the brand needs to promote. Promotion usage effects may also arise by shaping consumers’ behavior toward buying promoted products (Rothschild 1987). Given the widespread availability of promotions, this is likely to result in the selection of a competing brand that is promoted when the previously chosen brand rescinds its promotion.
Econometric studies of promotions indicate that they may also undermine brand preference by lowering consumers’ price expectations. Literature suggests that consumers evaluate prices relative to their expectations (Lattin and Bucklin, 1989, Papatla and Krishnamurthi, 1996). A price that is higher than expected decreases the probability that a brand will be chosen. Price expectations, in turn, appear to be a function of previously observed prices (e.g., Rajendram and Tellis 1994). Thus, by lowering the price that consumers observe for a product, a price promotion may lower price expectations and, in turn, future brand choice.
Researchers have identified two outcomes that indicate a change in brand preference following a sales promotion: brand perceptions and choice probability. Studies measuring consumers’ brand perceptions typically gauge shifts in subjects’ overall “liking” for the brand (e.g., Davis et al., 1992, Tybout and Scott, 1983) or perceptions of brand quality (e.g., Dawar and Sarvary, 1997, Low and Lichtenstein, 1993, Raghubir, 2004) following exposure to a sales promotion. Choice probability, the second measure of post-promotion preference, is often assessed directly via pre- and post-promotion brand choice (e.g., Motes, 1987, Kahn and Louie, 1990, Scott, 1976). Choice probability has also been measured indirectly via promotion-induced shifts in price sensitivity (Kopalle et al., 1999, Srinivasan et al., 2000) and promotion-induced changes in brand loyalty (Bhattacharya et al., 1996, Gedenk and Neslin, 1999).
Results of studies assessing brand perceptions after a promotion are equivocal across, and sometimes within, research studies. For instance, across four frequently purchased consumer non-durable brands and four perceptual measures of brand preference, Davis et al. (1992) report five instances of statistically significant increases in consumers’ brand perceptions after a period of promotions and no instances in which perceptions decreased. Similarly, measures of brand choice are associated with a variety of effects. Kalwani et al. (1990) report a negative effect of promotion on the post-promotion purchase probability for instant coffee. Conversely, Lattin and Bucklin (1989) find a positive effect of promotion in the same product category. Kopalle et al. (1999) find that promotions impair brand preference by leading to a marginally significant increase in price sensitivity whereas Srinivasan et al. (2000) report increased price sensitivity for three brands, decreased price sensitivity for two, and null results for three others. Bhattacharya et al. (1996) report that sales promotions do not affect brand loyalty, while Gedenk and Neslin (1999) find significant negative effects on loyalty. Thus, both measures of post-promotion brand preference are associated with equivocal results that make a detailed study of their conclusions appropriate.
Before summarizing the results via meta-analysis, we need to clearly delineate our domain of inquiry by identifying several types of promotion-centric studies that are not included in our research domain. Given our interest in the effect of sales promotions after the period in which they are offered, studies that focus on issues at time of the promotion such as maximizing immediate response to the promotion (e.g., Krishnamurthi and Raj 1988) and decomposing this response into promotional gain, brand switching, category expansion, and stockpiling (e.g., Gupta, 1988, van Heerde et al., 2003) are outside of our domain. There are also six types of studies that consider forward-looking consumer behaviors or evaluations in response to a sales promotion that fall outside the scope of our research.
First, we exclude studies that are indicative of stockpiling. For instance, studies of the effect of promotions on purchase timing or quantity for a brand likely reflect a stockpiling effect (e.g., Cotton and Babb, 1978, Slonim and Garbarino, 1999). Stockpiling leads to lower aggregate or per consumer sales for a brand following a sales promotion by taking consumers out of the market due to greater on-promotion purchase quantities (i.e., consumers who bought the promoted product are now “buying” quantity = zero after stockpiling during the promotion). It is important to consider the effect of promotions on consumer stockpiling to understand the profitability of promotions. However, increased stockpiling presents a relatively benign threat to the promoted brand in that it does not decrease the likelihood that a consumer chooses the brand when making a purchase in the product category again (i.e., is not indicative of a change in preference). Furthermore, promotion-induced stockpiling decreases consumers’ opportunities to switch to competing brands and may lead to repeat purchases of the chosen brand, and/or increase overall category consumption (see Ailawadi et al. (2005) for a test of such benefits).
Second, we seek to examine the impact of sales promotion on brand preference rather than judge the plausibility of such an effect. We consequently exclude studies that use simulated data to demonstrate the plausibility that sales promotions affect brand preference (e.g., Neslin and Shoemaker 1989). Third, our interest is on brand-level relationships. Thus, we exclude articles that infer the optimum level of sales promotion for a store across a set of brands (e.g., Blattberg and Levin, 1987, Suri and Zufryden, 1995). Fourth, the central issue in this manuscript is the impact of (a) offering versus not offering a sales promotion or (b) offering more frequent versus less frequent promotions. Articles that contrast different types of promotions to assess post-promotion preference but do not allow for a comparison to a strategy of not promoting or promoting less frequently are also excluded (e.g., Krishna 1994).
Fifth, we also omit much of the data derived from research focusing on price expectations or internal reference prices. Although lower price expectations following exposure to a promotion can affect future choice, we exclude several of the studies on price expectations for two reasons. First, as would be expected, the dependent variable in many of these studies is the price expectation for a brand (e.g., Bearden et al., 1992, Jacobson and Obermiller, 1990). Without linking a consumer's price expectations to future choice, a change in price expectations does not necessarily affect preference for the brand. Second, most studies measuring price expectations do not specify whether these expectations are changing in response to promotions or changes in regular prices. As such, the unique impact of promotions on brand preference is difficult to extricate from effects relating to other price changes. However, studies on price expectations that account for the specific effect of sales promotion on price expectations and future choice are included in our analyses (e.g., Kalwani et al. 1990). Finally, we eliminated studies in which the author(s) used the same data set to produce a related article. In such cases, rather than having one data set receive undue weight, we included the data from the article that we deemed most central to the issue of post-promotion brand preference and excluded any others from analysis.
In sum, this meta-analysis includes only studies that explore the impact of sales promotions on brand preference after the period in which the promotion is offered by measuring brand perceptions or choice probability or its derivative measures (e.g., price sensitivity). Each study allows for the comparison of brand preference across conditions of (a) offering versus not offering a promotion (e.g., an experimental versus a control condition in lab experiments) or (b) offering more versus less frequent promotions (e.g., a correlation-based measure of promotion frequency and purchase probability when not promoted in models of scanner data). Given this demarcation of our research domain, we now turn to the development of the data set that emerges within this set of boundaries and to our method of analyses.
Section snippets
Methodology
To identify the population of studies for this analysis we conducted key word searches of electronic databases using terms such as “promotions,” “brand choice,” and “deal retraction.” We then studied the reference sections of those identified studies in search of additional empirical studies. Finally, we conducted a manual search of leading journals in which articles addressing sales promotions and brand choice are most likely to be found (e.g., Journal of Marketing, Journal of Marketing
Results
Across studies, the mean correlation between the use of sales promotion and post-promotion brand preference is −.020 (t = −.87, p > .10). On average, sales promotions do not statistically affect brand preference after the promotional period has ended. However, promotions may still affect brand preference (either positively or negatively) in certain conditions. Thus, in addition to identifying the relative effect size between promotions and future brand preference, we sought to ascertain why the
Discussion
Our results suggest that, on average, sales promotions have neither a positive nor a negative effect on brand preference beyond the promotion period. While the overall mean effect is not statistically significant, this does not suggest that sales promotions do not affect brand preference. Consistent with the notion that multiple mechanisms may affect post-promotion preferences (e.g., purchase reinforcement can bolster post-promotion brand preference while the promotion usage effect weakens
Acknowledgements
The authors would like to thank Coeditors Dhruv Grewal and Michael Levy and three anonymous reviewers for their insightful comments. We would also like to thank the authors of the studies that provided the foundation for our work and make special mention of Scott Neslin, whose research on sales promotions proved invaluable to us.
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