Unintended effects of price promotions: Forgoing competitors’ price promotions strengthens incumbent brand loyalty

A majority of consumers resist switching brands when exposed to competitor sales promotions. Yet, in an effort to entice consumers to switch brands, firms spend more on sales promotions, in the form of price promotions such as discounts and coupons, than any other advertising and marketing expense. Interestingly, marketing research devotes much attention to understanding how the small subset of consumers who switch are impacted by a firm’s promotional efforts, yet little attention is focused on how forgoing a competitive promotion alters a consumer’s loyalty to an incumbent brand. The present research focuses on the potential unintended consequences of price promotions and demonstrates when a competitor brand’s offer fails to motivate consumers to switch brands, a consumer’s resistance to the promotion subsequently increases loyalty to- and spending with- their incumbent brand. Across seven studies, this research demonstrates how a competing firm’s attempt to lure consumers away from a competitor’s brand can strengthen loyalty for the incumbent brand.