The Case Against Price-Related Promotions
Kathy Hammond, Andrew Ehrenberg, Stephen Long
London Business School; South Bank University; University College, London
SUMMARY
The paper confirms our earlier findings that price-related promotions for branded grocery products are used mainly by past customers of the brand and attract few new customers. The outcome is that price-promotions do not lead to extra subsequent sales.
1. Overview
Vast sums are spent on short-term price cuts for packaged grocery brands. They produce short, sharp ups-and-downs in sales. This generally leads to a large net loss. If this were not so companies would promote on price even...