The Case Against Price-related Promotions

Argues the case that price promotions for fmcg brands do not lead to increased sales once the promotion is withdrawn.

The case against price-related promotions

Why the true value of price promotions is virtually negligible

Andrew Ehrenberg andKathy Hammond

INTRODUCTION

Price-promotions for fmcgs do not lead to increased sales once the incentive is withdrawn. This is explained by the additional finding that price-promotions are mainly used just by past customers of the brand who cannot be converted.

Vast sums are spent on short-term price cuts for branded packaged goods. They generally produce short, sharp ups and downs in sales (blips), with no after-effects. This leads to large net losses. Otherwise companies would promote on price even more often than...

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