The case against price-related promotions

Stephen Long, Kathy Hammond and Andrew Ehrenberg

The paper confirms the authors' 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 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...

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