Long-term Profitability Advertising versus Sales Promotion

A study which found packaged-goods firms that put most of their marketing budget into advertising were more profitable (return on investment) than those that put most of their budget into trade and consumer promotions.

Long-term Profitability: Advertising versus Sales Promotion

Alex Biel

This study examines the allocation of funds between advertising and sales promotion. In recent years, marketers have been increasingly turning to sales promotion as a seemingly attractive strategy.

Although many marketers agree that resource allocated to advertising is an investment in long-term brand building, there is far less confidence that advertising is an effective tool in the short or intermediate term. While it is generally accepted that promotions generate short-term sales, some of those sales are simply stolen from future purchases by the same consumer.

I am concerned that this short-term...

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