Thursday, June 17, 2004

The Danger of Price Promotions

Making Ads Work has a 2 part series on "The Dangers of Price Promotions."  Part 1 can be found here and part 2 can be found here.  There is a lot of content in both of these posts, and I suggest visiting the links above to get full detail.  Here are a few bits I picked out:

In brief, price promotions:
1. Do not attract new customers
2. Do not lead to extra subsequent sales
3. Do not affect repeat buying loyalty
4. Do not reach many customers.

HOWEVER, price promotions do produce up and down sales blips at a great cost.

Note: the piece of content above was originally authored by Professor Andrew Ehrenberg, referenced in the Making Ads Work blog, and reprinted by me.

There's a lot more detail, as I said before, in the original posts.  Read and consider how many price-based promotions your company runs.  What have been the end results for you?

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