Journal Review - Marketing
To buy or not to buy, that is the question....(What Effects do Price Promotions have on Brand Loyalty?)This paper provides an overview of price promotion & brand loyalty; in addition to a review of subsequent research, evidence & analysis of the effect price promotions have on brand loyalty. Slow market growth and a lack of differentiation have resulted in a highly competitive environment in many product categories. This, in turn is forcing managers to use price promotions more frequently and engage in price wars. There is also concern among some marketers who feel that frequent promotions can hurt a brand, however evidence has shown to both support and dismiss such fears. Thus, there is little agreement regarding the effects of such intense promotional activity (Papatla & Krishnamurthi, 1996). Some managers consider promotions as "quick fix solutions that don't generate brand loyalty", others believe that promotions can be used to achieve permanent gains in market share provided they are well designed and well executed (Papatla & Krishnamurthi, 1996).The purpose of this paper will be to understand, through studies already conducted, which of these two opinions is closer to reality.
Implications & conclusion:The discussions of this paper have been on the effects that price promotions have on brand loyalty. price promotions have on brand loyalty. Currently, the ratio of price promotions and advertising is approximately two to one. They also introduce the term of dollar-metric as a measure of brand loyalty. The model they use predicts that differences in brand loyalty are related to variations in size and frequency of price promotions across brands in the same product category. However Kendrick introduces swing to the topic; that increased loyalty was possibly the result of a combination of goodwill engendered in the customer toward the company as the result of receiving a "thankyou" letter, coupled with the repeated exposure to the brand name through the advertising specials. (1990), "The Effects of Brand Loyalty on Competitive Price Promotional Strategies", Management Science, Vol 36, No. They infer that the more brands found in one category, the more price promotions should be utilised. Raju, Srinivasan & Lal, 1990 specifically express that through the use of equilibrium pricing strategies, a brands likelihood of using price promotions increases as the number of brands in a product category increases. As studied by Kendrick (1998) in the category of dry cleaning, it was found that on the two dimensions of loyalty (purchase activity over time and spending), customers who received non-price promotions had greater purchase activity and higher spending levels overall than customers who were offered discounts (price promotions).
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Acceptance Essays
