While Grenville Wall’s RetailScan piece, “Promotional fears unfoun-ded” (MW September 6), put forward some reassuring arguments to support the view that sales figures after in-store promotions do not actually drop lower than those pre-promotion, there will always be a slump in sales because the purchase cycle will have been brought forward. However, I think retailer and manufacturer fears should be founded on bigger issues.
Incremental sales must be considered in the context of brand equity and the extent to which this can be compromised by devaluing the product in a promotion. Short-term sales may be undermined by long-term loss of share because the product has lost brand appeal – become cheap.
For this reason, I could not condone the argument put forward in the article to avoid the post-promotion slump of “adopting a policy of everyday low pricing”. Concerns about the success of a promotion should hinge on the impact they have on long-term sales and therefore the extent to which it attracts new customers who become regulars.
Traditionally, advertising builds brand equity while promotions cash in on and undermine it. Agencies should aim to enhance brand values by adding value, not selling cheap. They should devise a mechanic which, having generated trial, ties consumers into the product thereby building long-term loyalty. This can be done in a way that, when a competitor promotion is launched, it is not cost-efficient for the customer to take it up.