Chapter 1
Introduction
Background
Sales promotion is one of the basic tool marketers use in order to attract more and more buyers. Companies spend millions of rupees on promotion of their products/brands. The need for promotion arises from the intensity of competition. Companies attract and persuade potential customers by offering them sales discounts. Retailers often use promotions involving price discounts to increase store traffic and stimulate purchase. Now there are certain things that marketers need to consider while pursuing promotion through higher sales discounts because if there are some merits associated with this form of promotion, there are also some demerits of higher sales discounts, like sales effect may only be short term or customers may start expecting more discounts or last but not the least, higher sales discounts may harm a brand’s image. Marketers need to keep in mind certain questions e.g. Will sales discounts attract customers who will continue to buy the product, once the promotion ends, or will it simply attract those customers who are always in search of products offered on discounts? Is the sales promotion consistent with the brand image? A promotion that heavily discounts a product with a premium price might do some long-term damage to a brand. Effect of store image Store image have a moderating effect on consumer’s perception of a product’s quality. …show more content…
A positive store image and good value merchandise are key factors for retailers to achieve and sustain success in an increasingly competitive marketplace. Three important components that appear to be key factors to store trade decisions are the retailer's store image, quality of the merchandise/brands sold and price/promotions. Store image encompasses characteristics such as the physical environment of the store, service levels, and merchandise quality.
Similarly product knowledge moderated the effects of price on consumers' perceptions of quality. Price had a greater effect for the low knowledge group as compared to the high knowledge group. The variety a brand offers often serves as a quality cue and thus influences which brand consumers choose. Specifically, brands that offer a greater variety of options that appear compatible and require similar skills tend to be perceived as having greater category expertise or core competency in the category, which, in turn, enhances their perceived quality and purchase likelihood. Studies support this proposition and demonstrate that compared to brands which offer fewer products, (a) brands which offer increased compatible variety are perceived as having higher quality; (b) the higher perceived quality produces a greater choice share of the higher variety brand, even among consumers who select options that multiple brands offer and (c) product variety also effects post-experience perceptions of taste (Berger, Draganska and Simonson, 2007). Sales promotions and product enhancements are commonly expected to increase a brand's sales, when they do not negatively impact its utility and cost. That is, the purchase probability of consumers who find the promotion or additional feature attractive will increase, whereas the purchase likelihood of other consumers will not be affected. In contrast, those consumers, who perceive a new feature or promotion as providing little or no value, will be less likely to purchase the enhanced brand even when the added feature clearly does not diminish the value of the brand. Thus, a new product feature or promotion may decrease a brand's overall choice probability when the segment of consumers who perceive it as providing little …show more content…
(2006). Understanding Store-Brand Purchase Behavior across Categories. Marketing Science, 25(1), 75-90.
Kopalle, P. K., & Winer, R. S. (1996). A Dynamic Model of Reference Price and Expected Quality. Marketing Letters, 7(1), 41-52.
Ortmeyer, G., & Huber, J. (1991). Brand Experience as a Moderator of the Negative Impact of Promotions. Marketing Letters, 2(1), 35-45.
Raghubir, P., & Corfman, K. (1999). When Do Price Promotions Affect Pretrial Brand Evaluations? Journal of Marketing Research, 36(2), 211-222.
Reinartz, W. J., & Kumar, V. (1999). Store-, Market-, and Consumer-Characteristics: The Drivers of Store Performance. Marketing Letters, 10(1), 5-22.
Sayman, S., Hoch, S. J., & Raju, J. S. (2002). Positioning of Store Brands. Marketing Science, 21(4), 378-397.
Simonson, I., Carmon, Z., & O'curry, S. (1994). Experimental Evidence on the Negative Effect of Product Features and Sales Promotions on brand choice. Marketing Science, 13(1), 23-40.
Völckner, F., & Hofmann, J. (2007). The Price-Perceived Quality Relationship: A Meta-Analytic Review and Assessment of Its Determinants. Marketing Letters, 18(3),
Introduction
Background
Sales promotion is one of the basic tool marketers use in order to attract more and more buyers. Companies spend millions of rupees on promotion of their products/brands. The need for promotion arises from the intensity of competition. Companies attract and persuade potential customers by offering them sales discounts. Retailers often use promotions involving price discounts to increase store traffic and stimulate purchase. Now there are certain things that marketers need to consider while pursuing promotion through higher sales discounts because if there are some merits associated with this form of promotion, there are also some demerits of higher sales discounts, like sales effect may only be short term or customers may start expecting more discounts or last but not the least, higher sales discounts may harm a brand’s image. Marketers need to keep in mind certain questions e.g. Will sales discounts attract customers who will continue to buy the product, once the promotion ends, or will it simply attract those customers who are always in search of products offered on discounts? Is the sales promotion consistent with the brand image? A promotion that heavily discounts a product with a premium price might do some long-term damage to a brand. Effect of store image Store image have a moderating effect on consumer’s perception of a product’s quality. …show more content…
A positive store image and good value merchandise are key factors for retailers to achieve and sustain success in an increasingly competitive marketplace. Three important components that appear to be key factors to store trade decisions are the retailer's store image, quality of the merchandise/brands sold and price/promotions. Store image encompasses characteristics such as the physical environment of the store, service levels, and merchandise quality.
Similarly product knowledge moderated the effects of price on consumers' perceptions of quality. Price had a greater effect for the low knowledge group as compared to the high knowledge group. The variety a brand offers often serves as a quality cue and thus influences which brand consumers choose. Specifically, brands that offer a greater variety of options that appear compatible and require similar skills tend to be perceived as having greater category expertise or core competency in the category, which, in turn, enhances their perceived quality and purchase likelihood. Studies support this proposition and demonstrate that compared to brands which offer fewer products, (a) brands which offer increased compatible variety are perceived as having higher quality; (b) the higher perceived quality produces a greater choice share of the higher variety brand, even among consumers who select options that multiple brands offer and (c) product variety also effects post-experience perceptions of taste (Berger, Draganska and Simonson, 2007). Sales promotions and product enhancements are commonly expected to increase a brand's sales, when they do not negatively impact its utility and cost. That is, the purchase probability of consumers who find the promotion or additional feature attractive will increase, whereas the purchase likelihood of other consumers will not be affected. In contrast, those consumers, who perceive a new feature or promotion as providing little or no value, will be less likely to purchase the enhanced brand even when the added feature clearly does not diminish the value of the brand. Thus, a new product feature or promotion may decrease a brand's overall choice probability when the segment of consumers who perceive it as providing little …show more content…
(2006). Understanding Store-Brand Purchase Behavior across Categories. Marketing Science, 25(1), 75-90.
Kopalle, P. K., & Winer, R. S. (1996). A Dynamic Model of Reference Price and Expected Quality. Marketing Letters, 7(1), 41-52.
Ortmeyer, G., & Huber, J. (1991). Brand Experience as a Moderator of the Negative Impact of Promotions. Marketing Letters, 2(1), 35-45.
Raghubir, P., & Corfman, K. (1999). When Do Price Promotions Affect Pretrial Brand Evaluations? Journal of Marketing Research, 36(2), 211-222.
Reinartz, W. J., & Kumar, V. (1999). Store-, Market-, and Consumer-Characteristics: The Drivers of Store Performance. Marketing Letters, 10(1), 5-22.
Sayman, S., Hoch, S. J., & Raju, J. S. (2002). Positioning of Store Brands. Marketing Science, 21(4), 378-397.
Simonson, I., Carmon, Z., & O'curry, S. (1994). Experimental Evidence on the Negative Effect of Product Features and Sales Promotions on brand choice. Marketing Science, 13(1), 23-40.
Völckner, F., & Hofmann, J. (2007). The Price-Perceived Quality Relationship: A Meta-Analytic Review and Assessment of Its Determinants. Marketing Letters, 18(3),