A STUDY ON LOYALTY PROGRAMS AND SALES PROMOTION OF STORE BRANDS

Abstract

Manufacturers often utilize sales promotions to boost sales and influence consumers' purchase behavior (Neslin, 2002). These promotions are universally focused on driving purchase behavior, moving consumers out of a holding pattern by offering incentives to take action before promotional offers expire. Promotional efforts have proven to be particularly effective in supporting the launch of new products into competitive markets. Given evidence of their effectiveness, firms continue to invest heavily in sales promotions to the tune of $70 billion annually, which accounts for nearly 20% of total promotional spending, and they have remained an area of focus in the marketing literature. For more than 30 years, scholars have investigated the effect of promotions on various aspects of firm performance, which has provided great insights into how and why promotions drive consumer demand. Within these broader investigations, a relatively small subset have focused on understanding how promotions drive initial perceptions of quality and sales for newly introduced products. Additionally, less is known about how simultaneous promotions may impact consumer demand and firm performance, which is becoming an increasingly important issue for industries like automotive, where firms have large promotional budgets and must allocate this budget across mass and luxury brands with their annually refreshed product offerings.