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The effect of sales promotion on post-promotion brand preference: A meta-analysis

The effect of sales promotion on post-promotion brand preference: A meta-analysis

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Journal of Retailing 82 (3, 2006) 203–213
The effect of sales promotion on post-promotionbrand preference: A meta-analysis
Devon DelVecchio
a
,
, David H. Henard
b
,
1
, Traci H. Freling
c
,
2
a
 Richard T. Farmer School of Business, Miami University in Oxford, Ohio 45056, United States
b
College of Management, North Carolina State University in Raleigh, North Carolina 27695-7229, United States
c
Gatton College of Business and Economics, University of Kentucky in Lexington, Kentucky 40506, United States
Accepted 18 October 2005
Abstract
Thebenefitofsalespromotionsisthattheyinducechoice.However,thisbenefitmaybeoffsetbyunderminingpreferenceforthebrandwhenit is no longer promoted. Despite the fact that sales promotions have long been employed in marketing practice and researched academically,a clear understanding of the impact of sales promotion on post-promotion brand preference continues to evade brand managers and marketingscholarsalike.Thismanuscriptattemptstoprovideinsightontheeffectsofsalespromotionsonbrandpreferencebyintegratingresultsfrom51studies on the subject. Our meta-analysis suggests that, on average, sales promotions do not affect post-promotion brand preference. However,depending upon characteristic of the sales promotion and the promoted product, promotions can either increase or decrease preference for abrand. The empirical results provide insights for crafting promotion strategy and for understanding the process by which promotions influencebrand preference.© 2006 New York University. Published by Elsevier Inc. All rights reserved.
Keywords:
Sales promotion; Post-promotion brand preference; Meta-analysis
Introduction
Salespromotionsaretypicallyviewedastemporaryincen-tives that encourage the trial of a product or service (Kotler1988;Webster1971).Notsurprisingly,mostresearchontheiruseexplorestheeffectofpromotionsatthetimeinwhichtheyareoffered(BlattbergandNeslin1989;LeoneandSrinivasan1996).Relatively less attention has been devoted to investi-gatingtheconsequencesofsalespromotionsforbrandprefer-ence after the promotion has ended. Furthermore, scholasticopinion on whether promotions help or hinder a brand insubsequent choice periods is mixed. Some researchers assertthatsalespromotionscanunderminebrandpreference.Aaker(1996, p. 187)states that promotions have the potential to
Corresponding author. Tel.: +1 513 529 9364.
 E-mail addresses:
delvecds@muohio.edu(D. DelVecchio),dhhenard@ncsu.edu(D.H. Henard),traci.freling@uky.edu(T.H. Freling).
1
Tel.: +1 919 515 8945.
2
Tel.: +1 859 257 2257.
damage brand equity by focusing the consumer’s attentiontooheavilyonprice.Similarly,Keller(1998)warnsofanum- ber of disadvantages of sales promotions such as decreasedbrand loyalty, increased brand switching, decreased qual-ity perceptions and increased price sensitivity. Conversely,other researchers contend that sales promotions can increasebrand preference (e.g.,Davis et al. 1992; Rothschild andGaidis 1981).Thus, the extant literature is unclear as towhether sales promotions detract from or enhance brandpreference.Despite the widespread use of promotions in marketingpractice and the equivocal research findings, there hasbeen no systematic attempt to integrate extant researchto determine the nature of the relationship between theuse of sales promotions and brand preference once thepromotion is rescinded. To address this, we conduct ameta-analysis to evaluate the results of previously publishedresearch that links the use of sales promotion to indicators of post-promotion brand preference. In addition to examiningthe central tendency of association between sales promotion
0022-4359/$ – see front matter © 2006 New York University. Published by Elsevier Inc. All rights reserved.doi:10.1016/j.jretai.2005.10.001
 
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D. DelVecchio et al. / Journal of Retailing 82 (3, 2006) 203–213
and brand preference, we also identify conditions thatmight moderate this relationship. In the following section,we review the relevant literature and define our analyticaldomain. We then describe our methodology and providea detailed presentation of our results. We conclude with adiscussion of the implications emanating from this research.
The research domain
Researchers have investigated several aspects of con-sumers’ responses to sales promotions. Inquiry has primarilyfocused on whether, and by how much, promotions increasechoice at the time of the promotion (Goodman and Moody1970; Massy and Frank 1965).Related research investigatedtheabilityofvariablessuchaspromotiontype(SchneiderandCurrim 1991)and promotion value (Leone and Srinivasan 1996)to moderate the relationship between promotion andchoice. While relatively fewer studies have been conducted,researchers have also examined if sales promotions have animpact that extends beyond the time they are offered. In sodoing, rationale has been forwarded both to predict that pro-motions will decrease preference for a brand and that theywill increase preference for a brand. Making prediction evenmore difficult, the mechanisms associated with a positivepost-promotion effect and those associated with a negativeeffect may operate simultaneously (Blattberg and Neslin1989).Promotions may increase post-promotion preference viapurchasereinforcement(BlattbergandNeslin1989;Pauwelset al. 2002).For existing brand users, promotion reinforce-mentoccursbyremindingexistingcustomerstobuythebrandtherebybuttressingtheirpreferenceforit.Fornon-users,pro-motions may induce trial thereby bolstering attitudes and thelikelihood of repurchase. The case that sales promotions willdecrease post-promotion brand preference has been summa-rized from a behavioral standpoint as the promotion usageeffect (Blattberg and Neslin 1989).Consumers may make negative attributions about the brand as they look for expla-nations as to why the brand needs to promote. Promotionusage effects may also arise by shaping consumers’ behav-ior toward buying promoted products (Rothschild 1987).Given the widespread availability of promotions, this islikely to result in the selection of a competing brand thatis promoted when the previously chosen brand rescinds itspromotion.Econometric studies of promotions indicate that they mayalso undermine brand preference by lowering consumers’price expectations. Literature suggests that consumers eval-uate prices relative to their expectations (Lattin and Bucklin1989;PapatlaandKrishnamurthi1996).Apricethatishigherthan expected decreases the probability that a brand will bechosen. Price expectations, in turn, appear to be a function of previouslyobservedprices(e.g.,RajendramandTellis1994).Thus, by lowering the price that consumers observe for aproduct,apricepromotionmaylowerpriceexpectationsand,in turn, future brand choice.
 Assessing changes in brand preference
Researchers have identified two outcomes that indicatea change in brand preference following a sales promotion:brand perceptions and choice probability. Studies measur-ing consumers’
brand perceptions
typically gauge shifts insubjects’ overall “liking” for the brand (e.g.,Davis et al.1992;TyboutandScott1983)orperceptionsofbrandquality(e.g.,Dawar and Sarvary 1997; Low and Lichtenstein 1993;Raghubir 2004)following exposure to a sales promotion.
Choice
probability, the second measure of post-promotionpreference, is often assessed directly via pre- and post-promotion brand choice (e.g.,Motes 1987; Kahn and Louie1990;Scott1976).Choiceprobabilityhasalsobeenmeasuredindirectly via promotion-induced shifts in price sensitivity(Kopalle et al. 1999; Srinivasan et al. 2000)and promotion- induced changes in brand loyalty (Bhattacharya et al. 1996;Gedenk and Neslin 1999).Results of studies assessing brand perceptions after a pro-motion are equivocal across, and sometimes within, researchstudies. For instance, across four frequently purchased con-sumer non-durable brands and four perceptual measures of brand preference,Davis et al. (1992)report five instances of  statisticallysignificantincreasesinconsumersbrandpercep-tions after a period of promotions and no instances in whichperceptions decreased. Similarly, measures of brand choiceare associated with a variety of effects.Kalwani et al. (1990)report a negative effect of promotion on the post-promotionpurchase probability for instant coffee. Conversely,Lattinand Bucklin (1989)find a positive effect of promotion in thesame product category.Kopalle et al. (1999)find that pro-motions impair brand preference by leading to a marginallysignificant increase in price sensitivity whereasSrinivasan etal. (2000)report increased price sensitivity for three brands,decreased price sensitivity for two, and null results for threeothers.Bhattacharya et al. (1996)report that sales promo- tions do not affect brand loyalty, whileGedenk and Neslin(1999)nd significant negative effects on loyalty. Thus, bothmeasures of post-promotion brand preference are associatedwithequivocalresultsthatmakeadetailedstudyoftheircon-clusions appropriate.
Peripheral research
Beforesummarizingtheresultsviameta-analysis,weneedto clearly delineate our domain of inquiry by identifying sev-eral types of promotion-centric studies that are not includedin our research domain. Given our interest in the effect of sales promotions after the period in which they are offered,studies that focus on issues at time of the promotion suchas maximizing immediate response to the promotion (e.g.,KrishnamurthiandRaj1988)anddecomposingthisresponseinto promotional gain, brand switching, category expansion,andstockpiling(e.g.,Gupta1988;vanHeerdeetal.2003)are outsideofourdomain.Therearealsosixtypesofstudiesthatconsiderforward-lookingconsumerbehaviorsorevaluations
 
 D. DelVecchio et al. / Journal of Retailing 82 (3, 2006) 203–213
205
in response to a sales promotion that fall outside the scope of our research.First,weexcludestudiesthatareindicativeofstockpiling.For instance, studies of the effect of promotions on purchasetimingorquantityforabrandlikelyreflectastockpilingeffect(e.g.,Cotton and Babb 1978; Slonim and Garbarino 1999).Stockpiling leads to lower aggregate or per consumer salesfor a brand following a sales promotion by taking consumersoutofthemarketduetogreateron-promotionpurchasequan-tities (i.e., consumers who bought the promoted product arenow“buying”quantity=zeroafterstockpilingduringthepro-motion). It is important to consider the effect of promotionson consumer stockpiling to understand the profitability of promotions. However, increased stockpiling presents a rela-tively benign threat to the promoted brand in that it does notdecrease the likelihood that a consumer chooses the brandwhen making a purchase in the product category again (i.e.,is not indicative of a change in preference). Furthermore,promotion-induced stockpiling decreases consumers’ oppor-tunitiestoswitchtocompetingbrandsandmayleadtorepeatpurchases of the chosen brand, and/or increase overall cat-egory consumption (seeAilawadi et al. (2005)or a test of  such benefits).Second,weseektoexaminetheimpactofsalespromotionon brand preference rather than judge the plausibility of suchaneffect.Weconsequentlyexcludestudiesthatusesimulateddata to demonstrate the plausibility that sales promotionsaffect brand preference (e.g.,Neslin and Shoemaker 1989).Third, our interest is on brand-level relationships. Thus, weexclude articles that infer the optimum level of sales promo-tion for a store across a set of brands (e.g.,Blattberg andLevin 1987; Suri and Zufryden 1995).Fourth, the centralissue in this manuscript is the impact of (a) offering versusnot offering a sales promotion or (b) offering more frequentversus less frequent promotions. Articles that contrast differ-ent types of promotions to assess post-promotion preferencebut do not allow for a comparison to a strategy of not pro-moting or promoting less frequently are also excluded (e.g.,Krishna 1994).Fifth,wealsoomitmuchofthedataderivedfromresearchfocusing on price expectations or internal reference prices.Although lower price expectations following exposure to apromotion can affect future choice, we exclude several of the studies on price expectations for two reasons. First, aswould be expected, the dependent variable in many of thesestudies is the price expectation for a brand (e.g.,Bearden etal. 1992; Jacobson and Obermiller 1990).Without linking aconsumer’s price expectations to future choice, a change inprice expectations does not necessarily affect preference forthebrand.Second,moststudiesmeasuringpriceexpectationsdo not specify whether these expectations are changing inresponsetopromotionsorchangesinregularprices.Assuch,the unique impact of promotions on brand preference is diffi-cult to extricate from effects relating to other price changes.However, studies on price expectations that account for thespecific effect of sales promotion on price expectations andfuturechoiceareincludedinouranalyses(e.g.,Kalwanietal.1990).Finally, we eliminated studies in which the author(s)used the same data set to produce a related article. In suchcases, rather than having one data set receive undue weight,we included the data from the article that we deemed mostcentral to the issue of post-promotion brand preference andexcluded any others from analysis.In sum, this meta-analysis includes only studies thatexplore the impact of sales promotions on brand preferenceafter the period in which the promotion is offered by measur-ing brand perceptions or choice probability or its derivativemeasures (e.g., price sensitivity). Each study allows for thecomparisonofbrandpreferenceacrossconditionsof(a)offer-ing versus not offering a promotion (e.g., an experimentalversus a control condition in lab experiments) or (b) offeringmore versus less frequent promotions (e.g., a correlation-based measure of promotion frequency and purchase proba-bility when not promoted in models of scanner data). Giventhis demarcation of our research domain, we now turn to thedevelopment of the data set that emerges within this set of boundaries and to our method of analyses.
Methodology
To identify the population of studies for this analysiswe conducted key word searches of electronic databasesusing terms such as “promotions,” “brand choice,” and “dealretraction.” We then studied the reference sections of thoseidentified studies in search of additional empirical studies.Finally, we conducted a manual search of leading journals inwhich articles addressing sales promotions and brand choiceare most likely to be found (e.g.,
Journal of Marketing
,
 Journal of Marketing Research
,
Journal of Retailing
,
Inter-national Journal of Research in Marketing
, and
MarketingScience
). We identified 51 suitable empirical studies throughthedatabasedevelopmentprocess.ThesestudiesarenotedinTable 1.After reviewing and coding each study, it became clearthat a variety of both dependent variables and metrics werereported across the studies. To make the outcome variablescomparable while retaining the greatest number of studiesin our database, we used the point-biserial correlation as oureffect size given that most of the other reported measurescould be converted to it (seeGlass et al. 1981; Hunter etal. 1982).From this we retained a total of 132 observationsfrom 42 of the 51 studies. Our inclusion rate is generallyconsistent with previous meta-analyses (see e.g.,Compeauand Grewal 1999; Krishna et al. 2002).One of the principalinvestigators and a graduate student independently coded thedataineacharticle.Codingconsistencybetweenthetwowas94%.Thefewdiscrepancieswererectifiedthroughdiscussionand subsequent re-coding.Consistent with the analytical approach advocated byGlass et al. (1981)and employed in other meta-analyses(e.g.,Henard and Szymanski 2001; Krishna et al. 2002),

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