Developing Synergies between Promotions and Brands in Different Price-Quality Tiers

Brands are promoted in many different ways. In this research, the authors examine synergies between different types of promotions and characteristics of the brands that offer the promotions. Specifically, the authors examine interactions among feature advertising, display, price promotions, and the price-quality tier of the brand offering them. Using both scanner data and experiments, the authors find that high-tier brands benefit more than low-tier brands from price promotions, displays, or feature advertising when these promotional tools are used by themselves. This advantage disappears, however, when certain promotional tools are used in combination with one another. In particular, the authors find that price promotions have a more equal effect on low-tier and high-tier brands when these promotions are offered in settings where comparisons are difficult (end-of-aisle displays or feature advertising). Furthermore, the combined effects of displays and price promotions, or feature advertising and price promotions, are greater on the low-tier brands than on the high-tier brands. The results provide insights into the conditions under which specific marketing tools are most effective for which brands. The authors discuss theoretical implications of the results as they relate to promotions and consumer decision making and outline strategic implications for retailers and manufacturers.