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Long-Term Impact of Sales Promotion on Brand Image Udk: 658.626 237 Tržište 1 DUGOROČNI UČINCI UNAPRJEĐENJA PRODAJE NA IMIDŽ MARKE LONG-TERM IMPACT OF SALES PROMOTION ON BRAND IMAGE TRŽIŠTE UDK 658.626 Pregledni rad Review Danijela Mandić, M. Sc. Marketing communications Prvog Krajiškog korpusa 144 78000 Banja Luka, BOSNIA AND HERZEGOVINA Phone: ++387 65 691 234 E-mail: danijelalukic@blic .net Ključne riječi: Keywords: marketinške komunikacije, unaprjeđenje prodaje, marketing communications, sales promotion, brand imidž marke image SAŽETAK ABSTRACT Unaprjeđenje prodaje nezaobilazan je alat u promo- Sales promotion (SP) is an inevitable tool in the mar- tivnom miksu, posebno na tržištu proizvoda krajnje keting communications mix, especially in the FMCG potrošnje, između ostalog i zbog povećanih pritisaka markets, due to pressures such as retailers’ growing de- na tržištu kao što su rastući zahtjevi trgovaca i veći broj mands and increasing competition. This has proven to konkurenata. Ovi su se pritisci pokazali kao problem za be an issue for many companies, especially those with mnoga poduzeća, posebno ona koja su pozicionirana a premium brand positioning and those concerned kao premijske marke i ona koja brinu može li unapr- about the impact that SP might have on the long-term jeđenje prodaje imati negativan dugoročni učinak na image of the company. Despite the fact that literature njihovu poziciju. Iako postoji veliki broj istraživanja is replete with research on SP, it seems to be vastly provedenih na temu unaprjeđenja prodaje, ona često generalized and mostly focused on price reductions. generaliziraju tehnike unaprjeđenja prodaje i uglavnom Thus, this paper aims to analyze and discuss the issue se fokusiraju na marketinške alate koji uključuju sma- of the long-term impact that SP has on companies, njenje cijene. Prema tome, cilj je ovog rada analizirati i especially on premium brands in the FMCG markets. It 236 Danijela Mandić raspraviti pitanje dugoročnog utjecaja koji unaprjeđe- concludes that, when used properly and strategically, nje prodaje ima na poduzeća, posebno na premijske SP may have a positive long-term impact on brands. marke na tržištu proizvoda krajnje potrošnje. U radu je zaključeno da, ako se unaprjeđenje prodaje ispravno koristi, može imati pozitivne dugoročne utjecaje na TRŽIŠTE marku, a samim tim i na poduzeće. Vol. XXI (2009), br. 2, str. 235 - 246 2, str. XXI (2009), br. Vol. LONG-TERM IMPACT OF SALES PROMOTION ON BRAND IMAGE UDK: 658.626 237 TRŽIŠTE 1. INTRODUCTION it comes to the FMCG markets, the use of sales pro- motion (SP) has become inventible and almost every company needs to use SP as either an offensive or a In the changing and competitive marketing communi- defensive tool.5 cation industry it is of vital importance for companies finally to recognize that consumers perceive a brand through all the communication touch-points. This, in turn, implies the importance of a strategic focus in any 2. SALES PROMOTION marketing communications plan, as brand building is a long-term exercise. A brand entails a construct “of, Sales promotions consist of a variety of marketing first, an identity that managers wish to portray and tools, which are designed to stimulate purchase by secondly, images construed by audiences of the iden- providing an incentive.6 There are numerous reasons tities they perceive”.1 Furthermore, as brand image why SP has increased in importance: fierce competi- refers to the consumers’ perception of the brand and tion;7 high cost and decline of the more traditional all the associations that are formed,2 companies need marketing communications mediums;8 and short- to acknowledge the potential of all communication term perspectives with an emphasis on immediate tools available and view them through the long-term results.9 impact they might have on the brand image of the company, as a means of creating a positive attitude towards the company. These factors have been highlighted especially in the FMCG markets, characterized usually by low involve- ment products; a lack of clear differentiation between Brand image and associations consist of several dimen- brands and extreme competiveness. Premium brands sions, most often classified into attributes (descriptive and market leaders have not been exempted from features that characterize a brand), benefits (personal these issues, as it has been found that followers and value consumers attach to the attributes) and atti- market leaders experience the same level of competi- tudes (general evaluations of the brand).3 Del Rio et tion,10 although their brand characteristics may vary al.4 found that each of these factors might have a dif- greatly. ferent effect on consumer responses but, even though the concepts of brand image and associations are in themselves clearly complex (incorporating the above- Perhaps the most pressuring issue for manufacturers 11 mentioned factors), for the purpose of this paper we is an increasing power of retailers as well as a grow- 12 will refer to brand image in its broader sense – whether ing strength of retailers’ own label brands. Retailers the perception of the company is positive or negative now take up a considerable part of the market share in relation to other brands and whether consumers and can dictate the trading terms with manufactur- 13 perceive less value of the brand when encountering ers. Retailers are themselves in a pressure situation them through different communication tools. where they face competition from other retailers and constantly need to find new ways of providing more value to consumers. Consumers are becoming more The need to analyze the long-term impact of promo- 235 - 246 2, str. XXI (2009), br. Vol. demanding in their choice of retailers and may be tional tools is more important than ever, as marketing influenced by factors such as price, location, layout, communications are becoming increasingly expensive product range and sales personnel.14 and companies are constantly seeking ways to achieve their objectives in a more cost-effective manner. In the mass communication days, before the extreme Because of a growing retailer power, more demand- competition of the kind we are seeing today or such ing customers and a general increase in competition, strong growth of new technologies, a company could companies may be forced to use SP in order to retain charge premium prices and complement its position- not only market share in general, but concretely, to ing merely with advertising. Today, particularly when receive more shelf space and better terms for their 238 Danijela Mandić products. They now need to match the promotions Despite these benefits, the question remains whether of their competitors and show the flexibility needed these effects are made at the expense of the long- in the retail environment. This is especially important term impact that SP may have on companies. for established brands, as new entrants tend to use sales promotions as a means of encouraging brand- There is evidence pointing towards SP having a nega- TRŽIŠTE switching and breaking existing loyalty.15 tive effect on brands, especially in relation to advertis- ing. It is argued that SP does not have any brand-build- In the light of these pressures, it becomes clear that ing impact22 and could lead to diminishing effects for companies need to address the issue of SP in their the brand, particularly well-established ones.23 campaigns. However, the often assumed image of SP – that its long-term effects can be devastating for a In fact, the Ehrenberg et al.24 study showed that brand – is a concern for a company, especially one price-related promotions do not have any effect on with a premium brand positioning. This form of po- brand performance, either in terms of sales or repeat sitioning relies on core values, such as sophistication purchase. According to the authors, this is due to the and high quality, which in turn justify the premium fact that promotions influence existing customers in price. They usually incorporate both the intrinsic and the first place, with some rare exceptions.25 This is a extrinsic attributes. A strong brand image is particu- concern for companies, whose main objective it is to larly important for these brands, as a “perceived risk is target new customers or gain more long-term profit, reduced and high quality is conveyed through trust as new customers might only take advantage of the and experience formed through an association with promotion and then go back to their preferred brand. the brand”.16 Also, even when the existing customers are targeted and the response is satisfying, these consumers’ price Consequently, this paper explores and analyzes the sensitivity may be enhanced, causing difficulties in the issue of the long-term impact that SP has on compa- long run. nies’ image and should contribute to a better under- standing of the relationship between the SP strategic A premium brand needs to justify its high price and potential and brand image, with a particular focus on its image, and often does so through advertising, but premium brands in the FMCG markets. are these media expenditures a waste of money if the image is damaged through other communication channels? Perhaps the easiest advice would be to 3. SHORT- AND LONG- simply avoid SP due to this potential risk, but as we have seen in the FMCG markets, SP cannot easily be TERM EFFECTS OF SALES avoided and market characteristics force companies to PROMOTION address this issue. In addition, it is arguably the FMCG markets that face the largest issue of competition and lack of differentiation among products; and these are The evidence of short-term effects seems to be well all the problems that successful branding might ease. documented in the literature. It is suggested that SP can build brand awareness and motivate trial, provide more specific evaluation methods, as they are more Also, as previously implied, retailers and the charac- immediate and operate in a specific time frame,17 influ- teristics of the retail environment play an important ence sales,18 expand the target market19 and achieve role in customers’ perception of a brand.
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