Effect of sales promotion on perception of brand equity

Abstract

Sales promotions are the temporary short-term incentives targeted at the trade and / or end consumers. Sales promotions are designed to induce higher trial rate, to buy more quantity, prepone purchase or to buy more often. There is a general belief that if brands were frequently supported by sales promotion activities, there would be a dilution in brand’s equity with customers. Present study examines the effect of sales promotion on customer perception of brand equity. More specifically, we examine. a) Whether sales promotion influences perception of brand attributes by customers and b) Whether different types of sales promotions-straight cash discounts and free gifts-have differential effects on perception of brand attributes. Data was collected from a sample of 89 respondents. This sample which was homogeneous on all demographic characteristics was further divided into two matched groups of 44 and 45. Data on consumers’ perception of brand attributes when they/‘brand was promoted using cash discounts as well as free gifts was collected separately from those two samples. This was compared with consumer’s perception of brand attributes prior to exposing them to experimental variables (cash discount Vs free gifts). Results indicate that sales promotion does indeed result in less favorable evaluation of brand attributes and there is not statistically significant difference of perception between sales promotions, cash discount and free gifts.