Do strong brands need sales promotion? An experimental study

A common tradeoff, encountered by a Brand Manager, is whether to invest in the brand or to allocate resources to sales promotion. The sales promotion would have the advantage of quick results in sales volumes but this short term focus on sales volumes, may result in an erosion of the brand in the long term. In this paper, we address the question of whether the differential advantage gained by investing in brand equity is likely to translate into tangible savings on sales promotions. An experimental set up measures brand equity of two brands in the Panel TV segment first and purchase intentions in the backdrop of a sales promotion. The results of the study show that building brand equity provides substantial advantage over sales promotion and brand managers would thus be well advised to allocate more resources to building brand equity.