May 20, 2002

The Promotion Marketing Association (PMA), the premier trade organization representing the $350 billion promotion marketing industry, announced the results of "Promotion, Brand Building and Corporate Performance," a collection of five distinct, but related, studies commissioned to determine the economic impact of sales promotion on corporate performance. The research found that promotion marketing results in significant contributions to the corporate bottom line and that, executed strategically, promotion builds brand equity, increases retail traffic, and most importantly, drives sales of both products and services.

Conducted over four years by the department of Integrated Marketing Communications at Northwestern University, the study is based on empirical analysis of consumer purchase behavior with respect to promotion. Data sources for the study included frequent shopper databases, controlled experiments, first-hand dissemination and tracking of promotional materials (coupons, etc.), as well as an extensive survey of more than 1,000 retail shoppers along with data on the actual purchases of those shoppers.

"The study's findings prove that promotion directly influences corporate performance by attracting and serving a firm's customers in both economic and psychological ways," said Robert A. Bell, Chairman of the PMA Northwestern University research project. "Never before has research directly demonstrated -- although smart marketers have always known -- that promotion has a direct result on the bottom line."

Among the studies key findings:

* Promotions contribute to shopping enjoyment. Promotions provide both measurable hedonistic (pleasurable) benefits, as well as utilitarian (monetary) benefits.

* Promotion activity is an integral part of the shopping experience and is positively related to consumer satisfaction with retail stores.

* Consumers of all incomes participate in and enjoy promotions.

* Promotion buying and brand loyalty are not mutually exclusive -- many consumers who are loyal to a brand also respond positively to its promotions.

* Promotions contribute greatly to overall brand experience. Promotions serve as a point of differentiation that can help a brand stand out in a category -- regardless of product attributes or prices.

* Coupon promotions particularly have distinct, measurable contributions to profit that can be directly tied to the specific characteristics of face value and length of redemption period. By managing these characteristics, specific outcomes can be achieved.

"One of the more interesting findings is that all types of consumers participate in promotions, regardless of their income or spending habits," said Frank Mulhern, Department Chair and Associate Professor in Integrated Marketing Communications at Northwestern University. "In fact, our research indicates that 20-35% of all consumer purchases are tied to some kind of promotion. This speaks to the level at which promotion can be effective -- not only in attracting new customers but also in retaining those brand loyal customers who are known to provide enormous contribution to a company's profitability."

The research also indicated that the effectiveness of sales promotion is directly linked to the benefit provided. For high-equity, indulgent items such as gourmet chocolates and bubble baths, promotions are more effective when they provide non-monetary offers such as sweepstakes and other incentives. Low-equity items such as light bulbs, laundry soap and detergent were found to be best served by monetary promotions.

"As an association whose mission, in large part, involves education, the PMA undertook this study seeking benefit to its members and the marketing industry as a whole," said Claire Rosenzweig, CAE, executive director of the Promotion Marketing Association. "This study not only provides marketers with insight into how and why promotion works, but once and for all conclusively establishes promotion as an essential part of the overall marketing mix."

For more information art

Leave a reply

Enter the characters shown in the image.