390 CHAPTER 12 BRAND ACTIVATIONpromotions can have a negative effect on the medium-term image of the brand because consumers remember
afterwards to have chosen the brand because of the promotion rather than the intrinsic value of the product. They
may then see less reason to buy the product again when it is not on promotion.^32 According to the ‘Mental
Accounting Theory’ and the ‘Prospect Theory’, consumers base their decisions on the difference between the actual
stimulus and a stimulus of reference. Promotions can result in a decrease in ‘reference price’; in other words, con-
sumers get used to promotions and they adjust their price expectations as a result of frequent promotions.
Consequently, the normal price becomes expensive and a future promotion will have to be more ‘impressive’ to be
perceived as a promotion.^33 Promotions may also influence repeat-buying decisions adversely because the long-
term attitude towards the brand is being damaged.^34 In this sense, repeated monetary promotions have been shown
to be more likely to harm brand attitudes than repeated non-monetary promotions.^35 However, if the consumer is
already a loyal customer before the campaign, and has already developed a clear attitude towards the brand, the
effect of promotions on his or her long-term attitude towards the brand will not be affected. Similarly, in markets in
which promotion campaigns are frequently used, and in markets in which most consumers are brand-switching
anyway, the effect of promotions on brand attitude and thus repeat purchase will be limited.^36
Frequent promotions may lead to ‘deal-proneness’, with adverse effects on brand attitudes, market shares and
sales in the long term. Research even indicates that frequent use of promotions leads to a ‘prisoner’s dilemma’ as a
result of which competitors retaliate in order not to lose market share, and long-term market shares are not
affected. In a long-term market share analysis of 341 products, it was shown that 60% of all market shares
remained stable over a period of nine years. Only in 24% of the cases was a significant effect of promotions on
market share evolution found.^37 Similarly, in a study of 400 products, 78% of market share appeared to be stable
in the long run, which means that a maximum of 22% of the market share could have been affected by promotion
campaigns (or by other marketing mix instruments, for that matter).^38
Promotions will have a stronger effect on products that the consumer can easily hold in stock, and on products
that are bought by large numbers of consumers and for which supporting communications campaigns are organised.
A recent study by Nielsen shows that consumers are 32% more responsive to a sales promotion campaign of brands
that also used above-the-line advertising.^39 Promotions will be less effective in very competitive markets and when
the campaign is preceded by a competitor’s promotion.^40 Furthermore, promotions seem to be more effective for
brands with a small market share than for major market players.^41 Variety-seeking consumers and consumer seg-
ments with high ‘deal-proneness’ (such as young families) are more influenced by promotions than others.^42 The
risk of ‘deal-to-deal buying’, i.e. postponing purchases until the next promotion campaign, is somewhat higher in
those segments, and less frequent use of promotion campaigns is advised.^43M12_PELS3221_05_SE_C12.indd 390M12_PELS3221_05_SE_C12.indd 390 5/6/13 2:58 PM5/6/13 2:58 PM