Understanding How Manufacturers and Retailers Use Sales Promotion

Abstract

Do promotions increase or reduce retail prices in the long run? Long-term effects of promotions on sales and brand goodwill are well documented in marketing literature. However, knowledge about how best to integrate these effects in pricing and advertising strategies over time remains very sparse. Dr. Simon P. Sigue, AU Associate Professor of Marketing, presents two analytical models to investigate the impact on consumer welfare and channel decisions of manufacturer-controlled and retailer-controlled promotions targeted at consumers. Sales promotion and its magagerial implications on channel of distribution decisions will be discussed.