International Journal of Market Research Vol. 47 Issue 2
Sales promotions effects on consumerbased brand equity
Mariola Palazón-Vidal
University of Murcia, Spain
Elena Delgado-Ballester
University of Murcia, Spain
Research has traditionally posited that sales promotions erode brand equity.
However, in current management practices, one may observe that companies
design promotional programmes to differentiate and modernise their brand image
and build brand awareness. This divergence between practice in the industry and
the general academic view must inevitably lead to a rethink about the goals
assigned to sales promotions. Consequently, the research question that concerns
this study is whether sales promotions can contribute to building brand equity.
Adopting a consumer-based brand knowledge perspective of brand equity, this
study shows that monetary and non-monetary promotions are useful to create
brand equity because of their positive effect on brand knowledge structures. The
findings derived from a sample of 167 buyers suggest that non-monetary
promotions are more appropriate as a brand-building activity and that the
product type exerts a moderator effect on the relationship between sales
promotions and brand knowledge.
Introduction
Building a strong brand in the market is the current goal of many
organisations. This is due to the fact that brand equity has been found to
lead to higher prices (Firth 1993), greater market share (Park & Srinivasan
1994), more responsive advertising and promotions (Keller 1998), earlier
market penetration (Robertson 1993) and more efficient product line
extensions (Keller & Aaker 1992).
As a result it is not hard to understand why brand equity has emerged
as a central concept in marketing over the past 20 years. Much has been
learned during the past two decades about brand valuation (e.g. Aaker
1991; Keller 1998; Yoo & Donthu 2001), the leverage of brand equity
through brand extensions (Broniarczyk & Alba 1994), the impact of such
© 2005 The Market Research Society
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Sales promotions effects on consumer-based brand equity
extensions on the core brand (Loken & John 1993), and its many benefits
for a firm and its customers (Keller 1998). However, researchers have not
devoted the same considerable attention to addressing how brand equity
may be built through marketing activities.
Specifically, in our opinion, building brand equity appears to be worthy
of investigation in the context of sales promotions. Indeed, the most recent
practices in the industry diverge from the general academic view that sales
promotions destroy brand equity (Mela et al. 1997; Yoo et al. 2000). For
example, Georgia-Pacific, a leading manufacturer of paper products,
differentiated and modernised the image of its brand, Brawny, by
executing the ‘Do you know a Brawny man?’ contest promotion. Kraft
Food’s ‘Game of Life’ promotion reinforced its brand image values (further
information at www.kraftfoods.com) and Juicy Fruit’s ‘Gotta have sweet’
scavenger-hunt promotion of Wm Wrigley Company contributed to
building brand awareness and brand excitement (one of the five brand
personality dimensions suggested by Aaker 1997).
Thus, it would appear that, apart from the traditional goals assigned to
sales promotions (e.g. increase trial, price-discriminate), they are also used
in the industry as a brand-building activity. This brings us to the question
of whether this communication tool is appropriate for building brand
equity. Consequently, the purpose of the present study is to provide
answers to the following research questions.
•
•
•
As another tool of the promotion mix, do sales promotions have
potential to build brand equity?
What type of sales promotion, monetary or non-monetary, is more
effective for building brand equity?
How does the type of product affect the effectiveness of monetary and
non-monetary promotions for building brand equity?
To provide answers to these questions, the rest of the paper is organised
as follows. We begin by presenting the conceptual background on which
this research is based and the main hypotheses postulated. Next, the
methodology, key measures and the results of the study are described.
Finally, we discuss the findings, and highlight the limitations and
implications for theory and practice.
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Conceptual background and hypotheses
The conceptual framework used in this research approaches brand equity
from the perspective of the consumer. Specifically, we build on Keller’s
approach to consumer-based brand equity, which is one of the most
referenced theories in the branding literature. Keller (1993, 1998) defines
brand equity as ‘the differential effect that brand knowledge has on
consumer response to the marketing of that brand’. Based on this
definition, and from a cognitive psychology perspective, brand equity is
based on brand knowledge that consists of a variety of associations linked
to a brand node in memory. These associations represent the personal
meaning about a brand – that is, all descriptive and evaluative brandrelated information (Keller 1993). It is essential to stress that the
differential response that makes up brand equity comes from various
characteristics of brand associations in the consumer’s memory. In particular, based on Keller’s research, Krishnan (1996) empirically demonstrated
that association characteristics such as number of associations, valence
and uniqueness underlie consumer-based brand equity. Hence, brands with
high equity are characterised by having a greater number of associations,
and more net positive and unique associations.
Based on these ideas, Figure 1 exhibits our conceptual framework of
brand equity, which is inspired in Keller’s (1998, p. 69) model. Keller
proposes that (i) building brand equity requires creating brand knowledge,
(ii) this knowledge-building depends on three main factors (brand
elements, marketing programmes, and the leverage of secondary
associations), and (iii) brand equity leads to potential benefits to the firm.
For the purpose of this research, we simplify Keller’s model in two ways.
First, because the primary input of consumer-based brand equity comes
from the marketing activities related to the brand, we focus only on
marketing activities as a tool to build brand knowledge. Second, among
TOOLS
Developing marketing programmes
• Sales promotions
KNOWLEDGE EFFECTS
BENEFITS
Brand knowledge
• Number of associations
• Valence
• Uniqueness
Possible outcomes to the firm
• Greater loyalty
• Larger margins
• Less vulnerability to competitive
marketing actions
• Increased marketing communications
efficiency and effectiveness
• Possible licensing opportunities
Figure 1 A conceptual framework of building brand equity
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Sales promotions effects on consumer-based brand equity
these activities we focus on sales promotions. Investigating the sales
promotion– brand knowledge linkage is the focus of this research.
The effect of sales promotions on brand knowledge
Earlier, it was posited that brand knowledge is the source of brand equity.
Therefore any potential encounter with a brand may affect brand equity as
far as it changes the mental representation of the brand and the kinds of
information that can appear in the consumer’s memory. Some of these
potential encounters may be marketing-initiated, for example through
marketing communications tools.
Among these tools, sales promotions, and in particular price
promotions, are believed to erode brand equity because they enhance only
short-term performance by encouraging sales and brand-switching
(Dobson et al. 1978; Gupta 1988) and may convey a low-quality brand
image (Yoo et al. 2000).
These findings are in line with the approach that has inspired most of
the research conducted on sales promotions. That approach is characterised by the fact that (i) most studies have examined the convenience of
using promotions instead of examining their benefits to the consumer, (ii)
sales promotions are seen as a sale tool having ‘effective effects’ only on
behaviours, and (iii) it is assumed that monetary savings are the only
benefit that motivates consumers to respond to sales promotions.
However, we adopt a consumer-based approach (see Chandon &
Laurent 1999; Chandon et al. 2000) to consider that sales promotions, as
a part of marketing communications, also have an effect at a cognitive and
emotional level, and provide the consumer with multiple hedonic and
utilitarian benefits.
Taking into account that brand knowledge includes different kinds of
information linked to a brand such as attributes, benefits, thoughts,
feelings, experiences, and so on (Keller 1998), it follows that brand
knowledge may be potentially affected and changed by the sales
promotions experience. First, this experience can change the number of
associations evoked about a brand because sales promotions have brand
association-enhancing power. For example, they may engender positive
feelings that get transferred to the brand and help express the consumer’s
self-perception and its personal values (e.g. being a good and smart
shopper) or link new attributes to the brand (e.g. P&G used a monetary
promotion to associate and reinforce the floating attribute to its Ivory
bars).
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Second, they can also generate favourable associations if the
associations are desirable to consumers and successfully conveyed by the
supporting promotional campaign for the brand. In other words, the value
that sales promotions have for brands is related to the value or benefits
they have for consumers (Chandon et al. 2000).
Finally, sales promotions can develop meaningful points of difference to
the brand (unique associations) if the promotional campaign is not
attributed to another brand or is not seen as a generic promotion of the
product category.
Based on the above reasoning, we propose that sales promotions have
the potential to create brand equity because they affect the key properties
of brand knowledge that play an important role in determining brand
equity (Krishnan 1996; Keller 1998). Therefore, the first hypothesis is as
follows.
H1:
Sales promotions have a positive effect on brand knowledge in
terms of:
H1a: greater number of associations
H1b: more net positive associations
H1c: more unique associations.
The differential effect of monetary and non-monetary promotions
on brand knowledge
Although we have predicted that sales promotions have a positive effect on
brand knowledge, this effect may depend on the type of promotion. The
most recent literature on sales promotions (Chandon & Laurent 1999;
Chandon et al. 2000) stresses the need to distinguish between two types,
monetary and non-monetary, because there are important differences
between them. On the one hand, monetary promotions (e.g. free product,
coupons) are primarily related to utilitarian benefits, which have an
instrumental, functional and cognitive nature. They help consumers to
increase the acquisition utility of their purchase and enhance the efficiency
of their shopping experience. On the other hand, non-monetary
promotions (e.g. contests, sweepstakes, free gifts, loyalty programmes) are
related to hedonic benefits with a non-instrumental, experiential and
affective nature, because they are intrinsically rewarding and related to
experiential emotions, pleasure and self-esteem.
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Because of the different nature of the benefits provided by each type of
promotion, the question we address now is whether they differ in their
effect on brand knowledge.
First, we propose that monetary promotions generate less brand
knowledge (i.e. number of associations) than non-monetary ones. In the
language of Behavioural Learning Theory (Rothschild & Gaidis 1981),
price promotions are more likely to become primary reinforcement and,
according to Self-Perception Theory, they are attributed by the consumers
as the reason they buy the brand. This implies that, compared to nonmonetary promotions, the monetary ones are less effective in building
brand knowledge because of their greater emphasis on only one brand
association (i.e. price). In other words, they lead consumers to think
primarily about deals, shopping convenience and not about the brand
(Yoo et al. 2000). On the other hand, non-monetary promotions can evoke
more associations related to the brand personality, enjoyable experience,
feelings and emotions. As Nunes and Park (2003) remark, the use of
discounts places a greater emphasis on price, leading people to assess the
incentive relative to what they pay, while non-monetary promotions such
as premiums should take the focus away from price.
Second, sales promotions also differ in the favourability of the brand
knowledge generated. This is demonstrated by the fact that monetary
incentives can be viewed as generating functional associations because of
the utilitarian benefits they provide, while non-monetary incentives create
more abstract associations due to their hedonic benefits.
Considering, then, that associations deriving from different types of
promotion differ in their level of abstraction and qualitative nature, it is
worth stating that, according to Keller (1998), this affects the favourability
and uniqueness of associations because abstract associations tend to be
more evaluative and durable in memory. From studies focused on
utilitarian and hedonic aspects of buying and consumption a similar
reasoning is found. For example, when the purchase decision has hedonic
motivations, the fun, enjoyment or sensory stimulation arising influence
brand perceptions (Hirschman & Holbrook 1982) and make the
consumer’s attitude more favourable (Childers et al. 2001). Therefore,
when promotion experience is linked to these kinds of feelings, thoughts
and benefits, more favourable and positive brand associations are linked
to the brand. In fact, as suggested by Pham et al. (2001), the number and
the valence of spontaneous thoughts are better predicted by feeling
responses. This is the case with non-monetary promotion.
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Finally, because hedonic benefits are more subjective and personal than
utilitarian ones, they are more difficult to imitate and more capable of
providing unique associations (Babin et al. 1994). Thus, when promotion
experience provides these types of benefit, which is the case with nonmonetary promotions (Chandon et al. 2000), more unique brand
associations are linked to the brand.
To sum up, based on the above reasoning, the second hypothesis is as
follows.
H2:
Non-monetary promotions have more positive effects on brand
knowledge than monetary promotions, in terms of:
H2a: greater number of associations
H2b: more net positive associations
H2c: more unique associations.
The moderator effect of the type of product on the effectiveness
of monetary and non-monetary promotions on building brand
knowledge
In the previous hypothesis, we postulated that monetary and nonmonetary promotions are not equally effective in building brand equity
because of the different effect they have on brand knowledge. The question
arising now is whether the nature of the purchase decision (i.e. hedonic or
utilitarian) may affect this effectiveness.
One way of inferring the utilitarian or hedonic nature of the purchase
decision is to examine the type of product being considered (Mao & Oliver
1993), therefore we focus on the moderator effect that product type exerts
on the effectiveness of each type of promotion.
An argument in support of this moderator effect is provided by
Chandon et al. (2000), who assert that sales promotions effectiveness may
depend on the congruence or the match between promotions’ benefits and
those of the promoted product (the Benefit Congruency Framework). The
principle of congruency is based on the idea that promotions that are
compatible with the promoted product, because they offer similar benefits,
would have a greater impact on the demand of this product than
promotions that offer incongruent benefits. Therefore, it is expected that
utilitarian products will be more influenced by monetary promotions and,
conversely, hedonic products are more compatible with non-monetary
ones.
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Nevertheless, as stated by Holbrook and Hirschman (1982), all
products may carry a symbolic or hedonic meaning. In some cases this
meaning is more salient and rich than in others, although it seems that
non-monetary promotions may not only benefit hedonic products
according to the congruency principle. They can also be of benefit to
utilitarian products as this type of sales promotion enhances a symbolic
meaning and offers consumers opportunities to experience fun,
amusement and diversion, or social experiences not provided by the
product itself. In this sense, Arnold and Reynolds (2003) affirm that the
seeking of such experiences is often far more significant than the mere
acquisition of the utilitarian benefits provided by the product. The
successful use of non-monetary promotions for utilitarian products, such
as the loyalty programme for Unilever’s Omo laundry detergent and online
competitions for Kellogg’s Coco Pops, exemplified these ideas.
Furthermore, because emotional desires dominate utilitarian motives in
the choice of products (Hirschman & Holbrook, 1982; Dhar &
Wertenbroch 2000), it is expected that monetary promotions do not add
value meaning to the hedonic products. On the contrary, non-monetary
promotions can imbue a utilitarian product with a subjective meaning that
supplements the more functional and utilitarian image it possesses.
Following the above discussion, the third and fourth hypotheses are as
follows.
H3:
Monetary promotions are better for utilitarian product than for
hedonic product in affecting brand knowledge in terms of:
H3a: greater number of associations
H3b: more net positive associations
H3c: more unique associations.
H4:
Non-monetary promotions are equally effective for both utilitarian
and hedonic products in affecting brand knowledge in terms of:
H4a: number of associations
H4b: net positive associations
H4c: more unique associations.
Methodology
Study design and procedure
To test the hypotheses we used a 3 (between subjects) × 2 (between
subjects) × 2 (within subjects) mixed-factorial experiment design. It
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Table 1 Cell sizes for the six groups of subjects
Utilitarian product
Type of promotion
No promotion
Monetary promotion
Non-monetary promotion
High brand equity
Low brand equity
n = 31
n = 24
n = 31
Hedonic product
High brand equity
Low brand equity
n = 27
n = 28
n = 26
comprises three levels of promotion (no promotion, monetary promotion,
non-monetary promotion), two types of product (hedonic and utilitarian),
and two types of brand (high and low brand equity).
Due to the experimental design, 12 brand– promotions combinations
were obtained. Subjects were assigned to each one randomly. Table 1
reports the cell sizes, indicating the number of respondents in each cell.
Subjects who participated in the study were asked to answer a five-page
questionnaire. The first page asked questions about a specific product – for
example, to check the consumer’s knowledge of the product class. We also
asked about the consumption pattern in terms of the frequency of use and
number of brands consumers know and consume, and the relevance of the
brand in the decision-making when buying that product. In addition, we
introduced a free-association question on the product category to measure
the uniqueness of the brand associations (see the section on Measures,
below).
The next two pages of the questionnaire dealt with the evaluation of two
different brands (high and low equity) in the same promotion scenario (no
promotion, monetary or non-monetary promotion). Subjects viewed each
brand– promotion combination for a few minutes and were then asked to
mention whatever came to mind. To control for order effects, the order in
which the two brands were presented in the questionnaire was
counterbalanced. The ‘no promotion’ case consisted of the same type of
stimuli as the promotion scenario, the only difference being that the brand
is not promoted and therefore no information about promotion appears.
Figures 2, 3 and 4 are examples of the stimuli used in the high brand
equity and hedonic product condition.
As a manipulation check, subjects were also asked to evaluate the
hedonic or utilitarian nature of the products and the equity of the brands
used in the study. The questionnaire concluded with demographic
questions on age, income and level of education.
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Figure 2 Non-monetary promotion and high brand equity condition
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Figure 3 Monetary promotion and high brand equity condition
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Sales promotions effects on consumer-based brand equity
Figure 4 No promotion and high brand equity condition
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Pre-tests
Prior to data collection, two pre-tests were conducted with 14 women. The
first was designed to ensure the hedonic and utilitarian nature of the two
products selected in the study. On the basis of prior research (Laurent &
Kapferer 1985; Chandon et al. 2000) we pre-selected two hedonic
products, chocolate and perfume, and two utilitarian products, laundry
detergent and paper towels, with the objective of selecting the most
hedonic and utilitarian products. Based on the results, laundry detergent
was finally selected as the utilitarian product and chocolate as the hedonic
one.
The purpose of the second pre-test was to select two brands for each
product with different levels of equity. In a first stage, the market share
was used as an external index of brand equity and, based on it, a total of
eight brands were selected (four brands for each product). In a second
stage, participants evaluated their equity using the brand equity scale of
Yoo and Donthu (2001). Only two brands for each product were finally
selected, with significantly different levels of equity. Consequently, the
product categories and brand were:
1. laundry detergent – Ariel (high equity) and Flota (low equity)
2. chocolate – Ferrero Rocher (high equity) and Trapa (low equity).
Sales promotion types
The sales promotions used were designed ad hoc for this research. The
selection of the specific sales promotions was based on previous research
(Chandon et al. 2000) and a review of those more frequently offered in the
selected product categories and in the marketplace. The stimuli for
monetary promotion was a 15% price discount, and for the non-monetary
promotion consisted of a free gift and the possibility of participation in a
sweepstake to win e1500 to spend on shopping in one day.
Data collection and sample
The population targeted for this study was women. This is adequate for
the study’s objective since it has been reported in prior research that
women are the primary shoppers in the family unit (Laroche et al. 2003).
In particular, the marketing consulting firm Yankelovich reports that in
nearly two-thirds of households women are the primary shoppers and
72% of married women who work full-time are the primary shoppers
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Sales promotions effects on consumer-based brand equity
Table 2 Sample information
Sociodemographic data
College degree
Age
n
%
18–25
26–39
40–49
49+
27
51
35
51
16.5
31.1
21.3
31.1
No degree
Primary education
Secondary education
Higher education
n
%
8
74
45
37
4.9
45.1
27.4
22.6
(Cleaver 2004). In order to ensure a representative sample, the data
collection was confined to a selected number of census tracts located in the
city and its surrounding area where the survey took place. The
questionnaires were administered through personal interviews by a market
research firm. A total of 167 usable questionnaires were obtained, yielding
a response rate of 83% – a reasonable response rate given that the survey
was completely voluntary and the participants received no compensation
for answering the questionnaire.
Table 2 reports descriptive information about the respondents.
Regarding consumption pattern, 100% and 81.5% of those respondents
assigned to the utilitarian and hedonic product conditions respectively
were recognised to consume that product. In addition, 74.4% of participants in the utilitarian product condition were recognised to always use
the same brand of laundry detergent, as opposed to 47.0% in the case of
chocolate.
Measures
Since the focus of this research is to ascertain the effect of sales promotions
on brand knowledge from the consumer’s perspective, brand associations
were measured with indirect methods because, according to Aaker (1991),
they help the researcher understand what a brand means to people.
Number of associations. A free-association procedure was used to assess
the number of associations – subjects were asked to evoke whatever came
to mind when they thought about the promoted brand in question.
Specifically they were asked to think about the brand name each time they
evoked an additional response.
Valence of associations. At the end of the free-association tasks, subjects
were instructed to examine their brand associations and code them on
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whether the association was positive, negative or neutral. Following
Haugtvedt and Wegener (1994), net valence was measured as positive
minus negative associations.
Uniqueness of the associations. Another measure developed was the
uniqueness of associations with respect to the product category. We
followed the same procedure used by Krishnan (1996). An independent
coder was used rather than instructing the subjects to code their own
responses. For each brand, the number of associations shared by the brand
and product was first counted. By definition, the unique associations to the
brand were calculated as the complement of the shared associations
(proportion unique = 1 – proportion shared).
Brand equity. Brand equity was measured with a four-item Likert scale
developed by Yoo and Donthu (2001). This scale measures the difference
in consumer choice between the focal branded product and an unbranded
product given the same level of product features, which is in line with the
definition of brand equity proposed by Keller (1993).
Nature of the product. Following Chandon et al. (2000), a utilitarian
index was developed to measure the nature of the products used in the
study. This index consisted of a total of four items derived from the studies
of Batra and Ahtola (1991) – ‘fun/not fun’ and ‘pleasant/unpleasant’ – and
Spangenberg et al. (1997) – ‘practice/not practice’ and ‘dispensable/
indispensable’. This index is computed by subtracting the average semantic
differential score between the utilitarian and hedonic items.
Results
Manipulations checks
In order to check the nature of the products we used a utilitarian index. A
negative index score means that the evaluation of the product is primarily
hedonic, while if the index score is positive the product is qualified as
utilitarian. As expected, the results show that the utilitarian score was
– 2.26 for chocolate and 1.52 for laundry detergent, and the difference was
statistically significant (t159 = 14.733, p < 0.01).
The two brands in each product were next compared to examine equity
differences. As expected, the brands previously selected as high equity
scored higher in Yoo and Donthu’s (2001) scale than those brands selected
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Sales promotions effects on consumer-based brand equity
as low brand equity (for the laundry detergent: Xhighbrand = 3.67, Xlowbrand
= 2.41, t79 = – 4.480, p < 0.01; for chocolate: Xhighbrand = 3.27, Xlowbrand =
2.41, t160 = – 2.936, p < 0.01). Moreover, the brand association properties
were consistent with the brand equity scores, suggesting that these
properties form the basis of consumer-based brand equity.
The effect of sales promotions on brand knowledge
H1 postulated a positive effect of sales promotions on specific
characteristics of brand knowledge. Table 3 reports the results obtained.
As expected by H1a, there are significant differences in terms of the
number of associations as a function of sales promotion condition (no
promotion versus promotion): Xno-promotion = 2.58, Xpromotion = 2.93, t319 =
– 3.099, p < 0.01.
Sales promotions were also predicted to increase the net favourability of
associations (positive minus negative). The results show that H1b is
supported because subjects in the promotion condition mentioned more
favourable associations than their counterparts in the no promotion
condition (Xno-promotion = 1.31, Xpromotion = 1.91, t319 = – 3.189, p < 0.01).
Finally, in examining the different scores between uniqueness in both
conditions, all brands had more unique than common associations (in
Table 3 both proportions were greater than 0.5), and there are no
statistical differences, so H1c is not supported.
If we consider only whether the test is significant, valuable information
about the difference in means between conditions is being ignored. Thus it
becomes important to mention effect size. We estimated the effect size to
quantify the size of the difference between the two groups. Taking into
account Rosenthal and Rosnow’s (1991) suggestion that a small effect size
is d1 = 0.20, a medium one is d = 0.50 and a large effect size is d = 0.80,
Table 3 Effect of sales promotion on brand knowledge
Promotion type
No promotion (n = 58)
Promotion (n = 109)
T-test
Number of associations
Valence of associations
Uniqueness of associations
2.58
2.93
1.31
1.91
0.72
0.73
–3.099**
–3.189**
–0.157
**p < 0.01
1
Cohen’s d = t × (n1 + n2)/square root (df) × square root (n1 × n2)
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International Journal of Market Research Vol. 47 Issue 2
the effect size for H1a (d = 0.35) and H1b (d = 0.35) is between small and
medium. For H1c the effect size was d = 0.017, which corroborated the
result that there is no significant difference in uniqueness between the two
conditions (no promotion versus promotion).
The differential effect of monetary promotions and non-monetary
promotions on brand knowledge
H2 predicted that non-monetary and monetary promotions are not
equally effective at affecting brand knowledge in terms of number of
associations, favourability and uniqueness. Table 4 reports the results
obtained. Specifically, it was hypothesised that non-monetary promotions
have a more positive effect on brand knowledge than monetary incentives.
In support of H2a, non-monetary promotions are more effective than
monetary ones because the mean number of associations is higher in the
former than in the latter condition (Xnon-monetary = 3.10, Xmonetary = 2.73,
t203 = – 2.658, p < 0.01; d = 0.37).
Also, as predicted by H2b, the net favourability of associations is
significantly higher in the non-monetary promotion condition than in the
monetary one (Xnon-monetary = 2.15, Xmonetary = 1.64, t203 = – 2.356, p < 0.05;
d = 0.33).
Finally, H2c was tested, comparing the uniqueness of associations
between non-monetary and monetary promotions. The results obtained do
not support H2c because there are no significant differences in uniqueness
between both conditions. The small effect size obtained (d = 0.10)
corroborates that there are no differences in uniqueness.
Table 4 The effect of monetary and non-monetary promotion on brand knowledge
Promotion type
Monetary promotion
(n = 52)
Non-monetary promotion
(n = 57)
T-test
Number of associations
Valence of associations
Uniqueness of associations
2.73
1.64
0.71
3.10
2.15
0.74
–2.658**
–2.356*
–0.726
**p < 0.01
*p < 0.05
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Sales promotions effects on consumer-based brand equity
The moderator effect of the type of product
As we analysed previously, the utilitarian or hedonic nature of the product
is an important factor that moderates the effectiveness of different promotion types (Chandon et al. 2000). In this sense, H3 and H4 predicted that
the effectiveness of each promotion depends on the type of product
(utilitarian versus hedonic). Specifically, H3 stated that monetary
promotions are more effective for utilitarian than for hedonic products
(benefit congruency), in terms of number of associations, favourability and
uniqueness.
As shown in Table 5, for utilitarian products the number of associations
is greater than for hedonic products (Xutilitarian = 2.90, Xhedonic = 2.54, t47
= 2.023, p < 0.05; d = 0.59), this difference being statistically significant.
Therefore H3a is supported.
H3b predicted that monetary promotions evoked more net positive
associations on utilitarian than on hedonic products. Table 5 shows that,
as stated, monetary promotions were significantly more effective for
utilitarian products than for hedonic products (Xutilitarian = 2.29, Xhedonic =
1.39, t47 = 2.131, p < 0.05; d = 0.62), giving support for H3b.
Also, the effect size states that the difference in the number and valence
of associations between utilitarian and hedonic product is between
medium and large for H3a (d = 0.59) and H3b (d = 0.62).
Finally, our predictions for H3c were not supported because no
significant difference was found in the uniqueness levels between
utilitarian and hedonic products.
H4 posited that non-monetary promotions are equally effective for
utilitarian products as for hedonic (no effect of benefit congruency).
Results obtained support this hypothesis because no difference was found
between types of product (see Table 5). The results of H3 and H4 are
shown in Figure 5.
Table 5 The moderator effect of product type
Variables
Number of associations
Valence of associations
Uniqueness of associations
Monetary promotion
Non-monetary promotion
Product type
Product type
Utilitarian
Hedonic
T-test
Utilitarian
Hedonic
T-test
2.90*
2.29*
0.58
2.54
1.39
0.73
2.023*
2.131*
–1.434
3.30
2.50
0.75
2.88
2.04
0.75
1.380
1.234
–0.044
*The mean scores of utilitarian and hedonic products are different at p < 0.05
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3.6
Non-monetary promotion
Monetary promotion
3.1
2.6
2.1
1.6
1.1
0.6
Utilitarian
Hedonic
No. of associations
Utilitarian
Hedonic
Favourability
Utilitarian
Hedonic
Uniqueness
Figure 5 Promotion effectiveness and brand knowledge
Discussion
Marketing communications represent the ‘voice’ of the brand and are a
means by which it can establish a dialogue and build relationships with
consumers (Keller 1998). Although advertising is often a central element
of a marketing communications programme and has received the bulk of
attention from researchers, it is not the only element to build brand equity.
For many years, sales promotions research has focused on consumers’
short-term behavioural reactions to price deals and promotions (see
Dobson et al. 1978; Gupta 1988). However, as more recent practices in the
industry show, sales promotions are increasingly being judged in terms of
their ability to build brand awareness and brand image. Because no studies
have explored and linked empirically consumer perceptions of sales
promotions to consumer-based brand equity, this research attempts to fill
this gap in the literature. Moreover, because previous research on brand
equity and promotions has focused only on monetary incentives, we have
incorporated into this study an examination of the differential effects of
monetary and non-monetary promotions on consumer-based brand equity,
as well as an examination of the moderating effect exerted by product
type.
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Sales promotions effects on consumer-based brand equity
The perspective adopted in this study diverges from research considering
that promotional incentives have effects only on consumer behaviour (e.g.
brand-switching). Our position is in line with the Customer-based Brand
Equity Model proposed by Keller (1998), which posits that marketing
communication tools (e.g. sales promotions) can contribute to brand
equity by creating awareness of the brand and/or linking strong,
favourable and unique associations to the brand in the consumer’s
memory. Specifically, we focus on brand knowledge structure in terms of
number, favourability and uniqueness of these associations.
Based on the results obtained, sales promotions can be used to build
brand knowledge because the individuals exposed to promotion stimuli
evoked a greater number and more favourable associations (H1).
Taking into account the type of promotion, the results obtained in H2
provided empirical evidence that non-monetary promotions are more
customer franchise building as far as they enhance a greater number and
more favourable associations than monetary promotions.
Finally, when examining the performance of the two types of sales
promotion in two different product categories (H3), the interesting finding
is that the direction of congruency effects between product and promotion
types was contrary to that described by Chandon et al. (2000). Specifically,
the results show that monetary incentives are more effective for utilitarian
products while non-monetary promotions are equally effective for both
utilitarian and hedonic products. This result is also in line with the
practices in the industry. Chandon et al. (2000) verified that benefit
congruency was particularly respected for the more hedonic half of the
products studied, which were never promoted with a monetary promotion.
However, the more utilitarian products were promoted with both
relatively monetary and relatively non-monetary promotions.
Far from indicating a low contributory power of the hypotheses
proposed, the following two ideas should be borne in mind when
considering the small and medium effect sizes obtained in some
hypotheses.
1. First, when participants in a study are asked to list spontaneous
thoughts or associations about a brand, often the number of thoughts
evoked is not high. For example, in the study by Pham et al. (2001)
the number of associations elicited is around two, while Roehm et al.
(2002) found close to three. Furthermore, in high informationprocessing situations, Shiv and Fedorikhin (1999) found a maximum
of 3.5 thoughts. In this sense, the results of our study, in terms of
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number of thoughts and associations evoked, do not differ greatly
from those obtained in recent studies.
2. Second, it is important to take into account the methodology used in
this study. The participants were exposed to the promotion stimuli for
only a few minutes. This procedure makes it difficult to affect brand
knowledge structure in a significant manner compared to a more
realistic situation where there are usually several exposures to the
promotion (for example, those promotions that are run annually over
several years). Nevertheless, this limitation strengthens our theoretical
approach and results in some ways since it would be expected to find
stronger effects with repeated exposures.
Limitations and directions for future research
There are several limitations relating to the focus of the study and the
methodology used. Some of these highlight useful directions for future
research.
One issue is that the sample is not representative of the entire population
of consumers. As discussed previously, it was randomly selected,
interviewing only women because they are the primary shoppers in the
family unit. This being the case, our results may reflect a gender bias that
limits the external validity of this study. The generalisability of the results
could be extended by considering other demographic groups.
It is also noted that all brands used in the study are long established in
the marketplace. This implies that, over time, the participants have learnt
about these brands from a variety of sources (e.g. advertising, promotions,
trial and usage), making their brand knowledge structures relevant,
strongly held and difficult to change with a single promotion that lasts just
a few minutes. Replicating the experiment with fictitious or unfamiliar
brands and designing several exposures to the promotion would eliminate
the pre-existing brand knowledge, and provide greater experimental
control. This would be useful in further examining the impact of sales
promotions.
Third, generalisation and demonstration of the robustness of the effects
noted in this study require considering other monetary and non-monetary
promotions, and replication in other utilitarian and hedonic products. For
example, the use of original and non-typical promotional stimuli may
result in building more unique brand associations, not share with the
product category and other competing brands. In fact, when examining
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Sales promotions effects on consumer-based brand equity
the results for the hypotheses, we found that sales promotions’ effect on
brand uniqueness was directionally correct but not statistically significant.
This lack of statistical significance might be attributed to the fact that the
promotions used in the study are typical in the product category. In other
words, they can be attributed to any other brand in the product category.
On the contrary, the use of promotions that are tightly linked to a specific
brand would have avoided this identity problem and may have created
unique associations more easily.
Moreover, although the stimuli used were based on those more
frequently offered in the marketplace, the evaluation context was artificial
and remote from typical situations where consumers encounter these kinds
of promotional tool.
Finally, the measures of brand associations used, although in accordance
with the cognitive psychology perspective of brand equity adopted in this
study, may be viewed as an incomplete measure of brand equity. In other
words, our measures of brand associations, as a proxy of brand equity,
present face validity as it has been demonstrated in the manipulation
checks. However, they do not accomplish this with content validity
because they do not take into account other manifestations of this
phenomenon. We recognise the fact that this approach has its strengths
and weaknesses, as indeed have other approaches; however, it is perhaps
of greatest relevance to managers interested in managing brand equity,
precisely because the value of the brand resides in the consumer’s mind.
Apart from the number, valence and uniqueness of associations, the
study could be further extended by considering another important
association property: strength of brand association (Keller 1998).
Associations to do with a brand can be formed and based on several
sources (e.g. advertising, word-of-mouth, trial), and some sources are
more important than others since they lead to differences in the strength
of the association.
It is expected that company-influence sources of information, such as
sales promotions, are likely to create the weakest associations and thus
may be the most easily changed. However, one way that promotions can
enhance brand equity is to reinforce and strengthen the pre-existing key
associations of the brand, stimulating trial of the brand or participation in
a contest, and enhancing the level of attention paid to specific brand
values, attributes or characteristics of the brand user. This theme deserves
further consideration.
Another interesting line of research may consider the implications that
consumers’ attributional processing of promotional activities has for
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consumer-based brand knowledge. The importance of attribution research
to manufacturer branding strategies lies in the influence that causal
attributions have on behaviour, other cognitions and feelings (Hunt &
Keaveney 1994). If the consumer feels that several causes or sources of a
specific sales promotion are possible (e.g. brand, retailer or other
sponsors), the probability of attribution to any one cause is decreased – for
example, the attribution made to the brand. In this instance, would the
brand be affected more or less by sales promotions depending on the
presence of other sponsors of the promotions? Could a monetary
promotion have a less harmful effect on brand image and brand value if it
is not attributed to the brand itself but to the retailer?
Finally, our data set does indicate that there is an increase in brand
knowledge structures as a result of conducting sales promotions. However,
we have not assessed the negative impact of continually promoting brands
on brand equity. The question that arises is whether or not this negative
impact is smaller or larger than the corresponding positive impact of
increases in brand knowledge.
Managerial implications
Marketing managers have traditionally implemented promotion activities
for the purpose of creating short-term market share shifts achieved by
consumers’ short-term brand-switching behaviour. However, companies
are realising that long-term brand knowledge is affected by these kinds of
short-term marketing efforts as far as they make these efforts with the
purpose of increasing brand awareness and building brand image. The
results obtained in this research offer empirical evidence of this fact.
Therefore, as Keller (1993, p. 2) states, companies must realise that the
long-term success of all future marketing programmes for a brand is
greatly affected by the knowledge of the brand that has been established
in memory by the firm’s short-term marketing efforts. Consequently, it is
critical that managers understand how their marketing programmes affect
consumer learning and thus subsequent recall of brand-related
information.
This study has also offered an insight into how managers can use sales
promotions to build brand knowledge, and therefore brand equity,
successfully. Specifically, in terms of the nature of the product, companies
have to be careful not to promote any product with just any type of
promotion. As suggested by the results obtained, monetary promotions are
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Sales promotions effects on consumer-based brand equity
more attractive for utilitarian products, while non-monetary promotions
are equally effective for both utilitarian and hedonic products.
Furthermore, the use of promotions that are tightly linked to the
product category (for example, price promotions on laundry detergents)
does not contribute to create unique brand associations that give
consumers a compelling reason for buying a particular brand. Hence
managers have to consider the use of more creative stimuli for promotions
as a way of offering a ‘unique selling proposition’ to consumers.
Finally, the potential difference in brand knowledge associated with
non-monetary and monetary promotions is also of interest to retailers. The
discovery of a positive finding for non-monetary promotions could be
extremely valuable for retailers given that Hardesty and Bearden (2003)
have shown the potential purchase-related benefits associated with nonmonetary promotions.
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