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Extensive research has shown that the effectsof short-term price promotions on sales are themselves short-term. Companies’ hopes that promotions might have apositive aftereffect have not been borne out for reasons that researchers havebeen able to identify. A price promotionentices only a brand’s long-term or “loyal” customers; people seldom buy anunfamiliar brand merely because the price is reduced. They simply avoid paying more than they haveto when one of their customary brands is temporarily available at a reducedprice. A price promotion does notincrease the number of long-term customers of a brand, as it attracts virtuallyno new customers in the first place. Nor do price promotions have lingeringaftereffects for a brand, even negative ones such as damage to a brand’sreputation or erosion of customer loyalty, as is often feared.
So why do companies spend so much onprice promotions? Clearly pricepromotions are generally run at a loss, otherwise there would be more ofthem. And the bigger the increase insales at promotion prices, the bigger the loss. While short-term price promotions can have legitimate uses, such asreducing excess inventory, it is the recognizable increase in sales that istheir main attraction
to management, which istherefore reluctant to abandon this strategy despite its effect on the bottom line.
Q13: The passagesuggests that evidence for price promotions’ “effect on the bottom line” (line40) is provided by
A. the lack of lingering aftereffects from price promotions
B. the frequency with which price promotions occur
C. price promotions’ inability to attract new customers
D. price promotions’ recognizable effect on sales
E. the legitimate uses to which management can put pricepromotions
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发表于 2011-7-8 22:08:25
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