Promotions have been recognized as a brand management tool, and represent a significant portion of a company's marketing budget. But, do we know how they work?

Managers need to understand which specific promotion, used in which combinations, and for which of their brands, will be the most effective in achieving their marketing objective. Displays, features, and price promotions are being recognised as strategic tools in the marketing mix and not just short-term tactical solutions.

Recent work published by Katherine Lemon* and Stephen Nowlis** suggest that high-tier brands will benefit more than low-tier brands from price promotions, displays, or feature advertising when these promotional tools are not combined. Interestingly, the benefit disappears when these specific tools are used in combination.

The advantage of price promotion to high-tier brands will be reduced when these promotions are offered in settings where comparisons are difficult (e.g., end of aisle displays or in feature advertising). The combined effects of displays and price promotions, or feature advertising and price promotions, will be more positive (or less negative) for low-tier brands than for the high-tier brands.

When brands are separated and cannot be easily compared, the attributes of each brand increase in importance when they are considered separately.

Compatibility between the type of decision (considering brands in isolation) and particular attributes (features that are easily evaluated alone) should increase the weight of these attributes.

Prior research has shown that brand names are more easily evaluated alone than prices are (Nowlis and Simonson 1997). As a result of this increased compatibility, brands that excel in terms of their brand names should fare better when these brands are considered independently. Prices, on the other hand, are difficult to judge without a reference from a previous price or from another brand. - SG