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How Short-Term Profits Can Mask a Brand’s Long-Term Losses

More data are needed to measure the impacts of long-term investments in brand equity

Duke University
Wed, 06/30/2021 - 12:01
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Price discounts and other promotions on consumer goods can boost a product’s sales in the short term, but that same strategy may destroy a brand’s equity, according to research from Carl Mela, a marketing professor at Duke University’s Fuqua School of Business.

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Brands often focus on the short-term incentives of price promotions—a large and temporary increased lift in sales—but that effect can cause them to under-invest in brand-building strategies such as advertising, new product development, and new forms of distribution, Mela said in a live discussion of his research on Fuqua’s LinkedIn page.

Regular promotions can also turn loyal customers into “deal junkies” who learn to buy the products only when they’re on sale, Mela said.

 …

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