The myth about sales promotion: Sales promotion´s effect on brand equity

Faiza Arif Hussain & Martin Sjørslev Khamphoukeo

Student thesis: Master thesis


The thesis deals with the myth about sales promotion causing a brand’s equity to decrease. In the past years, marketers have focused more and more on using sales promotion at the cost of advertisement. The thesis has analyzed what effects sales promotion has on different brand equity assets. Furthermore, the thesis analyzes how the decision making process of a consumer is affected by sales promotion, and at the end, suggestions on how marketers can use sales promotion to create brand equity will be elaborated on. The findings of the thesis show that there is some truth to the myth about sales promotion decreasing brand equity. The two brand assets that are negatively affected by sales promotion are price, quality and in some cases brand meaning. The thesis found out that by using sales promotion, the internal reference price of a brand can be lowered, and furthermore, the perceived quality can also be lowered. However, the thesis found out that sales promotion has a positive effect on brand equity assets such as: Awareness, brand meaning, brand evaluation and brand relationship. Sales promotion’s effect on a consumer’s buying decision making process can be divided into two categories. Consumers who make buying decision based on either the central route or the peripheral route, according to the ELM. The thesis found out that consumers who took the peripheral were more receptive to use sales promotion as the only factor to by the product. The thesis’ suggestions for marketers are to be aware of the fact that when they introduced a new or unknown brand, sales promotion could have strong negative effect on consumers’ internal price reference and perceived quality. However, marketers could use sales promotion to build brand equity by increasing awareness, brand meaning and evaluation of the brand, and also increase brand switching.

EducationsMSc in Brand and Communications Management, (Graduate Programme) Final Thesis
Publication date2010
Number of pages132