Managing Advertising and Promotion for Long-Run Profitability

A study examines the following issues: whether it is more desirable to advertise or promote, whether it is better to use frequent shallow promotions or infrequent, deep promotions, and how changes in regular prices affect sales relative to increases in price promotions. Results show that, in the long term, advertising has a positive effect on brand equity, while promotions have a negative effect. In addition, most of the effect of a price cut is manifested in consumers' brand choice decision in the short term, but when long-term effect are again considered, this result no longer holds.