Disentangling the effects of promotion mix on new product sales: An examination of disaggregated drivers and the moderating effect of product class

Abstract

The typical firm invests 20% of its promotional budget on sales promotions in an effort to drive short-term sales, Limited insight into the differential impacts of various sales promotions as well as the conditions under which they are most effective in lifting the sales of new products remain despite the rich body of research on sales promotions in the marketing literature. This research seeks to address these gaps by demonstrating the effects of two types of sales promotions on high-value consumer durable goods. Specifically, we investigate the effects of cash rebates and financing incentives on consumer perceptions of value and sales across luxury and mass goods in the automobile industry. Our findings suggest that although both categories of promotional strategies are effective sales booster, cash rebates are more effective in the mass market while financing rates offer significant new product sales benefits in the luxury market.