Long-term brand development versus short-term business targets: the impact of price promotions on branded food products

Abstract

Although the importance of taking a long-term perspective in the development of brands is well recognised, short-term price promotion is increasingly used for manufacturer-branded products within the food industry. There has been limited discussion in the literature regarding the long-term consequences and value of price promotion for food brands and food manufacturers. This paper presents the findings from a study of one of Europe's largest food brand manufacturers in the convenience food sector. The research was carried out in two stages. Stage 1 investigated the level and use of price promotions of a leading product brand over a 10-year period from 2000 to 2009. Stage 2 involved in-depth interviews with the key managers involved in the development, marketing and branding of this food brand to ascertain their perceptions and opinions in relation to the findings from Stage 1. The findings illustrate that over half of the sales growth in the period under study came from additional price-promotional activity. Prior to the study the managers appeared to be unaware of the overall impact on the core rate of sale during the 10-year period. Key implications in relation to balancing long-term brand objectives and short-term organisational objectives are discussed.