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Topic: The effect of price promotion 1. Introduction The ultimate goal of price promotion is to enhance sales and that is the reason why so businesses adopt price promotion as one of their marketing tools and consider it is beneficial to them. However, the truth is that not all brands benefit from price promotions from the result of many studies. This study will be drawn on Dr. Heiner Evanschitsky’s point of view that price promotions are “ lose-lose” games to businesses in section two, discussing the definition and propose of price promotions, positive and negative effects of price promotions on brands and the variables that may affect the result of price promotions. Based on the data of a variety of studies to know if price promotion is a useless marketing tool to brands as Dr. Heiner Evanschitsky claimed. The next section is about the future trend of retailing and its influence on price promotions. Both Dr. Heiner Evanschitsky and Dr. Sean Ennis consider omni-channel is the future of retailing. Retailers should make an effort on offering a seamless, customer-centric and personalized shopping experience for customers on different platforms. Some retailers (e.g. Amazon Go and Hema supermarkets) have successfully applied technology in-store to create a unique experience for customers by connecting the consumers’ mobile phones with in-store tech. 2. Literature Review- price promotion 2.1. Price promotion Price promotions refers to a short-term reduction of a listed price, and all buyers have equal access to price reduction (Chen et al., 1998). From the definition of Raghubir & Kim (1999), it usually increase product value by reducing the price of a given quantity or increasing the quantity offered at the same price to attract consumers to buy. When the price of a product is reasonable for the consumer, consumers perceive more benefits, and in this case, the consumer’s purchase 1 intention is also high (Lien et al., 2015). As a result, price promotions are used by retailers to achieve the goal of increasing customers’ purchase intentions and sales volume (Bambauer-Sachse & Massera, 2015). However, based on Dr. Heiner Evanschitsky’s study result, the price promotions cannot boost sales and increase revenues. He explained the circumstance by a few points (e.g., decreased sales when post-promotion, lower profit margin, increasing irrelevance of suggested retail price, deterioration of consumer trust), and used the performance of Asda and ALDI as evidence of the statement. Asda's performance became worse after price reductions, while ALDI performed promisingly without any price promotions. In addition, it may also involve the type of product. His research results showed that the price discount of Haagen-Dazs ice cream benefits its competitors even more. According to (Progressive Grocer, 2015), discounts and promotions accounted for more than 25% of typical consumer goods revenue. Data from other studies indicated that 99% of retailers are adopting price promotions as their pricing strategy, and most of them claim that discount pricing is “very effective” (Guinn, 2017). Moreover, it is often seen that retailers using price discount as a method to attract more buyers and increase sales in many places (e.g., supermarkets, department stores and restaurants). Therefore, the findings of Dr. Heiner Evanschitsky surprising and contradictory with reality, because if the company can not benefit from price promotions, what are their reasons or motivations for offering discount? Further research on this question will be discussed below from a variety of perspectives. 2.2. Positive effects and negative effects of price promotion Although the effects of price promotion have been studied by many researchers, the results of previous studies were quite different. Some researchers asserted that price promotions have positive impacts on retailers. First, According to (Gauri et al., 2 2017), the key implication was that the price promotions can enhance sales of nonpromoted items by attracting customers to the store. Second, a higher discount rate could lead to increased attention towards them by shoppers (Gauri et al., 2017). Third, When manufacturers provide consumer promotions to maximize profits, Sigué's (2008) and Lin's (2016) argument that the long-term positive effects of promotions are beneficial to both manufacturers and retailers. However, other researchers contended that sales promotions have negative impacts on brands. First, DelVecchio et al. (2006) stated that by lowering the price that consumers observe for a product, price promotions may lower price expectations, thereby reducing future brand choices, so retailers should be cautious when offering price promotions because a detrimental effect on brand preference may be incurred over time. Second, High “consumer-pull” brands can generate high overall sales by price promotion but result in lower net profits (Ailawadi et al., 2006). Third, price promotions can reset consumers' reference prices for frequently purchased brands, so that they are unwilling to purchase products at the brand's normal or non-discounted prices (Kalwani & Yim, 1992). Finally, Other studies have found a non-linear relationship between sales and promotional discounts at the brand or category level, These findings do not necessarily affect the sales and traffic of the entire store (Briesch et al., 2002; Pauwels et al., 2007). Above all, It seems that price promotion do attract shoppers visit retail stores and increase sales in the certain duration. Nevertheless, price promotion may cause detrimental effects on brands (e.g., profitability, brand preference, lower perceived value and lower sales volume post-promotion). The overall perspectives of the studies above are aligned with Dr. Heiner Evanschitsky’s point of view but why businesses consider price promotions as an irreplaceable marketing tool is still unknown. In order to have more insights into the question, variables of price promotion effects will be 3 looked at in more details in the next section. 2.3. Variables affecting the effects of price promotion The result of many studies indicated that the results of price promotion could be affected under different circumstances (e.g., the type of products, the number of promoted products, the discount rate, the type of price promotion, brand awareness, brand loyalty and the number of competitors). How these variables affect the results of price promotions will be explained separately below. The type of products: Feature discounts on high penetration and high-frequency items (e.g., meat, ice cream), and low penetration and low-frequency items (e.g., beer, coffee and tea) are associated with increased store traffic but discounts are profitable only for low penetration and low-frequency items (Gauri et al., 2017). Gauri et al.'s (2017) study also mentioned that, discounts on impulse items in the store does appear to create increased sales, and is associated with higher margins. The number of promoted products: Ailawadi et al (2006) pointed out that breadth If a large number of products are promoted, consumers will find that they have more choices, which makes them more likely to switch stores. The discount rate: Large promotions (>20% of the product’s value) were found to have a detrimental effect on brand preference(DelVecchio et al., 2006). The results of Kim's (2019) study indicated that a heavy price promotion could have a positive effect in the short-term, but could have an unintended negative effect in long-term. When the discount is large, consumers will buy more storable goods, although these do not turn into profitable spillovers (Ailawadi et al., 2007). The type of price promotion: Büyükdağ et al. (2020) studied the purchase intention of customers under different discount scenario (e.g., fixed price, 40% off, discount from 500TL to 300TL and 20%+25% discount). The study finding implied customers have the highest purchase intention when discounting from 4 500TL to 300TL. However, since the data was collected by questionnaire and not randomly, the actual situation could be not identical to the result of this study. Brand awareness: DelVecchio et al. (2006) study asserted that sales promotions are more harmful to unfamiliar brands than to brands customers are familiar with. The finding of Gauri et al., (2017) study also implied that discounts on branded items are found to have a stronger impact on sales and higher margin per transaction than discounts on unbranded items. Another study (Zhu et al., 2019) suggested that restaurants already have their own competitive advantage in satisfying consumer demands but without brand awareness in the market should online price promotion minimally. Nevertheless, it is insightful to understand that customers’ buying intentions will be affected by the type of discount, and further research in this area can be done to develop better pricing strategies. Brand loyalty: From the result of (Zhu et al., 2019), The more loyal the consumer, the higher the depth of the promotion, and the higher the profit for channel members. The number of competitors: Our results indicate that brand managers should also be mindful of the size of the product category in which they compete since the negative effect of promotion is greater in categories with relatively few competitors (DelVecchio et al., 2006). According to the results of previous research, it is obvious that the effect of price promotion is not necessarily positive or negative, but depends on the type of product, discount rate, discount pattern and brand awareness.. etc. Bogomolova et al.'s (2017) study has shown that companies lack a systematic evaluation of the goals of price promotion activities. Most of them seem to be catching up, rather than carefully planning, implementing and evaluating a series of actions. Thus, using price promotions as a method cannot achieve companies’ objectives effectively. 5 This can be implied that companies should conduct a comprehensive study of their brand and product characteristics to choose the most appropriate method to achieve their goals. The adverse effect of price promotion on enterprises may be due to insufficient understanding of marketing theory, rather than the method itself of price promotion. 3. Literature Review- Omni-channel Based on the perspectives of Dr. Heiner Evanschitsky and Dr. Sean Ennis, omnichannel has become the trend of retailing (e.g., Amazon go and Alibaba) to provide “a seamless, effortless, and high-quality customer experience within and between contact channels”. And mobile phones have become a marketing medium for omnichannel retailers to integrate online and offline shopping experience since the number of people shop on mobile phone are increasing (O’Shea, 2019; PPRO, 2020). However, even the market of online shopping is growing, the majority of sales are contributed by physical stores (Statista, 2021). This means that if companies can catch up with omni-channel trends and meet customers’ expectation, the advantages of physical stores still exist. Since physical stores will not be replaced by online stores, the following content will discuss the changes in the in-store marketing strategy (price promotion) for attracting more shoppers and increasing sales in omni-channels. Famous omni-channel practices in-store includes Amazon Go’s “Just Walk Out Technology”(Tillman, 2021), Hema supermarkets (McKinnon, 2021) and Nike flagship store (Adewusi, 2019). 3.1. Price promotion in Omni-channel Omni-channel retail is different from multi-channel retail and cross-channel retail in terms of integration degree and number of channels (retailer's point of view) and channel integration level (customer's point of view) (Yrjölä et al., 2018). There are two new in-store technologies in omni-channel that may change the 6 way businesses conduct price promotion compared with traditional retailing. First, companies can offer personalized recommendations to customers by analyzing the data collected from online apps on mobile phones. In this way, brands can learn customer shopping behaviors and reach target groups more effectively by sharing promotional products with people who are most likely to be interested in them. Second, cheap prices are one of the reasons customers want to shop online. Companies should assume that customers will use multiple channels to make their purchase decision, such as comparing online prices while in-store (Yrjölä et al., 2018). Therefore, when conducting price promotions, companies should ensure that in-store prices are competitive with online prices. 4. Conclusion In Summary, it is difficult to judge that the price promotions have either positive effective or negative effective on brands. Some studies (Gauri et al., 2017; Lin, 2016; Sigué, 2008) stated that price promotions benefit to their research object while other researchers (Ailawadi et al., 2006; Briesch et al., 2002; DelVecchio et al., 2006; Kalwani & Yim, 1992; Pauwels et al., 2007) think there is no positive impact on the brands they studied. However, when looking at the variables of price promotion, it can be found that the result of price promotion was affected by many elements (e.g., the type of products, the number of promoted products, the discount rate, the type of price promotion, brand awareness, brand loyalty and the number of competitors). For example, for brands that are not well-known or private brands, the effect on price promotion could be detrimental to businesses (DelVecchio et al., 2006; Gauri et al., 2017). Another study that examined how companies make the decision to do price promotion founded that most businesses conduct price promotion without detailed research on the market and their brands. They just act like copycats, seeing the success 7 of other brands then follow and ignoring the condition and situation of each company are different. Therefore, it can be assumed that the success and failure of price promotion depend on if the method of price promotion conducted by companies is appropriate for them. For example, for some start-up companies with lower brand awareness, price promotion is not the marketing tool to adopt. Or the depth of discount rate and the pattern of discount is not attractive for customers to purchase. All in all, it is important for companies to have comprehensive research before adopting price promotion to increase sales. Regarding price promotion in omni-channel era, businesses can reach their target group for the promoted products easier and offer more personalized recommendations to customers based on data collected online. Another implication is that as more and more customers compare online prices in stores, store managers should ensure that promotional prices are attractive for customers to purchase instore. Even though there are many researchers have studied the positive effects, negative effects and variables of price promotion, whether the failure of price promotion is due to the inappropriate marketing tools adopted are still unknown. This is recommended to conduct a study about if price promotion can benefit companies more after doing research and make an appropriate marketing plan. 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