Key Marketing Metrics, 3rd Edition

9

Promotion

Key concepts covered in this chapter:

• Baseline sales, incremental sales, and promotional lift
• Redemption rates for coupons/rebates
• Percent sales on deal, percent time on deal, and average deal depth
• Pass-through and price waterfall

Introduction

Price promotions can be divided into two broad categories:

• Temporary price reductions
• Permanent features of pricing systems¹

With both of these types of price promotions, firms seek to change the behavior of consumers and trade customers in ways that increase sales and profits over time, although a promotion’s short-term effect on profits will often be negative. There are multiple routes to sales and profit growth, and there are many potential reasons for offering price promotions. Such ...