Manufacturers urged to resist retailer price promotion demands

22nd June 2009 | marketing | Manufacturers who cave in to retailers’ demands to discount branded goods risk doing long-term damage to their businesses. That’s the view of the Institute of Practitioners in Advertising (IPA), which argues brand owners should resist the urge to spend money on in-store price promotion.

In its report, Price Promotion During the Downturn, the IPA says short-term sales volume increases for retailers mean brand reputations suffer further down the line, with erosion in price for brands and reduced loyalty.

Janet Hull, IPA consultant head of marketing and reputation management, says, ‘Past academic theory has indicated that price promotions do not benefit brands, however this is the first time that we have real sales data to confirm the extent to which this rings true. Based on such comprehensive data it is clear retailer pressure is dictating business and that brand owners must find a different way of negotiating with retailers, which is less damaging to their brands.’