Interesting Results

Sales Promotions and New Product Introductions

Which has a greater effect on short- and long-term performance: sales promotions or new product introductions? A 2004 study¹ suggests that at least in the US auto industry, both sales promotions and new product introductions have positive short-term effects on revenue, income (after expenses), and firm (stock market) value; however, these effects are enhanced in the long-run for new product introductions, but not for sales promotions. While sales promotions were shown to increase revenue over the long-term, they had negative long-term effects on firm income and firm value.

¹ Pauwels, Koen, Jorge Silva-Risso, Shuba Srinivasan, and Dominique M. Hanssens (2004), “New Products, Sales Promotions, and Firm Value: The Case of the Automobile Industry”, Journal of Marketing, 68(4), 142-156.