A brand of instant coffee runs a promotion offering a 50% discount every other week. What is the most likely long-term negative consequence of this strategy?

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BlackTom AI · Accepted Answer

Question restatement: A brand of instant coffee runs a promotion offering a 50% discount every other week. What is the most likely long-term negative consequence of this strategy?

Option 1: It will create a strong, positive brand attitude. While promotions can temporarily boost sales, frequent deep discounts often erode perceived value and can undermine a strong, positive brand attitude over time. This option overlooks the potential damage to price integrity and premium positioning, making it a weaker claim about long-term negative consequences.

Option 2: It will violate the principles of a recall brand awareness strategy. Recall and awareness strategies are about ensuring consumers remember and recognize a brand. A promotion schedule does not inherently violate recall or awareness principles; the issue is more about value perception and behavior patterns than branding theory. This makes the option less plausible as the primary negative consequence.

Option 3: It will be considered an effective use of a "ratchet effect." The ratchet effect describes a situation where consumers become conditioned to wait for discounts and reduce their willingness to purchase at regular price. While describing a real phenomenon, calling it an "effective" use mischaracterizes the outcome; the effect is typically viewed negatively from a brand/value perspective, as it undermines baseline pricing. This option is closer to a negative consequence but still framed inappropriately as a positive outcome.

Option 4: It will be too expensive to manage the logistics of the promotion. Logistics costs can rise with frequent promotions, but the question asks for the most likely long-term negative consequence on brand or sales, not operational burden. While real, this is more of an operational concern than a core marketing consequence, so it’s less central to the long-term strategic impact.

Option 5: Consumers may only buy the brand on promotion, damaging the brand and sales. This option captures a fundamental risk: customers may delay purchase until discounts, reducing full-price sales and harming long-term brand equity. It also erodes price integrity and can make the brand appear as a discount brand, undermining sustainable profitability. This aligns with a classic long-term negative consequence of promotional-heavy pricing.

Overall, the most defensible long-term consequence centers on customer purchasing patterns shifting toward promotion-only behavior, which undermines profitability and brand value. The other options describe related ideas but do not pinpoint the dominant, lasting risk as directly as option 5.

MARK5560 (L1) Final Exam

A brand of instant coffee runs a promotion offering a 50% discount every other week. What is the most likely long-term negative consequence of this strategy?

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