Discuss The Reasons Why New Brands With A Smaller Market Sha

discuss The Reasons Why New Brands With A Smaller Market Share Spend

1. Discuss the reasons why new brands with a smaller market share spend proportionately more on advertising than brands with a larger market share. 2. At what stage in a product’s life cycle are pioneering, competitive, and comparative advertising most likely to occur? Give a current example of each type. 3. What is the primary factor that determines sales promotion objectives? Name some different types of sales promotion techniques, and explain the type of customer they are intended to influence. 4. Discuss how different forms of sales promotion can erode or build brand loyalty. If a company’s objective is to enhance customer loyalty to its products, which sales promotion technique would be most appropriate? 5. What forms of consumer sales promotion might induce impulse purchases? What forms of sales promotion are more effective at persuading consumers to switch brands?

Paper For Above instruction

Introduction

The competitive landscape of marketing necessitates strategic advertising and sales promotion, especially for new brands with smaller market shares. Such brands often encounter unique challenges and opportunities that influence their marketing expenditure and tactics. This paper explores the rationale behind the higher advertising spend of small-market-share brands, examines the stages of advertising in a product's lifecycle, investigates sales promotion objectives and techniques, and evaluates the impact of these strategies on brand loyalty and consumer behavior.

Reasons for Higher Advertising Spend by Newer, Smaller Brands

New brands with limited market share often allocate a higher proportion of their resources to advertising to establish brand awareness and carve out a market niche. Due to their limited visibility and credibility, these brands need to invest heavily in promotional activities to inform and persuade consumers (Keller, 2013). Unlike established brands that benefit from brand recognition and customer loyalty, smaller brands cannot rely on word-of-mouth or brand equity to generate sales. Consequently, they rely more on advertising to build recognition, communicate value propositions, and differentiate themselves from competitors (Armstrong & Kotler, 2017). Additionally, new brands often face intense competition from well-established competitors, compelling them to increase advertising efforts to gain a foothold in competitive markets (Rossiter & Percy, 2019). The proportionate higher spend is thus a strategic investment aimed at achieving market entry and growth momentum.

Advertising in the Product Lifecycle

Advertising activities align with specific stages of a product’s lifecycle, namely pioneering, competitive, and comparative advertising. In the pioneering stage, advertising aims to create awareness about a new product, highlighting its features and benefits to stimulate trial and adoption. For example, electric vehicle manufacturers like Tesla aggressively promote innovations to educate consumers about new technologies (Lunn, 2020).

In the competitive stage, advertising shifts focus to differentiation, emphasizing why consumers should prefer one brand over others. This involves brand positioning and reinforcement. An example is Coca-Cola’s continued brand advertising to sustain its market dominance amid competition.

Comparative advertising, which directly compares a brand’s features with competitors, most frequently occurs in mature markets when brands seek to gain or defend market share. A current example is Samsung’s advertising contrasting its smartphones’ features with Apple’s devices.

Sales Promotion Objectives and Techniques

The primary factor influencing sales promotion objectives is the stage of the product life cycle, along with market conditions and consumer behavior. For instance, during the introductory phase, promotions aim to stimulate trial among early adopters, while in maturity, they seek to incentivize repeat purchases.

Types of sales promotion techniques include discounts, samples, contests, and loyalty programs. Discounts and temporary price reductions primarily target price-sensitive consumers and encourage immediate purchase, often leading to trial or switching behavior. Samples help persuade consumers to try new products without risk. Contests and sweepstakes create excitement and engagement, appealing to consumers seeking entertainment or recognition. Loyalty programs reward repeat customers, fostering long-term brand loyalty by providing incentives for continued patronage (Blattberg & Neslin, 1990).

Impact of Sales Promotion on Brand Loyalty

Sales promotions can have dual effects on brand loyalty. On one hand, frequent discounts or temporary deals may erode perceived value, leading consumers to expect lower prices and potentially switch to competitors once promotions end. This "deal-prone" behavior can weaken brand loyalty (Ailawadi et al., 2009). On the other hand, well-designed promotions such as loyalty programs or personalized offers can reinforce consumer engagement, increase satisfaction, and strengthen emotional bonds with the brand.

If a company's goal is to enhance customer loyalty, implementing a loyalty program would be most effective. Such programs reward repeat purchases with exclusive offers, points, or benefits, encouraging consumers to stay committed to the brand over time (Dowling & Uncles, 1997).

Promotional Strategies for Impulse and Brand Switching

Impulse purchases are often driven by point-of-sale promotions, including displays, buy-one-get-one-free (BOGO) offers, and in-store sampling that evoke spontaneity. These strategies shorten the decision-making process and capitalize on consumers’ in-the-moment desires (Lichtenstein et al., 1993).

To persuade consumers to switch brands, marketers may employ trial offers, coupons, or limited-time discounts that lower the perceived risk and monetary cost of trying a new brand. Additionally, highlighting superior quality or features through comparative advertising can persuade consumers to reconsider their current choices (Nair & Prasad, 2019).

Conclusion

In conclusion, small-market-share brands tend to allocate more resources to advertising as a strategic tool for building recognition and competing effectively. Advertising’s role varies across different stages of the product lifecycle, from awareness creation to differentiation and comparison. Sales promotions are vital in influencing consumer behavior—driving trial, loyalty, and switching—depending on their design and timing. While certain promotions can erode brand loyalty if overused, appropriately targeted strategies like loyalty programs can reinforce long-term customer relationships. Understanding these dynamics is essential for marketers aiming to develop effective campaigns that foster sustainable brand growth.

References

• Armstrong, G., & Kotler, P. (2017). Marketing: An Introduction. Pearson.
• Ailawadi, K. L., Neslin, S. A., & Gedenk, K. (2009). Pursuing the Right Lessons from Promotions Research. Journal of Marketing, 73(4), 44-61.
• Blattberg, R. C., & Neslin, S. A. (1990). Sales Promotion: Concepts, Methods, and Strategies. Prentice Hall.
• Dowling, G. R., & Uncles, M. (1997). Customer Loyalty and Brand Loyalty. Journal of Strategic Marketing, 5(4), 229-242.
• Keller, K. L. (2013). Strategic Brand Management: Building, Measuring, and Managing Brand Equity. Pearson.
• Lichtenstein, D. R., Ridgway, N. M., & Netemeyer, R. G. (1993). Price Perceptions and Consumer Shopping Behavior. Journal of Marketing Research, 30(2), 234-245.
• Lunn, P. (2020). Marketing Electric Vehicles: Strategies and Challenges. Journal of Business Ethics, 164(2), 251-265.
• Nair, S. R., & Prasad, K. (2019). Comparative Advertising and Consumer Attitudes. Journal of Advertising Research, 59(3), 325-338.
• Rossiter, J. R., & Percy, L. (2019). Advertising Communications: An Integrated Approach. Sage Publications.
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