Published by:
Harvard Business Publishing
Length: 5 pages
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Abstract
Large U.S. consumer goods manufacturers and retailers have seen profits decline disastrously when they have overpromoted lines to stimulate short- term volume. A simple application of economic theory shows that overpromotion costs too much - whatever extra volume is generated will be eaten up by increased competition, overhead costs, and customers who learn to wait for a sale rather than to buy at full price.
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Abstract
Large U.S. consumer goods manufacturers and retailers have seen profits decline disastrously when they have overpromoted lines to stimulate short- term volume. A simple application of economic theory shows that overpromotion costs too much - whatever extra volume is generated will be eaten up by increased competition, overhead costs, and customers who learn to wait for a sale rather than to buy at full price.