What is a potential risk of relying too heavily on sales promotions?

What is a potential risk of relying too heavily on sales promotions?

• A. It increases profit margins.
• B. It builds long-term customer loyalty.
• C. It may lead customers to expect bonuses before making purchases.
• D. It reduces the need for advertising.

Answer: (C)

The idea being tested is that overreliance on sales promotions trains customers to expect bonuses before they buy. When promotions are used too often, buyers begin to associate purchases with a discount rather than with value, so they delay buying until a sale or bonus appears. This can shrink non-discounted sales, compress profit margins, and make revenue less predictable. It can also erode brand value, because full-price purchases become rare and customers may not be willing to pay steady prices in the future. Promotions can still drive short-term traffic, but they don’t automatically translate into lasting loyalty or reduce the need for other marketing efforts. Frequent discounts attract bargain seekers who may switch brands if another promotion is offered, and the approach doesn’t inherently substitute for effective advertising.

The idea being tested is that overreliance on sales promotions trains customers to expect bonuses before they buy. When promotions are used too often, buyers begin to associate purchases with a discount rather than with value, so they delay buying until a sale or bonus appears. This can shrink non-discounted sales, compress profit margins, and make revenue less predictable. It can also erode brand value, because full-price purchases become rare and customers may not be willing to pay steady prices in the future.

Promotions can still drive short-term traffic, but they don’t automatically translate into lasting loyalty or reduce the need for other marketing efforts. Frequent discounts attract bargain seekers who may switch brands if another promotion is offered, and the approach doesn’t inherently substitute for effective advertising.