1) Trade promotions load the goods into the manufacturing end of the pipeline 2) Media advertising influences consumers to get pull goods from other end of pipeline. Consumer promotions (stimulate buyers to buy) pull like media but also push retailers to increase inventories in anticipation of extra demand.


The GNP and advertising have a positive relationship: if one goes up, the other does too and vice versa. Although the money has increased for advertising, it has not been grown very strongly over the long-term.


Sales promotions are harder to measure: trade promotional expenditure is virtually invisible because it consists of deals made between the manufacturers and retailers. Rebates and incentives to move goods quickly are really reductions in a manufacturer's income and while they represent substantial money, they are negative items in the accounts and not real investments.


The share represented by media advertising has gone down, but not in absolute terms and the only way to explain the drop is to say that promotional spending has increased a lot (three times as much as advertising). In sum, promotions are favored over advertising, contrary to the myth of "Advertising is all there is."


Manufacturers have convinced themselves into thinking that promotions can produce positive effects, but really over promoting a brand leads to the degradation of it in consumers' eyes.


The main difference between advertising and promotions is that advertising aims to build a franchise and keep those consumers dedicated to the brand and buying it repeatedly while promotions is just after generating the most sales (less long-term outlook). To best build a franchise, premium offers work the most, but only a third of the A&P spending is given to that, while the other two thirds are given to promotions based on price cutting (leading to degradation mentioned earlier).


Promotions may boost volume, but they affect both receipts and costs. Because the average elasticity means that a 10% reduction in price leads to an 18% increase in sales, many manufacturers are attracted to this idea even though it implies that they will have to pay direct costs involved in making the additional goods. Because there are more goods are sold, there is less money coming in and more going out, making the promotions slice deeply into a brand's margin. In other words, the manufacturer earns less money with a larger volume of goods with promotion than a smaller volume without promotion. Also, after the promotion, sales drop down sometimes even lower than before the promotion because consumers will have bought ahead. As bad of an idea as this sounds, most manufacturers continue to do it because retail trade forces them to do so as well as the course of their competitors.