More Promotions, More Sales? A Promotional Extent Optimization Model to Beauty Business

Nivaldo Kassouf Pizzinatto, Nadia Kassouf Pizzinatto, Andrea Kassouf Pizzinatto

Abstract


This study contributes for marketing theory for analyzes the effect of Promotional extent (weighted percentage of a beauty´s company’s portfolio which is promoted to amplify sales by sales leverage) and whether it is possible to determine optimal Promotional extent. Multiple regressions were used to determine the effect of Promotional extent on leverage. The analysis was based on 2005-2007 data from both sales and margin from a cosmetics direct sales company. Using the regression equation found, a model was built to analyze and propose optimal Promotional extent. The results suggest that on the data analyzed, promotional leverage is negatively correlated with Promotional extent. Results also suggest that sometimes promoting more products can actually reduce sales, due to reduced promotional leverage. The model can be used as a managerial tool to determine optimal promotional policies.

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DOI: http://dx.doi.org/10.5539/par.v4n1p1

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Public Administration Research  ISSN 1927-517X  (Print)  ISSN 1927-5188  (Online)  Email: par@ccsenet.org

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