THEORETICAL-MODELS OF SALES PROMOTIONS - CONTRIBUTIONS, LIMITATIONS, AND A FUTURE-RESEARCH AGENDA

Our objective in this paper is to review theoretical models of sales p romotions. We highlight the key contributions of these models, discuss their limitations, and outline an agenda for future research. Manager ial questions examined in these models include some very fundamental i ssues such as why firms resort to the use of sales promotions in matur e markets, and why the use of sales promotions has increased dramatica lly during the last two decades. Also included in this review are mode ls that address firm level strategic issues such as the allocation of dollars between advertising and sales promotions, acid the relative em phasis on trade promotions vis-a-vis consumer promotions. We also revi ew theoretical models that explain how consumers respond to price prom otions, and what type of sales promotion tools may be superior to othe rs in a particular market. The review concludes with a possible agenda for future research.