Affiliate marketing has a dark side

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The cost-effective price (C-RM) should be good for everyone: the company compares itself with a good price, sells its products as usual, and delivers the goods. get the teacher.

A win-win, huh?

From the outside, that may be the case. But for a sales company to say a can of soup or a box of cereal in a new red bag to diagnose cancer is not that easy.

Recent research from Annibal Sodero, assistant professor of marketing and logistics at Fisher, shows that C-RM ads aren’t very good for businesses. In the midst of the first empirical evaluations of C-RM effects on sales and performance measures across the retail supply chain, Sodero noted:

  • The C-RM is no different from a traditional advertising strategy, in that it increases sales in the short term, but decreases sales when the advertising is over.
  • Unlike traditional marketing campaigns, C-RM ads show businesses with unique and critical challenges how they can drive demand disparity, which greatly affects the accuracy of the market. their product forecasts.

Sodero’s study, “Good reason, isn’t business good? Sales and Operations Performance of Cause-Related Marketing,” uses data from a merger between a Fortune 500 multinational consumer packaged goods firm and with a national nonprofit cause combating child food insecurity in the US

The firm has vowed to give the nonprofit the same amount (in pounds of food) for each raw material purchased at any of the 630 U.S. stores of a government retailer. The announcement ran for four weeks.

Sodero compared the advertising data to a set of data – provided directly from the company – that recorded 52 weeks of sales in retail stores, as well as activity from the company’s offices for customers. 386 products total in the main product segment.

The results, published in Journal of the Logistics Department, showed a “dark side” to C-RM.

“When we open up sales and plan the performance results between the retail supply chain and look for the bottom sales side and the top performance side, the immediate results are in the market. “during the promotion, and the permanent C-RM effects immediately after the announcement, we. It has opened a dark side to this kind of free advertising,” Sodero said.

“Our results show that there is no incentive or permanent sales result after the advertisement. It is the same as other advertisements. C-RM is seen to provide a short period of time to generate sales. customers form good relationships with a product and benefit from engaging.. in the effort. But it doesn’t last. “

This variety of C-RM-related applications, Sodero said, could have a serious and negative impact on businesses.

“At C-RM, we’ve seen more and more inventory developers by changing the order level and production levels, leading to the notorious bullwhip effect,” he said. “This leads to a trend that is lower than forecast when advertising starts, as developers base their decision -making on increasing sales… In orders held. at the time of advertising, while the actual order levels to fill advertising centers are declining as store sales are declining. “

Beginning with the first government announcement to use the C -RM – American Express ’1983 partnership with the Ellis Island Foundation to raise money for the restoration of the Statue of Liberty – C -RM has become a useful tool. for businesses to increase product exposure, improve. their images and enhance employee morale. For consumers, C-RM is an easy way to use their marketing power to support a brand and a product.

But C-RM has its limitations. Before embarking on C -RM advertising, businesses need to understand their design value – and reasonable costs – by contacting all stakeholders, from customers to developers. make the messengers of the teacher.

“This research is a starting point for further learning the marketing and design process for these types of C-RMs, non-financial marketing campaigns,” Sodero said. “C-RM is trained and unlike other store advertising programs. Because it’s so different, customers and developers need to really develop and improve their ability to predict the effective use of C-RM to generate effective signaling and revenue for a business… ”


The researchers point to suboptimal levels of platform group design


More information:
Anníbal C. Sodero, Good teacher, isn’t the business good? The sale and production of the related price, Journal of the Logistics industry (2022). DOI: 10.1111 / jbl.12298

Presented by The Ohio State University

Directions: The price-related dark side (2022, March 30) retrieved on March 30, 2022 from https://phys.org/news/2022-03-cause-related-dark-side. html

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