Which policy helps prevent cannibalization of higher-margin products when designing a price promotion?

Which policy helps prevent cannibalization of higher-margin products when designing a price promotion?

• A. Guardrails on promotion depth/duration
• B. Increasing promotional visibility on the promoted item
• C. Reducing overall marketing budget
• D. Launching multiple promotions simultaneously

Answer: (A)

Preventing cannibalization happens when promotions pull demand away from higher-margin items instead of attracting new customers. Guardrails on promotion depth and duration create boundaries on how steep a discount can be and how long it runs, ensuring promotions improve volume without eroding the profitability of premium SKUs. With these limits, the promotion can attract price-sensitive shoppers while preserving the baseline demand and margins for the higher-margin products. Increasing visibility on the promoted item may boost its sales but doesn't stop competition with higher-margin items; reducing the overall marketing budget isn't targeted to this issue; launching multiple promotions simultaneously tends to amplify cannibalization rather than prevent it.

Preventing cannibalization happens when promotions pull demand away from higher-margin items instead of attracting new customers. Guardrails on promotion depth and duration create boundaries on how steep a discount can be and how long it runs, ensuring promotions improve volume without eroding the profitability of premium SKUs. With these limits, the promotion can attract price-sensitive shoppers while preserving the baseline demand and margins for the higher-margin products. Increasing visibility on the promoted item may boost its sales but doesn't stop competition with higher-margin items; reducing the overall marketing budget isn't targeted to this issue; launching multiple promotions simultaneously tends to amplify cannibalization rather than prevent it.