Pre-empting Switch on Deal Retraction

Abstract

Consumer sales promotions (deals) are important promotional tools used by marketers to achieve immediate sales. However, sales promotion campaigns will not be profitable if customers do not make repeat purchases but switch to other brands once the deal is retracted. Typically, incremental sales during sales promotion campaign is obtained from the deal prone consumers with high brand switching tendency, as they are more likely to switch to a brand offering deal to reach his/her optimum stimulation level (OSL). In this case the deal is an external factor that induces the switching behavior. So, if the promoted brand retracts the deal offer, will such consumers switch to a different brand to attain their OSL because of their intrinsic characteristic? If yes, will they repeat purchase the brand if it offers them a deal? It is a matter of interest for marketers to know whether external factors (deals) or intrinsic factors (brand switching tendency) are primarily used by consumers to attain their OSL. This study attempts to answer these questions.