Profiling intrinsic deal proneness for HILO and EDLP price promotion strategies

Abstract

This study defines deal proneness as an intrinsic propensity towards two kinds of price promotions in retailing: the high-low strategy (HILO) and the every-day-low-price (EDLP) strategy. A scale is developed to identify EDLP, HILO and non-deal prone consumers. In order to gain a deeper insight into the behavioral structure, these deal proneness segments are portrayed by demographic variables, purchasing characteristics, brand preference and store choice. Store choice, in particular, is of interest for retailers to target their price promotion strategies to specific deal proneness segments. Therefore, the following convincing hypothesis is tested in detail: EDLP prone consumers tend to prefer EDLP stores, HILO prone consumers tend to prefer HILO stores.