Take Turns or March in Sync? The Impact of the National Brand Promotion Calendar on Manufacturer and Retailer Performance

Abstract

Featured price cuts are a popular tool among brand manufacturers and retailers. However, there is increasing concern about the net sales and revenue gains from these promotions, because retailers and manufacturers may simply be subsidizing consumers who shop around. Thus, the (co-)occurrence of a brand's promotions across retailers has been placed high on the promotion-planning agenda. This article examines the mechanisms underlying out-of-phase versus in-phase schedules and empirically demonstrates their sales and revenue implications in four product categories, covering purchases of a national panel of households across eight years. The results reveal that calendar effects primarily materialize in categories in which the chosen retailer is driven by brand promotions. In those categories, alternating the timing of featured price cuts across chains substantially increases the manufacturer and retailers' immediate sales lift. However, with regard to net gains, striving for out-of-phase promotions—the dominant approach among chains—is not necessarily the best practice, because retailers observe the revenue advantage diminish, and manufacturers may even earn less.