Effects Of Price Promotions Research Articles

Good discounts earn good reviews in return? Effects of price promotion on online restaurant reviews

Online consumer reviews (OCRs) are valuable to consumers and sellers. Online price promotion is commonly used by local merchants to increase sales. However, knowledge of the differences in OCRs between consumers who received a discount and regular consumers is limited. This study investigates the effects of price discounts on restaurant OCRs by comparing the review rating and open-ended contents of OCRs from consumers who received a discount and regular consumers. The results show that the review rating is higher from consumers who received a discount, whereas the word count, image count, and diversity of review contents are higher from regular consumers. Regular consumers are more likely to mention product quality, environmental quality, service quality, geographic location, purchasing process, recommendation expression, and loyalty expression in OCRs, and there is no significant difference in the dimensions of price, cognitive attitude, and emotional attitude between the two groups.

Price promotions: examining the buyer mix and subsequent changes in purchase loyalty

PurposeThis paper aims to investigate the extent to which temporary price promotions attract people who do not normally buy a brand, and whether buyers change their propensity to buy the promoted brand afterwards.Design/methodology/approachThe study analyses promotions in 18 consumer goods categories in the UK and USA. It calculates the proportion of promotion purchasers that have bought a brand at least once in their last five purchases and the Share of Category Requirements of those purchasers. These figures are then compared to normal-price purchasers.FindingsThe study finds the majority of price-promotion buyers already bought the brand at least once in their last five category purchases (average = 77 per cent). This figure is similar to that for normal-price purchases (average = 81 per cent). Average Household SCR to the brand is also very similar for price-promotion purchases compared to normal price purchases. Therefore, promotions do not attract a markedly different mix of buyers. Furthermore, buyer propensity to buy the brand is the same after a promotion purchase as it was before.Research limitations/implicationsA contribution of the paper is that it supports a theory of consumers as cognitive misers, who screen out promotion information about unfamiliar brands. The paper also highlights that in packaged-goods markets, consumers can be generally seen as experienced buyers, who do not learn new information from buying brands they have previously purchased.Practical implicationsThe managerial implication is that price promotions must be judged on their immediate profitability. There seems little recourse to the idea they can result in “try it, like it, buy it again later” effects.Originality/valueWhile many studies have examined the effects of price promotions, this is the first to explicitly compare the mix of buyers attracted from a price promotion to that which occurs when a brand is sold at normal price.

Counter-Cyclical Price Promotion: Capturing Seasonal Category Expansion Under Endogenous Consumption

This paper provides a new and complementary explanation for a pricing puzzle for seasonal products, namely, counter-cyclical pricing, drawing on the category-expansion effects of price promotions. Our study emphasizes the seasonal fluctuation in promotion frequency rather than the change in aggregate mean price across seasons, which motivates most existing studies. We propose a rationale for the counter-cyclical price promotions: consumers are more likely to increase category demand in response to promotions during periods of high demand, causing seasonally varying promotion effects on category expansion. We show promotion effects are amplified during high-demand periods if the product category is subject to stockpiling and endogenous-consumption behavior; that is, consumption is a function of inventory. Using scanner-panel data on the canned soup category, we find households' purchase patterns are consistent with the endogenous consumption hypothesis. We investigate the seasonally varying promotion effects using the framework of a dynamic inventory model with forward-looking consumers (Erdem, Imai, and Keane, 2003; Hendel and Nevo, 2006) by allowing the consumption rate to be endogenous to household inventory and subject to the exogenous seasonal fluctuation in category preference. Our results indicate the long-run promotion effects are underestimated by 32% during periods of high demand if endogenous consumption is ignored, and that with endogenous consumption, the long-run promotion effects increase by 24% across seasons, implying a larger gain of promotions during high-demand periods, which is a motivation for the counter-cyclical price promotions.

Effects of price promotions on purchase intentions in post-promotion periods

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Elasticities and dynamics of on-line price promotions and advertising

Our paper deals with short and long-term effects of price promotions and advertising using experimental research on a web shop sales and page clicks. We try to assess how promotions and advertising elasticities are affected by different combinations of marketing activities. We also determine dynamic behaviour of web sales and page-clicks using category aggregated daily time series with various marketing activities as intervention pulses. Findings show higher elasticities for increased marketing efforts, peaking at highest discounts and maximum levels of advertising. Price elasticities have been found to be 0.32 to −2.64, while advertising elasticities were between 0 and 0.32. Analysis of dynamics of both marketing activities and carryover effects confirm an immediate effect of discounting on sales and a lagged effect of 1 period of advertising. The decay of advertising effect is faster than discounting and neither of the two has a carryover effect.

Data-Driven Promotion Planning for Mobile Applications

In this paper, we propose a two-step data analytic approach to the promotion planning for paid mobile applications (apps). In the first step, we use historical sales data to empirically estimate the app demand model and quantify the effect of price promotions on download volume. The estimation results reveal two interesting characteristics of the relationship between price promotion and download volume of mobile apps: (1) the magnitude of the direct immediate promotion effect is changing within a multi-day promotion; and (2) due to the visibility effect (i.e., apps ranked high on the download chart are more visible to consumers), a price promotion also has an indirect effect on download volume by affecting app rank, and this effect can persist after the promotion ends. Based on the empirically estimated demand model, we formulate the app promotion optimization problem into a Longest Path Problem, which takes into account the direct and indirect effects of promotions. To deal with the tractability of the Longest Path Problem, we propose a Moving Planning Window heuristic, which sequentially solves a series of sub-problems with a shorter time horizon, to construct a promotion policy. Our heuristic promotion policy consists of shorter and more frequent promotions. We show that the proposed policy can increase the app lifetime revenue by around 10%.

Data-Driven Promotion Planning for Paid Mobile Applications

In this paper, we propose a two-step data-analytic approach to the promotion planning for mobile applications (apps). In the first step, we use historical sales data to estimate the app demand model and quantify the effect of price promotions on download volume. The estimation results reveal two interesting characteristics of the relationship between price promotion and download volume of mobile apps: (1) the magnitude of the direct immediate promotion effect is declining within a multiday promotion; and (2) due to the visibility effect (i.e., apps ranked high on the download chart are more visible to consumers), a price promotion also has an indirect effect on download volume by affecting app rank, and this effect can persist after the promotion ends. Based on the empirically estimated demand model, we propose a moving planning window heuristic to construct a promotion policy. Our heuristic promotion policy consists of shorter and more frequent promotions. We show that the proposed policy can increase the app lifetime revenue by around 10%.

The impact of different price promotions on customer retention

This paper investigates the impact of different price promotion effects regarding two different types of service cost (i.e., a joining fee vs. a monthly fee) on retention intentions for new customers in the long-term service industry. Based on the depreciation curve, mental accounting, and the escalation of commitment theory, we predict that customers’ retention intentions will be higher when they start using a service with a free monthly fee promotion rather than when they start it with a free joining fee promotion. This expectation was confirmed by five studies; experiments, customer survey, and secondary data. The theoretical and managerial implications are also discussed.

The effects of price promotion on relative virtue and vice food products

Retailers use price promotion of light and regular products, but not all of these products are perceived as relative virtues and vices, respectively. This paper aims to identify whether consumers distinguish between the two product categories. Survey data is used to distinguish between each product category, and identifies low-fat milk as a light product that gives both immediate and delayed rewards. Daily scanner data from a hypermarket supports the effects of price promotions on sales within and between product categories, as expected. We expect that, (1) due to these light products representing more enduring involvement, demand is less price sensitive compared to demand for regular products; (2) as nonimpulse purchase products, price promotions of light products cannibalize the sales of other light products; and (3) the loss of light product benefits associated with switching means that price promotions of light products hurt regular product sales more than vice versa.

Dynamic Effects of Price Promotions: Field Evidence, Consumer Search, and Supply-Side Implications

This paper investigates the dynamic effects of price promotions in a retail setting through the use of a large-scale field experiment which involved varying the promotion depths of 170 products across 17 categories in 10 supermarkets of a major retailer in Chile. In the intervention phase of the experiment, customers were exposed to a promotion schedule that differed only on promotional depths: treated customers were exposed to deep discounts (approximately 30%), whereas control customers were exposed to shallow discounts (approximately 10%). In the subsequent measurement phase, the promotion schedule held discount levels constant across groups. We find that treated customers were 22.4% more likely to buy promoted items than their control counterparts, despite facing the same promotional deals. Strikingly, the magnitude of the dynamic effects of price promotions (when promotional depths are equal across conditions) is 61% of the promotional effects induced by offering shallow vs. deep discounts during the intervention phase. The result is robust to other concurrent dynamic forces, including consumer stockpiling behavior and state dependence. We use the experimental variation and historical promotional activities to inform a demand-side model in which consumers search for deals, and a supply-side model in which firms compete for those consumers. We find that small manufacturers can benefit from heightened promotion sensitivity by using promotions to induce future consideration. However, when unit margins are high, heightened promotion sensitivity leads to fierce competition, making all firms worse off.

Retailers' and manufacturers' price-promotion decisions: Intuitive or evidence-based?

Consumer price promotions account for more than half of many manufacturers' marketing budgets, and require a significant time investment to manage. Amidst the considerable research on price promotions, little academic attention has been paid to how manufacturers and retailers make price-promotion decisions. Based on in-depth interviews with a broad range of managers, this study investigates factors that influence price-promotion decisions in durable and consumer goods industries. Findings suggest that (1) intuition and untested assumptions are the main inputs into these decisions; (2) practitioners lack solid empirical evidence to guide their actions, and their beliefs are often in stark contrast with academic knowledge about the effectiveness of price promotions; and (3) price promotions are typically not evaluated against the objectives according to which they were justified, impeding appropriate feedback for future decisions. Research priorities are outlined to advance evidence-based decision-making in this area.

预期后悔对网上冲动性购买行为影响的实证研究

基于冲动性购买、预期后悔等相关理论，探讨了预期后悔和电子商务环境下消费者冲动性购买行为的关系，研究了不同的刺激因素(价格促销、图文展示、他人评论)和冲动性特质对网上冲动性购买行为产生的影响。以预期后悔作为调节变量，使用SPSS17.0对样本数据进行分组回归分析。研究结果表明，预期后悔能够直接影响网上冲动性购买行为；在价格促销、图文展示和冲动性特质对消费者冲动性购买的影响过程中，预期后悔的调节作用显著；在他人评论对消费者冲动性购买的影响过程中，预期后悔的调节作用不显著。 Drawing on the theory of impulse buying behavior and anticipated regret, this study explores the relationship between anticipated regret and impulse buying behavior on internet, investigates different factors (price promotion, graphic display and online comment) and impulsivity trait influencing impulse buying behavior on internet. Samples collected are empirically tested by SPSS17.0 and multiple group regression analysis is conducted with anticipated regret as a moder-ator variable. The results indicated that anticipated regret can directly influence online impulse buying. In the effect of price promotion, graphic display and impulsive impulsivity trait on con-sumer impulse buying, the moderating effect of anticipated regret is significant. In the effect of online comment on consumer impulse buying, the moderating effect of anticipated regret is not significant.

New developments in behavioral pricing research

Behavioral pricing extends traditional price theory by exploring consumers’ reactions to prices from a psychological perspective. With the constant and substantial evolution of this research field, we review the progress on the state of knowledge on consumers’ processing of price information and price behavior. To this end, we develop a framework to classify the advances made in behavioral pricing research during the past decade. We discuss conceptual developments, the contribution of the adoption of new theories, and new relationships and pricing phenomena. We show that several concepts have undergone conceptual developments (e.g., price search) while other concepts are new to the literature (e.g., participative pricing mechanisms). Regarding theoretical developments, the adoption of theories from other disciplines has contributed to enhance understanding of price-related effects. Finally, new pricing phenomena, such as the zero price effect or the placebo effect of price promotions, challenge the traditional view of consumers’ response to price information. Furthermore, a number of recent empirical findings contradict existing knowledge on price-related concepts and phenomena. Thus, it is of prime importance to integrate the latest findings with prior literature. From the key findings in the literature, we derive directions for future research.

Cross-Channel Effects of Price Promotions: An Empirical Analysis of the Multi-Channel Grocery Retail Sector

An important consideration for multi-channel grocery retailers is which promotion strategy to adopt across channels. The tendency of grocery buyers to keep visiting the offline store after they start to buy at the chain's online store implies that promotions in one channel can have substantial negative effects on buying behavior in the other channel, especially if the promotions differ across channels. This article examines the cross-channel effects of price promotions on category purchase decisions, taking into account both contemporaneous effects (during the promotion period) and cross-period effects (after the promotion period). For cross-period promotion effects, a distinction is made between lagged promotion effects on subsequent category purchases, and promotion frequency effects on future promotion effectiveness. The results show that (1) promotions in one channel can have negative effects on category purchases in the other channel during the promotion period, (2) these cross-channel effects are asymmetric, (3) high promotion frequency can have negative effects on future promotion effectiveness in the other channel, and (4) cross-channel effects are more negative for more loyal customers of the chain.

The effect of price promotions on consumer shopping behavior across online and offline channels: differences between frequent and non-frequent shoppers

This study evaluates the differential effect of price promotions on brand choice across the offline and online channels of a grocery retailer. We use scanner data to analyze the purchasing behavior of orange juice of a sample of multichannel customers of a large European grocery chain selling across offline and online stores. We find that promotions have a higher impact on offline than in online purchases. In fact we don't find a significant effect of promotions in the online channel. We also find a moderating effect of purchase frequency in the category, in the sense that frequent customers are more influenced by promotions than infrequent customers. While this effect is clear in the offline channel, it is not found in the online channel. There is also a high degree of heterogeneity in the effect of promotions among consumers, specially in the offline channel. It is important to remark that these differential effects across channels have been found for the same sample of multichannel customers, meaning that the same consumers are more affected by promotions offline than online. Potential causes and consequences of these results, as well as implications for management, are also discussed.

Assessing the Impact of Price Promotions on Consumer Response to Online Stockouts

The recent growth of e‐commerce technologies has disrupted the traditional retail environment, leading to more consumers shopping online. While the manner in which consumers shop is changing rapidly, our understanding of how changing consumer behaviors affect retail supply chain management is lacking. In particular, our understanding of how consumers react to stockouts in an online shopping environment remains unclear. Making the challenge even more difficult is the fact that price promotions are heavily used to attract consumers in an online retail environment where consumer switching costs are low. This research develops a theoretical framework, based on expectation‐disconfirmation theory, to explain the effect of price promotions on consumer expectations of product availability and their reactions to stockouts in an online retail environment. Surprisingly, our findings suggest that consumers are actually less dissatisfied with a stockout of a price promoted item than a nonprice promoted product and are less likely to switch to another retailer's website. These findings may suggest that price promotions actually create a type of switching cost in the online retail environment, leading to interesting implications for researchers and supply chain managers.

The Perceived Quality of Store Brands: The Effect of Price Promotion and Quality Guarantees

This research examines the effect of price promotion on the quality of store brands and national brands. It also examines the effect of a quality guarantee on the perceived quality of store brands. These findings suggest that store brands, but not national brands, are negatively affected by price promotion. However, a quality guarantee can counterbalance the negative effect of price promotion. Finally, the research results show that purchase intention is positively affected by perceived quality.

PRICE PROMOTIONS AND BRAND EQUITY: THE CASE OF LUXURY BRANDS

This study aims to investigate the effects of price promotions on the perception of a brand in the mind of consumer in luxury market. This study extends the previous literature on price promotional strategy and brand equity (brand awareness, brand image, and brand loyalty) by focusing on how a consumer perceives functional value and psychological value to create brand equity in luxury products.

Luxe for Less

As an emerging distribution channel, online discount websites are gaining popularity among luxury hotels. However, little guidance on the effectiveness of such price promotions in luxury hotels is provided in the extant literature. Building on the status consumption theories, we examine the joint effects of price promotions and need for status (NFS) on consumers’ attitudes toward the hotel as well as their intentions to return. Our results indicate that consumers who are high in NFS exhibit less favorable attitudes toward the luxury hotel and a lower likelihood to return on having learned that the hotel plans to implement price promotions through discount websites. On the contrary, customers who are low in NFS are unaffected by the presence of price promotions via discount websites. Therefore, luxury hotels that traditionally attract consumers high in NFS need to be aware that using price promotions via discount websites might have a detrimental effect on consumers’ perceptions of the hotel.

Price Discounts and Peer Effects in Information Goods: Results from an In-vivo Organic Randomized Experiment

We look at the interplay between price promotions and peer influence in the case of movies in Video-on-Demand (VoD), which are non-storable information goods. We analyze the outcomes from a randomized experiment run for 3 consecutive months using the VoD system of a large telecommunications provider. We show that households with access to movies priced 25% lower than usual lease 11.1% more of these movies than households that never had access to movies at reduced prices. However, they also lease 3.3% fewer of the movies without price discounts during the entire experiment, which reduces aggregate sales by 2.9% hurting the provider’s profitability. We use cell phone call detail records from this provider to infer a graph of social proximity across households. The average degree in this graph is 10.23 friends. Using this graph, we find a positive effect of peer influence in the consumption of movies in this VoD system, which can be strategically used by the firm to issue price promotions minimizing profit losses. Firms can break-even if they offer price promotions to households with enough connections to generate enough sales through peer influence to counter the undesirable effect of price promotions. We show how the ability of the firm to break-even depends on the magnitude of the effect of peer influence, the discount offered and the markup factor. At the average of the covariates observed in our setting, the firm breaks-even if it offers price promotions to households with more than 4 connections.