Effects Of Price Promotions Research Articles

The Study on Product Promotion Design and its Mechanism

Product promotion designing is an important aspect of product design. Price promotion is a kind of the product promotion, which lead to the success of product design. Based on the existing literatures, this paper introduces the definition of price promotion, types of price promotion, effect of price promotion, the mechanism of price promotion. These are important for designing a successful product promotion.

Promote the price promotion

Purpose – The authors empirically evaluated the effect of price promotions on customer quality evaluations and repeat-purchase intentions in coffee chain stores. The moderating role of customer characteristics in this process was also investigated. Design/methodology/approach – Consumers in 12 coffee chain stores were surveyed and 488 usable questionnaires were obtained. Relationships in the test model were examined using structural equation modeling techniques. A multiple-group solution was used to test the moderating effects of consumer characteristics. Findings – The results of structural equation modeling analyses suggested that price-promotion activities at Starbucks in Taiwan had a favorable effect on customer quality evaluations and positively influenced repeat-purchase intentions. The moderating effects of consumer characteristics were partially supported. Whereas sex showed no significant moderating effect, consumption frequency did demonstrate a moderating effect. Practical implications – The results indicate that existing customers may see price promotions at Starbucks in Taiwan as a reward or incentive, and thus lead to an increase in favorable evaluations. The findings provide a new perspective that may encourage those involved in the marketing of coffee chain stores to manage price promotions in a more strategic manner by considering customer characteristics. Originality/value – The effects of price promotions on brand evaluation remain controversial and may vary among product categories. Additionally, most studies regarding price promotions have used an experimental approach, and few studies of price promotions in the coffee industry have been reported. The study is among the first to empirically examine the effects of price promotions and the moderating role of consumer characteristics in the process at coffee chain stores.

The Bright Side of Loss Aversion in Dynamic and Competitive Markets

A well-established phenomenon of consumer buying behavior is that consumers evaluate prices relative to a reference point and exhibit loss aversion; i.e., their propensity to buy is more negatively affected by prices above the reference point than it is positively affected by prices below the reference point. The objective of this paper is to analytically examine how the competitive strategy and profitability of firms are affected by the presence of consumer loss aversion in the price dimension. Although we assume that consumer loss aversion increases consumer propensity to search for lower prices, we find that it does not necessarily lead to lower prices or profits when firms compete over multiple periods and when the consumer reference price in subsequent periods is affected by current prices. Specifically, consumer loss aversion could lead to higher prices and profits when consumer valuation is sufficiently high relative to search costs and the proportion of consumers with positive search costs is in an intermediate range. We also show that when forward-looking firms incorporate the negative effect of price promotions on future profits, the equilibrium range of price promotions may actually increase.

Price promotions effects of virtue and vice products

Purpose– This paper aims to propose models that capture the own effect of price promotions of virtue and vice products on sales and cross effects within the subcategory, between subcategories and between periods. The hypotheses assume that, due to reverse consumption self-control, the demand for vice products is more price-sensitive than demand for virtue products, but the demand for vice products is less price-sensitive between periods than demand for virtue products; furthermore, due to the degree of impulse-buying and to licensing, the demand sensitivity of the products of a subcategory and of those of other subcategories varies according to the type of promoted product (vice or virtue).Design/methodology/approach– The methodology is based on different econometrical models that estimate the total net effect of price promotions of virtue and vice products on sales.Findings– The results show a greater own effect for price promotions of vice products than for virtue products. However, the complementary sales effect between subcategories for virtue products facilitates greater expansion of the subcategory in virtue products than in vice products.Originality/value– Although price promotions of virtue products (light) and vice products (regular) have proliferated in recent years, researchers have only estimated their own sales effect. Alternatively, the paper contributes by considering own and cross effects.

가격할인과 소비자 조절초점이 PB 제품의 구매의도에 미치는 영향

가격할인과 소비자 조절초점이 PB 제품의 구매의도에 미치는 영향

The effects of price promotion depth on new and mature products

Although the short-term effects of price promotion depth on mature product sales volume and sales revenue are well known, empirical studies on the long-term effects of price promotions are relatively scarce. This study employs two models, a generalized linear autoregression model and a linear mixed model, to analyze the effects of promotion depth on sales revenue for a 106-weeks period. Using learning theory as a framework, the researchers also examine the effects of price promotions on new and mature consumer packaged goods sales. Across 10 store-level point-of-sales data sets, our results indicate that promotion depth does not affect brand extension sales but does positively influence line extension and mature product sales. We address the theoretical and managerial implications of these interesting results in the second half of the article.

Effects of price promotions on potential consumers of high-speed rail

Effects of price promotions for high-speed rail (HSR) on the choice behaviours of potential consumers are analysed for public transit marketing purposes. A questionnaire survey, with 300 valid samples collected from private vehicle drivers with long-distance trips through freeways, is conducted. Factor analysis is employed to determine the constructs of service quality, while a discrete choice model considering individual heterogeneity, namely a mixed logit model, with stated preference is utilised to explore the diversion of passengers from private vehicle drivers due to price promotions. Analytical results reveal that service qualities, socio-economic characteristics and price promotions significantly affect choice behaviours. Finally, some strategies are developed from these analytical results to help a HSR operator increase its market share.

Store price promotion strategies: an empirical study from Chile

Purpose The purpose of this paper is to examine two popular price promotion strategies – price matching guarantees (PMGs) and everyday low prices (EDLP) – and their effects on Chilean consumer behavior in terms of consumer perceptions of low prices, search behavior and purchase intention. Design/methodology/approach A quasi experiment with three scenarios was conducted to test price promotion effects. Subjects were instructed to respond a questionnaire that included the dependent variables. Findings Results show that EDLP and PMG strategies increase perceptions of low prices and affect purchase intentions. These effects are significantly higher for stores offering EDLP than PMG. However, when consumers are exposed to two or more price promotion strategies (rather than one) they reduce their purchase intentions for a specific store and increase their search intentions. Research limitations/implications This is an initial study exploring the effects of price promotion strategies on consumers. Future research could test the hypotheses advanced in the study across different samples and contexts (supermarkets, department stores, convenience stores, and other retailers) and might privilege external validity, using experiments mimicking decisions with real consequences. Practical implications Retailers and marketers in Latin America – particularly those companies stressing price or value as their differential advantage – should consider the use of price promotions when designing marketing strategies. On the other hand, retailers should be aware that an intensive use of these of promotions could lead to increases in consumer search behavior. Originality/value While findings from the USA suggest that price promotion strategies can be effective in several contexts, there has been a limited number of studies addressing whether such strategies are effective in other countries, particularly in Latin America and emerging nations.

The correlations between price cuts/changes and fee sensitivity on the choice of mobile phone service provider

This study adopts fee thresholds to measure users' fee sensitivity and employs a two-step logit model to predict a phone user's probability of choosing a certain service provider. The results indicate that the choice probability can be overestimated if the reference fee effect is not taken into consideration. Furthermore, the lower calling fee image and perceptions shaped by the telecommunications service provider can increase the probability of it being chosen. Users' benefit (saving money) perceptions also reveal a significant difference. In this regard, price promotion effects may not necessarily be successful for every service provider at the time. Service providers with a larger base of benefit perception users have a relative advantage in price-cutting activities. The characteristics of users in the low-loss perception (insensitive to an expensive fee) group are younger, female, and college-educated. Service providers could focus on this segmented market and implement a non-price strategy in order to attract more users. This study may be useful to mobile phone service providers in terms of price-setting policy and image management.

Examining price promotions, venue and place of residence as predictors of alcohol consumption

PurposeThe purpose of this study is to understand the effect of price promotions, venue and place of residence on low‐risk, risky and high‐risk alcohol consumption behaviour of young women between 18 and 24 years of age who attend university in Australia, Wales and Germany.Design/methodology/approachThe quantitative, self‐administered questionnaire collected data from a convenience sample of three universities in three OECD countries with high alcohol consumption being: a regional Australian university (n=305), a city Welsh university (n=354) and a rural German university (n=325).FindingsFirst, the multinomial logistic regression results revealed that price promotions and venue influenced alcohol consumption in Wales alone while place of residence influenced alcohol consumption in Australia; however, price promotions, venue and place of residence had no effect on young women attending university in Germany. Second, the binomial logistic regression results for Wales reported a sensitivity to price promotions for all three alcohol consumption risk classifications; however, location was of little consequence to risky drinkers when compared to high risk drinkers. For Australia, the place of residence did not influence alcohol consumption for both risky and high‐risk drinkers.Originality/valueThe value of this study lies in the examination of three levels of alcohol consumption – low‐risk, risky and high‐risk – for the same cohort across three countries using the same test instrument and standard alcohol consumption metrics. As such, this study provides a more meaningful macro view of alcohol consumption; thus has the capacity to contribute to effectual intervention strategies.

Focus on Authors

Focus on Authors

Moderating Factors of Immediate, Gross, and Net Cross-Brand Effects of Price Promotions

This article examines cross-price promotional effects in a dynamic context. Among other things, we investigate whether previously established findings hold when consumer and competitive dynamics are taken into account. Five main influential effects (asymmetric price effect, neighborhood price effect, asymmetric share effect, neighborhood share effect, and private label versus national brand asymmetry) appear jointly in the second layer of a pooled HB-VEC-VARX model, together with brand- and category-specific variables. This study tests the relative importance of these key factors across three scenarios: with no market dynamics, when only consumer dynamics are considered, and when competitive reactions are also taken into account. The results confirm all five influential effects, even if they are jointly estimated, and consumer and competitive dynamics are taken into account. National brand/private label asymmetry has the strongest influence on the cross-price promotional effects and becomes significantly stronger when consumer and competitive dynamics are taken into account. Dynamic consumer responses and competitive reactions both affect cross-brand price elasticities, and contrary to expectations, competitive reactions accumulate rather than diminish cross-price elasticities. Preemptive switching does occur; i.e., a brand's promotion in period t hurts a competitor's sales in subsequent periods. Our findings are based on an extensive data set. To attain generalizable results, we analyze 33 categories in five stores—that is, 165 store/category combinations.

Why are Consumers Less Loss Averse in Internal than External Reference Prices?

The literature has produced mixed support for loss aversion in a reference price context and the outcome may depend on the type of reference price. One extant study has reported empirical evidence that consumers are less loss averse in internal than external reference prices, but without discussing causes or implications. In the current study, we reconcile relevant literature and propose this asymmetric loss aversion result as an empirical generalization. Next, we provide and test an explanation: two empirical regularities in pricing cause that consumers tend to observe few losses for external reference price and many losses for internal reference price, making them less sensitive to internal than external losses. We use two scanner panel data sets to show that the two empirical regularities contribute to asymmetric loss aversion, while accounting for alternative explanations. We explore the implications of loss aversion asymmetry for the effectiveness of price promotions by simulation.

Using Supermarket Loyalty Card Data to Analyse the Impact of Promotions

The aim of this paper is to show how supermarket loyalty card data from a panel of over 1.4 million shoppers can be used to analyse the effect of price promotions in a way which can bring significant advantages to retailers and manufacturers when making promotional decisions. The paper demonstrates the significant advantages that loyalty card data can bring to enhance our understanding of promotions, compared to traditional scanner and panel datasets. Regression analysis is used to compare the effects of different promotional mechanics upon different tiers of product across the fresh beef category in Tesco, using both scanner data and loyalty card data. The results show that using loyalty card data, which enables us to moderate for specific shopper characteristics, produces more statistically significant results and provides a more detailed picture of how promotions influence sales.

Cross-category demand effects of price promotions.

Do promotions in a certain category lead to higher revenues in other categories? If so, to what degree? The answers to these questions are highly relevant for retailers that supply products in different categories. Empirical findings in studies that consider a limited number of categories indicate small promotional cross-category effects. This study develops a framework to determine the impact of price promotions on category revenues that include interdependencies among a substantial number of categories at the category demand level. The own- and cross-category demand effects are moderated by variables such as promotion intensity, category characteristics (own-category effects), and spatial distances between shelf locations (cross-category effects). The empirical results based on daily store-level scanner data show that approximately half of all price promotions expand own-category revenues, especially for categories with deeper supported discounts. There is a high probability (61%) that a price promotion affects sales of at least one other category. The number of categories affected is not greater than two. Moderate evidence supports the existence of cross-promotional effects between categories more closely located in a store.

The Effect of Mood States on Variety-Seeking Behavior: The Moderating Role of Price Promotion

In this study we aimed to explore the effect of price promotion on the relationship between mood states and variety-seeking (VS) behavior. Participants were 133 university students, who were induced to feel either a sad or happy mood to test our hypothesis. Results indicated that price promotion mitigates the effect of affective states on VS. That is, people who are sad demonstrate more VS than those who are happy in the absence of price promotion. However, people in both mood states demonstrate similar level of VS in the presence of price promotion.

An exploratory study of sales promotions for multichannel holiday shopping

PurposeThe purpose of this paper is to explore how consumers respond to price promotions in stores and on internet channels during a holiday season. Since holiday shopping has long been considered promotion intensive and multichannel shopping is increasing, it is important to understand whether consumers respond differently to price promotions from these two different channels. The paper aims to examine whether the extent of price promotions that consumers perceive in online and offline channels and their sensitivity to such price promotions influences their holiday spending in each channel.Design/methodology/approachA public telephone survey was conducted to collect data during the month of December 2006. Using random sampling in Florida, a total of 501 responses were collected.FindingsOverall, the findings support the effectiveness of price promotions during holiday periods. Such awareness of the extensive practice of price promotions at stores can encourage holiday spending offline; additionally, sensitivity to price promotions on the internet can be transferred into increased holiday spending online.Practical implicationsThe results of this paper extend knowledge of how holiday price promotions affect consumer spending and provide important insights into how retailers should develop price promotion programs that are well tailored to consumer behaviors in different channels.Originality/valueThis paper addresses an untapped issue on how price promotions are perceived in multichannel holiday shopping contexts.

Decomposing Promotional Effects with a Dynamic Structural Model of Flexible Consumption

In this article, the authors offer a methodology to decompose the effects of price promotions into brand switching, stockpiling, and change in consumption by explicitly allowing for consumer heterogeneity in brand preferences and consumption needs. They develop a dynamic structural model of a household that decides when, what, and how much to buy, as well as how much to consume, to maximize its expected utility over an infinite horizon. By making certain simplifying assumptions, the authors reduce the dimensionality of the problem. They estimate the proposed model using household purchase data in the canned tuna and paper towels categories. The results from the model offer insights into the decomposition of promotional effects into its components. This could help managers make inferences about which brand's sales are more responsive to stockpiling or increase in consumption expansion and how temporary price cuts affect future sales. Contrary to previous literature, the authors find that brand switching is not the dominant force for the increase in sales. They show that brand-loyal consumers respond to a price promotion mainly by stockpiling for future consumption, whereas brand switchers do not stockpile at all. The authors also find that heavy users stockpile more, whereas light users mainly increase consumption when there is a price promotion.

Tourist Loyalty to Tour Operator: Effects of Price Promotions and Tourist Effort

This article analyzes the formation of the tourist loyalty to tour operator and the effects of price promotions and the consumer's search for price promotions in the scheme of perceived price perceived quality satisfaction loyalty to tour operator. The main results indicate that perceived quality is the primary antecedent of tourist loyalty to tour operator. This variable affects loyalty to tour operator directly and positively, as well as indirectly by means of satisfaction. Second, price promotions do not directly erode the tourist loyalty to tour operator. The relationship that exists is indirect and low in quantity. Third, the effort invested by the tourist to find price promotions acts as a mediating variable of price promotions, such that the more intensive the consumer's search for advantageous prices, the lower the negative and indirect effect of price promotions on consumer loyalty.

The formation of the tourist's loyalty to the tourism distribution channel: how does it affect price discounts?

AbstractGiven that distribution agents who wish to maximize long‐term business profits should not only attract new consumers but also keep them loyal, this study analyses the variables that determine the consumer's loyalty to distribution agents for tourism. Although retailers in the service industry employ price discounts on products to motivate short‐term sales, they often establish promotional policies without considering their effect on the long‐term business results. This paper presents an empirical study of the effect of price promotions on tourists who travelled with a package tour. The results indicate that price discounts do not erode consumer loyalty directly, and that the key to obtaining loyal consumers is to offer package tours that customers perceive as providing high‐quality service. Copyright © 2007 John Wiley & Sons, Ltd.