Non-price Promotions Research Articles

Estimating promotion effects in email marketing using a large-scale cross-classified Bayesian joint model for nested imbalanced data

We consider a large-scale, cross-classified nested (CRON) joint model for modeling customer responses to opening, clicking, and purchasing from promotion emails. Our logistic regression-based joint model contains crossing of promotions and customer effects and allows estimation of the heterogeneous effects of different promotion emails, after adjusting for customer preferences, attributes, and historical behaviors. Using data from an email marketing campaign of an apparel retailer, we exhibit the varying effects of promotions not only based on the contents of the email but also across the three different stages, viz. open, click, and purchase of the conversion funnel. We conduct Bayesian estimation of the parameters in the joint model by using a block Metropolis–Hastings algorithm that not only incorporates nested subsampling to tackle the severe imbalance between conversions and no conversions but also uses additive transformation-based modifications of random walk Metropolis to scale estimation for large numbers of customers. We extend our approach to a segmented cross-classified nested (SCRON) joint model that encompasses the possibility of varying promotion effects across different customer segments. The resultant high-dimensional model is estimated using spike-and-slab priors on the promotion and customer segment interactions. Our nested joint model accounts for the correlations in customer preferences across the conversion funnel. Based on the promotion estimates from the model, we demonstrate how marketers can use different priced, nonpriced, and combination of price and nonprice promotions to increase brand awareness or increase purchases. Comparing estimates from CRON and SCRON models, we display the benefits of targeted marketing by using email promotion lists which are separately optimized for the different customer segments.

Behaviorally targeted location-based mobile marketing

Marketers increasingly use behavioral targeting in location-based mobile marketing (LBMM). However, highly personalized marketing messages like this may backfire by eliciting consumer reactance. We suggest that LBMM efficacy depends on its potential to minimize consumer reactance, which can be achieved by effectively combining location targeting (in-store vs. out-store), behavioral targeting (based on consumers’ product category involvement [PCI]), and the type of promotion offered (price vs. non-price promotion). Results of a field study, a virtual reality experiment, and two online experiments show that although in-store mobile ads are generally more effective in increasing sales than out-store mobile ads, this is only the case if consumers have low PCI with the advertised product category, because this decreases their reactance. To attract consumers to stores by out-store LBMM, we show that firms should offer price promotions to consumers with low PCI and non-price promotions to consumers with high PCI, because these combinations of location targeting, behavioral targeting, and type of promotion elicit the least reactance and therefore result in a higher probability to buy.

The preservation of loyalty halo effects: An investigation of the post-product-recall behavior of loyal customers

This study examines the post-product-recall behaviors of previously loyal customers. Specifically, the study examines whether they stay with a product or leave it, and if they do stay, then how long they delay resumption of their regular purchase cycle. The investigation examines three types of influences on post-recall behavior: first, the behavioral characteristics of customers, including their levels of product loyalty and their strength of shopping habits; second, the use of post-recall promotions and loyal customers’ promotion sensitivity; and third, the recall characteristics, including its seriousness and its public announcement. Using 20,342 point-of-sale grocery scanner transactions by 1919 rewards card members, we found that loyal customers tended to stay with affected products while delaying repurchases of these products. Customers with strong shopping habits may leave the product but do not delay repurchases if they stay. The findings also suggest the differential effects of price promotions and non-price promotions on repurchase behaviors.

Marketing-Mix Response Across Retail Formats: The Role of Shopping Trip Types

The authors study differences in the effects of prices, nonprice promotions, and brand line length on brand shares at different retail formats. Their conceptual framework rests on the presence of trip-level fixed and category-level variable utility components and shows how the trade-off between these components results in (1) different formats visited on different types of shopping trips and (2) differential marginal sensitivities of brand shares to changes in marketing-mix variables across trip types. Together, these provide predictions on how marketing-mix variables differentially affect brand shares at various retail formats. The authors use Nielsen Homescan and store-level data from 2011–2014 and analyze the top ten spending product categories across four retail formats—convenience stores, drugstores, supermarkets, and mass merchandisers—in over 200 Nielsen markets. Implications for brand manufacturers managing the marketing mix across different formats are offered. JEL codes: M310, L11, D4

Point-of-Sale Marketing Mix and Brand Performance – The Moderating Role of Retail Format and Brand Type

We study differences in the effects of prices, non-price promotions, and brand line length on brand shares at different retail formats. Our conceptual framework rests on the presence of trip level fixed and category level variable utility components and shows how the trade-off between these components results in (i) different formats visited on different types of shopping trips; and (ii) differential marginal sensitivities of brand shares to changes in marketing mix variables across trip types. Together, these provide predictions on how marketing mix variables differentially impact brand shares at various retail formats. We use Nielsen Homescan and store level data from 2011-2014 and analyze the top ten spending product categories across four retail formats - convenience stores, drug stores, supermarkets and mass merchandisers, in over 200 Nielsen markets. We then describe how our findings linking the effects of marketing mix variables with different retail formats has implications for brand manufacturers.

A Study of Brand Equity Formation in the Fast Moving Consumer Goods Category

Purpose: To identify key relationships in building brand equity in the fast-moving consumer good (FMCG) category in the United Arab Emirates. Design/methodology/approach: It is postulated that marketing elements impact brand equity dimensions which in turn impact the brand equity construct. Five marketing mix elements were selected—price, distribution intensity, advertising, price promotions and non-price promotions, and four dimensions of brand awareness, brand loyalty, perceived quality and brand associations, finally to overall brand equity. Data were collected from a broad sample. Structural equation modeling was used to test the relationships among the 10 constructs. Findings: Brand loyalty and perceived quality have a significant impact on brand equity, whereas brand awareness and brand association were weak. Brand awareness has a significant influence on brand loyalty. Distribution intensity and non-price promotions have a positive relationship with all the brand equity dimensions, whereas weak support was determined for pricing and advertising. Conclusion: In the FMCG category building strong brand awareness combined with wide distribution and supported by non-price promotions are critical to building brand loyalty which in turn impacts brand equity. Originality/value: This study contributes to the general body of knowledge on branding and provides a starting point for further research in the region.

A study of food retailing: How does consumer price sensitivity vary across food categories and retailer types in Mexico?

<p>The cost of food in Mexico has increased over several decades while modern retailers face intense rivalry. Currently, consumers have several choices for buying food, which prompts retail managers to implement pricing strategies designed to differentiate from competitors and attract more customers. The problem is that several retailers seem to be using the same approach without a clear understanding of consumer price sensitivity, the effect of non-price promotions, and the variations across retail formats. This research will address these issues by analyzing scanner sales data and mystery shopper price reports to calculate price sensitivity across six food categories sold in four retail chains. Results indicate that product demand, in most food categories, is sensitive to price changes at big-box retail competitors and not traditional supermarket retailers. Additionally, results indicate that the six food categories in the study are sensitive to feature advertising. Retail managers can use these findings to help define their value propositions, focus their pricing strategies, and inform their marketing communications strategy.<strong></strong></p>

Non-Price Sales Promotion Impact and Moderator Role

Despite the importance of non-price sales promotions in new-product introductions, little is known about the impact of their characteristics in different time periods and the role of moderating variables. This study examines the effects of different levels of promotion desirability and relatedness in promotion time periods and post-promotion time periods. It also examines the effects of the need for cognition variable as a possible moderator. Research results, from a between- and within-subjects experimental design, add value to the literature by providing new insights for designing promotion programs and building brands. Implications are discussed and ideas for future research are given.

Antecedencje postrzeganego przez konsumenta kapitału marek własnych – model koncepcyjny

The objective of this paper is to present a conceptual model of antecedents of store brand (SB) equity (SBBE) that aims to identify the effects of SB advertising spend, attitudes toward SB advertisements, SB price promotions, and SB non-price promotions on the metrics of SBBE (i.e. SB awareness, SB associations, SB perceived quality, and SB loyalty), overall and with regard to retail format differences across three retail formats. For this purpose an extensive literature review is introduced. This paper provides key directions to brand managers regarding store brand assortment. There is emphasized that the expected outcomes of this research project are not only of great importance to build the academic literature on SBs, but are also of immense value to practitioners and SB managers.

Self-Signaling and Prosocial Behavior: A Cause Marketing Experiment

We test an information theory of prosocial behavior whereby ego utility and self-signaling crowd out the effect of consumption utility on choice. The data come from two field experiments involving purchases of a consumer good bundled with a charitable donation. Across experimental cells, we randomize the price level and the donation level. A model-free analysis of the data reveals nonmonotonic regions of demand when the good is bundled with relatively large charitable donations. Subjects also self-report lower ratings of “feeling good about themselves” when offered bundles with large donations and price discounts. The evidence suggests that price discounts crowd out consumer self-inference of altruism. Alternative motivation-crowding theories are rejected due to their inability to explain the nonmonotonic data moments. The standard use of interaction effects and other falsification checks to explore the underlying choice mechanism in an experimental setting is complicated in our self-signaling context. Instead, a novel feature of our analysis consists of using the experimental data to estimate the structural form of a model of consumer demand with self-signaling. We specify a model in which consumers obtain both consumption and ego utility from their choices. Ego utility derives from a consumer’s posterior self-beliefs after making her choice. An estimator is proposed that handles the potential multiplicity of equilibria that can arise in the self-signaling model. The model estimates allow us to quantify the economic role of ego utility and to explore the underlying signaling mechanism. Nested tests reject the hypothesis of no self-signaling. Alternative model specifications that potentially allow for nonmontonic demand without the self-signaling structure exhibit an inferior fit to the data. The model estimates imply that consumer response to the donations are mainly driven by ego utility and not by consumption utility (i.e., not by altruistic motives). The findings from the combination of a field experiment and a structural model contribute to a growing literature on self-signaling and consumer behavior by quantifying the magnitude of self-signaling on preferences and choices. The results also have implications for the design of a cause marketing campaign and the potential negative synergies between price and nonprice promotions. Data are available at https://doi.org/10.1287/mksc.2016.1012 .

An Exploratory Analysis of Marketing Elements and Brand Equity in the UAE FMCG Category

Purpose: The purpose of this research is to explore the relationship between the marketing elements, brand equity (BE) dimensions and BE construct in the UAE fast-moving consumer goods (FMCG) category with a view to strengthening the understanding of the relationship as postulated by Aaker (1991) and validate the scales developed to test the constructs in previous studies. Design/methodology/approach: Aaker (1991) proposed that the BE construct is built on brand awareness, brand loyalty, perceived quality, brand associations, and other proprietary brand assets, which in turn are built by managing the elements of marketing. A priori, it is postulated that there are 10 constructs of which five are marketing elements (price, distribution intensity, advertising, price promotions, and non-price promotions) and four BE dimensions (brand awareness, brand loyalty, perceived quality, and brand associations) and a final construct—overall brand equity. Thirty-three items were carefully selected from previous studies covering all the constructs. Data were collected from 536 respondents using major brands to stimulate answers on a 5-point Likert scale questionnaire. Exploratory factor analysis was done to identify factors and rename them to be descriptive of the factor. Scale reliability was conducted on the overall items and the individual factors and also for the individual summated scales as per the factors. Findings: The 33 items were factored into seven factors with the four marketing elements’ factors (price, distribution, advertising, and promotions price and non-price factored into one) as per the a priori assumptions. Items measuring BE and its dimensions were factored into three factors instead of the theoretical five constructs. The BE factor encompasses the BE dimensions with brand awareness with brand association (BABA) and brand image coming up as separate factors. Seven of the eight factors also showed strong scale reliability. Practical implications: This study suggests that the four marketing elements can be modeled and measured based on the items selected. BE dimensions do not factor into the assumed dimensions but the three dimensions that are factored can be renamed to be more representative and incorporated into the model. Furthermore, these items can be used to construct measurement scales for the identified constructs within the UAE and the larger Gulf Cooperation Council (GCC) region. Originality/value: This study, being the first of its kind in the UAE, contributes to the general body of knowledge on branding and marketing. The respondents covered are both Arabs and Asians, who constitute the majority of the population in the region. The sample size is large and covers gender, age groups, ethnic background, income group, and education level hence being highly representative of the actual consumers. The constructs identified and the items tested can be used for further studies and also used to construct measurement scales which can be used in practical business situations.

Determinants of Satisfaction with Holidays and Hospitality in Rural Tourism in Spain

An analysis of travelers’ satisfaction with a holiday trip to Spain’s Andalusia region found a distinct difference in the information sources used by first-time visitors and repeat visitors. In addition to determining the travelers’ satisfaction with the trip itself, this study also assessed the travelers’ satisfaction with the travel-related information they received before taking their trip. The framework for the study was a rural tourist trip, a little studied area. Repeat visitors relied primarily on their own experience in terms of expectations for their trips, and any external information sources they consulted had no effect on their satisfaction with the trip. Of the several external sources consulted by the first-time visitors, only mass-media advertising was associated with favorable satisfaction results for the first-timers. Other sources, including word of mouth, the internet, and noncommercial media placements (such as news stories), were associated with negative effects on satisfaction, perhaps because these sources created unrealistic expectations. Destination promotions attracted both new and returning visitors, but again the two groups had different views on which types of promotion were most effective. First-time travelers responded primarily to price discounts in some form, whereas repeat travelers were more inclined toward such nonprice promotions as gifts and prize drawings. For hospitality and tourism officials, the findings focus on the need to ensure that information sources are accurate and create appropriate expectations for first-time travelers. This may require more activity in social media, since internet sources apparently created incorrect expectations or simply offered the first-time travelers so much information that they felt overloaded.

Joint optimization on pricing, promotion and inventory control with stochastic demand

Firms often utilize and coordinate dynamic adjustment of price, non-price promotions such as advertisement and recruitment of excellent salespeople and proper inventory replenishment policies to satisfy customer demands and achieve maximal profit. This paper provides an analytical model for obtaining optimal decisions jointly on pricing, promotion and inventory control. Specifically, we study a single item, finite horizon, periodic review model in which the demand is influenced by price and promotion, and the objective is to maximize the total profit. We characterize the optimal policy and provide solution for coordinating promotion, pricing and inventory replenishment. We show that the optimal promotion policy is a threshold policy under some reasonable assumptions and once the promotion is determined the optimal inventory/pricing policy is a base-stock-list-price policy. Numerical study is also provided to demonstrate the contribution of our model.

Estimating the Effects of Non-Price Promotion on Export Demands for U.S. Poultry Meat

A dynamic gradually switching Almost Ideal Demand System (AIDS) model was developed and estimated to assess the effectiveness of non-price export promotions for U.S. poultry meat products in six major international markets. Results suggest that about 75% of the effect of promotion occurs after the first year. The marginal rates of return on investment from non-price promotion of U.S. poultry products in Singapore and the rest of the world are estimated to be $5.76 and $16.06, respectively, for the short run, and $30.39 and $61.93, respectively, for the long run. The study suggests that the export market of Japan for U.S. poultry meat products may have reached maturity as indicated by very small marginal rates of return.

The Determinants of Coupon Discounts for Breakfast Cereals

This study identifies the determinants of coupon values at the brand level using a framework developed from price discrimination theory and the principles of demand. Couponing is considered within the context of a complex marketing program in which it is coordinated with other non-price promotional strategies. A simultaneous, two-equation, fixed-effects, panel-data model is specified and fitted with data on household purchases of ready-to-eat (RTE) breakfast cereals between 1992 and 1997. The empirical model accounts for the bi-directional causality between brand prices and discount levels and captures the retail effects of the major cereal maker's price cuts and discount reductions that occurred in 1996. Higher brand prices cause coupon values to rise, supporting the hypothesis that cereal makers price discriminate among consumers. Other non-price promotions, including advertising, store flyers, and in-store displays, appear to be coordinated with couponing. Specifically, coupon values fall with more intense advertising and in-store displays but rise when the couponed products are featured in store flyers. Discount levels are positively related to brand market share and the size of discounts that are redeemed for rival cereals. Moreover, coupon values fall with increasing brand loyalty among RTE cereal purchasers. Cereal prices are positively affected by coupon values, advertising expenditures, food-ingredient and packaging costs, and the prices of competing brands. Inventory levels are negatively correlated with brand price. Employee wages were not found to significantly influence cereal prices.

Die Wirkung von Preis- und Nicht-Preis-Promotions auf die Markenloyalität

This paper develops a model for measuring the effects of sales promotion on purchase event feedback. The model directly assesses the extent to which promotion purchases contribute differently than non-promotion purchases to the dynamic component of Guadagni and Little’s (1983) “brand loyalty” measure. It is applied to two product categories to compare the effects of price versus non-price promotions. Results suggest that the model improves the fit over a conventional model. Substantively, the results indicate that price promotions are associated with negative purchase event feedback compared to non-promotion purchases, while non-price promotions such as features, or sampling have no effect or in fact are associated with positive purchase event feedback, compared to purchases made off promotion. We discuss the implications of the research for both academics and practitioners.

The role of retail promotion in determining future brand loyalty: its effect on purchase event feedback

We model and estimate the role of retail promotion in determining future brand loyalty through its effect on purchase event feedback. Purchase event feedback represents the effect of current purchases on future brand preference. Our model assesses the extent to which purchases made under a retail promotion enhance or detract from the level of feedback, compared to nonpromotion purchases. We apply the model to two product categories and compare the effects of price versus nonprice retail promotions. We find that in-store price promotions are associated with negative purchase event feedback compared to nonpromotion purchases, whereas nonprice promotions such as features or sampling have no effect or in fact are associated with positive purchase event feedback, compared to purchases made off promotion.

Managing the Sales Promotion Mix

Though an integral component of many marketing strategies, relatively little has been written about the management of consumer sales promotions. This study introduces a framework that examines the relative importance of key factors on managers' use of two consumer promotions: coupons and sweepstakes. Our results show that brand managers use trade and consumer sales promotions more extensively than media advertising, but do not consider sales promotions to be more effective in meeting objectives. Our sample of U.S. brand managers heavily favor price-oriented over non-price promotions. We conclude that managerial use of sales promotions is influenced primarily by competition and short-term pressures. A national survey of brand managers of packaged convenience goods provides support for the proposed framework.

An examination of deal proneness across sales promotion types: A consumer segmentation perspective

This research examines if there are consumer segments that have a propensity to be deal prone in general and/or segments that reflect a proneness to deals at some more specific level (e.g., a segment reflecting a propensity to respond to price promotions but not nonprice promotions, a specific coupon prone segment, a rebate prone segment). Analyses using multi-item scales assessing consumers ' proneness to eight different types of sales promotion indicate the existence of a consumer segment that reflects a generalized deal proneness across deal types. These segment-based findings are validated by relating segment membership to deal-responsive behaviors assessed in a natural field setting. Significant differences between the consumer segments are shown across eleven dependent measures. Given the objective of reaching deal prone consumers in an efficient manner, these results suggest that usage of a broad variety of promotion types may not be necessary to achieve this goal.