Retail Price Promotions Research Articles

The effect of brand characteristics and retailer policies on response to retail price promotions: Implications for retailers

The variation in the impact of a brand's retail price promotion on its own sales (promotional price elasticity) and the sales of its competitors (promotional cross-price elasticities) during the period of the price promotion is studied. Brand characteristics and retailer policies significantly explain the variation in promotional price elasticities and cross-price elasticities across brands. Results are used to offer guidelines to retail managers for planning promotions in terms of what brands to promote, and how and when to promote them under three different retailer objectives: (1) to liquidate inventories; (2) to maximize product category sales; and (3) to maximize product category profits. These guidelines can be used by retailers in taking actions that will result in desirable levels of responses to price promotions of a brand—promotional price elasticity and promotional cross-price elasticities.

Explaining the Variation in Short-Term Sales Response to Retail Price Promotions

This study focuses on the short-term sales response to price promotions in retail grocery stores and attempts to explain its variation using frequency of price promotions and the consecutive scheduling of price promotions. Retail managers’ expectations and tenets from behavioral theories provide the basis for the hypotheses that the frequency of price promotions and consecutive scheduling of price promotions affect short-term response to price promotions. The hypotheses are tested on three frequently purchased product categories, using store-level data from retail chains in three major markets. The analysis is validated with additional data on the same product categories and markets. A variety of managerial implications are drawn from the results and suggestions for future research are offered.

Assessing the Impact of Retail Price Promotions on Product Substitution, Complementary Purchase, and Interstore Sales Displacement

The author investigates the impact of retail price promotions on consumer purchasing patterns and the performance of competing retailers. A conceptual framework for retail promotional effects that includes brand substitution effects, interstore sales displacements, and the effects of promotions on complementary goods is developed. The framework is tested with store-level scanner data. Results are generally supportive of the framework and show that retail price promotions created significant complementary and substitution effects within the store. Interstore promotional effects also were detected in several cases as the promotions of products in one store significantly decreased sales of substitutes and complements in a competing store. Implications of the results for retail and manufacturer promotional strategies are discussed and several directions for future research are offered.

Assessing the Impact of Retail Price Promotions on Product Substitution, Complementary Purchase, and Interstore Sales Displacement

The author investigates the impact of retail price promotions on consumer purchasing patterns and the performance of competing retailers. A conceptual framework for retail promotional effects that includes brand substitution effects, interstore sales displacements, and the effects of promotions on complementary goods is developed. The framework is tested with store-level scanner data. Results are generally supportive of the framework and show that retail price promotions created significant complementary and substitution effects within the store. Interstore promotional effects also were detected in several cases as the promotions of products in one store significantly decreased sales of substitutes and complements in a competing store. Implications of the results for retail and manufacturer promotional strategies are discussed and several directions for future research are offered.

Manufacturer Trade Deals and Retail Price Promotions

The author examines the phenomenon of manufacturer trade deals described as off-invoice and/or bill-backs in markets for frequently purchased consumer goods. The analysis affords a new explanation for why offering such deals may be in the best interest of manufacturers. It also provides some evidence to test the validity of the proposed theory. Though the power of the empirical tests is not strong, the results give encouragement for further data collection and more rigorous testing of the theory.

Manufacturer Trade Deals and Retail Price Promotions

Manufacturer Trade Deals and Retail Price Promotions