Brand-Pack Size Cannibalization Arising from Temporary Price Promotions

This study investigates how price promotions for one pack-size of a brand steal sales from the other pack-sizes of the same brand. To do so, the study examines twelve grocery product categories (seven US, three UK, two Australian). The analysis finds heavy cross-pack cannibalization. On average, 22 percent of the sales uplift for a promoted brand-pack size comes from other pack sizes of the same brand. Cross-pack cannibalization most typically occurs in the week of the promotion, but also transfers future week's sales away from the non-promoted pack size in 31 percent of cases. The study finds higher cannibalization is associated with packs that sell for a higher dollar value than others sold under the same brand; whereas higher price-per-weight, a packaging difference, and the item having a larger relative share of sales in the brand portfolio, are linked to lower cannibalization. Also examined is the impact of pack-size cannibalization on promotion profitability for retailer PLs. That analysis finds PL price promotions have generally negative impacts on PL profits, and that pack-size cannibalization exacerbates this negative outcome. The results suggest both retailers and manufacturers should carefully consider pack-size cannibalization when evaluating the outcome of temporary price promotions. The study also provides some evidence-based recommendations from which managers can attempt to minimize such cannibalization.     

The impact of brand personality and sales promotions on brand equity

This research assesses the relative impact of a long-term brand management instrument (brand personality) and a short-term marketing mix instrument (sales promotions) on brand equity formation. The authors measure consumer perceptions of promotional intensity and brand personality and model their impact on brand equity. They find a positive impact of brand personality and a negative impact of sales promotion intensity on brand equity at the aggregate level. In line with research that identifies varying consumer responses to promotional deals, this study posits that the relative impact of the two elements varies across consumer groups. Three homogeneous consumer groups differ according to the relative impact of brand personality and consumer promotions on brand equity, following an application of a finite mixture partial least squares procedure.     

The long‐term effects of sales promotions on brand attitude across monetary and non‐monetary promotions

This study compares the influence of sales promotions on brand attitude across promotion types over time. An experiment is conducted with 154 subjects, who are exposed to test materials for 12 weeks. Evidence shows that the long‐term effects of sales promotions on brand attitude vary across deal types. Non‐monetary promotions seem to work better in eliciting consumers' favorable brand attitude than monetary promotions over time. However, such effects are moderated by consumers' deal proneness. Although monetary promotions may induce more negative effects than non‐monetary promotions, these effects are weaker for high deal‐prone consumers than for low deal‐prone consumers. © 2011 Wiley Periodicals, Inc.     

Are Brand Promotions Just a Zero-Sum Game – or Can They Increase the Size of the Pie?

Packaged goods companies now "spend" more on promotions – special offers, in-store displays and the like – than on media advertising. Until recently, it was generally believed that while promotions benefit individual brands, they usually do not result in an increase in overall category sales. Recent research, however, suggests that promotions can increase total category sales in a wide range of circumstances. This article starts by discussing the relationship between brand promotion and category sales, outlines research to date, and then describes the author's own most recent research on this topic. It concludes by pointing to implications for managers.     

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.     

Managerial perspectives on trade and consumer promotions

Understanding the perceptions of managers and the behavioral rules they employ in allocating marketing resources is important in applied research. Using survey data obtained from brand managers, this paper explores the factors managers consider important in allocating trade and consumer promotions. Importance scores on several dimensions are factor analyzed to extract the underlying factors. Indices are computed using these raw scores. The extent of mediation by several brand and category variables on managerial perceptions are then examined by correlating managers' indices and the structural variables. The impact of the structural variables and the importance scores are related to promotion to sales ratios in a regression model. While the structural variables have strong and predictable impact, the importance scores are somewhat weak in their explanatory power. These results are used to shed some light on the budgeting process of allocating marketing dollars among advertising trade and consumer promotions.     

Meta-Analysis of the Long- and Short-Term Effects of Sales Promotions on Consumer Behavior

ABSTRACT

This article presents a meta-analysis aiming to assess the short- and long-term effects of sales promotions on consumer behavior. We found 221 studies addressing this relationship. Our final sample provided 139 observations. First, the results revealed a significant relationship between sales promotion and both purchase intentions and sales volume. Second, we identified significant and positive connections with brand loyalty, perceptions of quality, consumer attitudes, and switching costs for consumers. Third, we noted that the sample type, the number of promoted products and sample size partially moderated the relationship between sales promotion and short/long-term effects.     

The Effectiveness of Sales Promotion Tools among Indian Consumers: An Empirical Study

Marketers use sales promotions to boost sales. Sales promotion tools vary in their effectiveness to elicit different sales responses. Companies have a specific goal when they choose to use any promotional tool. Many researchers believe that sales promotions are zero sum game. Unlike in the West, in India brand loyalists outnumber price buyers by 200%. This paper investigates the effectiveness of select sales promotional tools in generating different buying behaviors. The study reveals that sales promotions, in India, do not help in category expansion. They are effective measures for inducing brand switching, stock piling, and purchase acceleration.     

Duration of price promotion and product profit: An in-depth study based on point-of-sale data

Anecdotal evidence has shown that retail price promotions can help small and medium-sized retailers enhance their sales, and thus profits. However, most marketing managers usually stop a promotion after a certain duration. This study aims to explain why these retailers discontinue their price promotion. Our approach posits that overall contributions of a price promotion to the product profit progressively diminish with time. In this study, we present a theoretical framework to explain the relationship between duration and profit effects of price promotion and propose statistical models to empirically examine this framework using point-of-sale (POS) data. Our findings provide empirical support that the effect of price promotion on the product profit has a downward trend with elapsed time. The results are helpful for marketers to understand how price promotions dynamically influence product profit and when the promotion should be terminated.     

The Impact of Price-Based and New Product Promotions on Fast Food Restaurant Sales and Stock Prices

A key tool used in demand or revenue management marketing strategies is the application of pricing tactics based on anticipated demand to enhance both customer utility and maximize firm performance (Wirtz et al., 2003). In the restaurant segment, particularly in quick-service restaurants (QSR), organizations focus on two main promotion formats to attract customers: price-based promotions and new product promotions. The purpose of this article is to explore how the number of price-based promotions and new product promotions influence firm sales growth or decline and change in stock prices. Results suggest that new product promotions can have a significant and positive effect on same store sales, whereas price-based promotions tend to results in lower same-store sales changes and changes in stock price. As an additional control for these results, the study controls for economic and seasonal conditions effects.     

The Differential Impact of Price-Related Consumer Promotions on Loyal versus Non-Loyal Users of the Brand

Abstract

Consumer goods manufacturers regularly spend millions of dollars annually on sales promotions such as couponing, rebates, sweepstakes, and other premium offers. Although the impact of advertising on consumer purchase behavior has been documented in the marketing literature, the impact of promotions on purchase behavior has received relatively little attention. The purpose of this research is to investigate the relationship between brand loyalty, purchase involvement, product experience, and their impact on the efficacy of consumer promotions. The results show that sales promotions have applications beyond their traditional role as short-term promotional tools. Managerial implications as well as suggestions for future research are discussed.     

Product information and consumer choice confidence in multi-item sales promotions

This research augments efforts to produce a richer understanding of the drivers of consumer choice confidence. It examines the interplay between two marketing interventions that consumers encounter in retail marketplaces, diagnostic product information and multi-item sales promotions. Results indicate that the influence of product information varies as a function of sales promotion format. The information effect is weaker when consumers are allowed to select the products that will be included in the promotion. Perception of information adequacy is revealed as a mediator of the information diagnosticity effect. The implications for marketing theory and promotional strategy are discussed.     

Impact of sales Promotion's benefits on perceived value: Does product category moderate the results?

The purpose behind the development of this research article is to assess the impact of sales promotions benefits on consumer perceived value and examine the moderating effect of product categories on the relation between sales promotions, their benefits, and consumer perceived value. The study used a sample of 400 consumers from India and ‘Structure Equation Modelling’ technique is applied to evaluate the research assumption. Finally, the moderating effect of the product category is evaluated by utilizing ‘Multi-Group Analysis' technique. Research findings reveal that the product category moderates the consumer's perceived value for hedonic and utilitarian benefits of sales promotion tools. It is found that utilitarian benefits of sales promotion have more impact on consumer perceived value in the context of personal care product while hedonic benefits are having more impact on consumer perceived value in the context of food products. A sales promotion plan can be made more effective when it is hedonic benefit oriented in the case of food products and utilitarian benefit oriented in the case of personal care products. The findings of this research can be useful for marketers to develop an effective sales promotion strategy considering the category wise differential impact of sales promotions benefits.     

Statistical Inference Using Stochastic Switching Models for the Discrimination of Unobserved Display Promotion from POS Data

The execution of price and/or display promotion has a significant effect on the sales of a brand sold in a supermarket. Information on price and/or sales is available from POS data. However, unless an investigator collects information on the execution of display promotions from every retail store, such information is unavailable. This paper presents a method of identifying whether display promotion has been executed without having to visit individual stores. We treat the execution/non-execution of a display promotion as a state variable. An unknown stationary probability matrix is assumed to describe the probability of a transition between states. Each state is characterized by a different stationary time series model with unknown parameters. The objective of the analysis is to identify the model and to assign a probability model for each state at each time instant. Finally, we provide a high precision estimator of a past execution/non-execution of a display promotion based on the proposed model.     

The perception of discount sales promotions – A utilitarian and hedonic perspective

This paper explores the effects of utilitarian and hedonic benefits perceptions of discount sales promotions on consumer purchase decisions (attitude and behavioral intention). A closed-ended survey, as well as a partial least squares structural equation modeling of consumers sampling who had used discount sales promotions in their recent purchases, was utilized in this study. The findings suggest that utilitarian benefits perceptions derived from price-quality perception and hedonic benefits perceptions derived from smart shopper self-perception of using discount sales promotions positively affect consumer purchase decisions. Both utilitarian and hedonic benefits perceptions of discount sales promotions can henceforth be used to produce the desired effects on purchase decisions. Hence, this paper sheds light on the effects of utilitarian and hedonic benefits perception of discount sales promotions on purchase decisions. Though the findings are limited to discount sales promotions alone and two types of purchase decisions outcomes (attitude and behavioral intentions), this paper identified multiple avenues to extend its findings. This encourages further exploration of such promotion topics, particularly on the various perceptions of discount sales promotions as well as other sales promotion techniques among marketing academics and practitioners.     

A Multiple-discrete/Continuous Model of Price Promotion

Understanding the effect of temporary price reductions, or price promotions, on sales of consumer packaged goods is an area of ongoing interest, both in academia and in practice. Price promotions, however, are becoming an increasingly important method of managing consumer demand for fresh produce items. Modeling the impact of price promotions must take into account the differentiated nature of fresh produce and the fact that consumers tend to purchase multiple items of only a few of the products available to them. Neither a continuous nor a discrete model of demand is appropriate. In this paper, we apply a multiple-discrete/continuous model of fresh produce demand to study the impact of price promotion on retail apple sales. Our findings show that the brand switching/category incidence effect of promotion is closer to 65/35 than the more usual 80/20 rule (80 percent of the effect is brand switching and 20 percent purchase incidence) when the nature of the decision is appropriately taken into consideration.     

Consumer research on sales promotions: A state‐of‐the‐art literature review∗

Many research traditions have dealt with consumer psychology and behaviour vis‐à‐vis sales promotions The consumer‐oriented approach seeks to identify the heavy users of promotions and to track their purchasing strategies involving the choice of a promoted brand The aim of the theory‐oriented research traditions is to test the explanatory power of various cognitive, attitudinal, behavioural and economic frameworks, be it to explain why and how consumers react to sales promotions or to understand when companies should promote This article exposes the specificity of each research tradition, its principal results and the most promising areas for future research     

Influences on consumer response to direct mail coupons: An integrative review

A substantial and growing body of research on coupons and coupon effectiveness has emerged in the marketing literature. The objective of this paper is to review and consolidate the findings of previous studies to provide a better understanding of the factors that influence consumer response to direct mail coupons. The effects of coupon, brand, product category, and consumer characteristics on redemption behavior and incremental sales are examined, and their implications for the effectiveness of direct mail coupon promotions are discussed. Based on the findings of prior studies, a theoretical model of coupon effects on purchase behavior is proposed. Several key issues that need to be addressed in future research are identified. © 1996 John Wiley & Sons, Inc.     

Building brand equity with cause-related marketing: A comparison with sponsorship and sales promotion

Building brand equity is a key objective for a range of communication activities; however, greater understanding is required on how different communication options compare in their impact on consumer response to a brand. In particular, firms are increasingly using cause-related marketing (CRM) to achieve business as well as social objectives, yet there has been limited research comparing the effectiveness of this strategy to other communication methods that may achieve similar brand-related outcomes. Using an experimental design, we examine consumer attitudes toward CRM and CRM's impact on brand attitude compared with two other communication options: sponsorship and sales promotion. Our results show that consumers respond more positively to CRM and that this strategy can be more effective in achieving brand-related objectives. However, consumers must perceive that the partnered cause fits with the brand. In fact, perception of fit plays a more critical role in determining the impact of CRM than in the impact of sponsorship or sales promotion. These findings suggest that when firms are considering their communication mix, CRM can be a more effective way of developing favorable brand associations, but managers must associate with causes that consumers will perceive to fit with the brand. Furthermore, this fit should be communicated.     

A brand preference and repurchase intention model: the role of consumer experience

Consumer brand preference is an essential step towards understanding consumer choice behaviour, and has therefore always received great attention from marketers. However, the study of brand preference has been limited to traditional marketing focusing on functional attributes to maximise utility. But now the shift to experiential marketing broadens the role of the brand from a bundle of attributes to experiences. Technological advancements have helped to increase the similarities between brand attributes and product commoditisation. Consequently, consumers cannot shape their preferences among brands using rational attributes only. They seek out brands that create experiences; that intrigue them in a sensorial, emotional and creative way. This study seeks to develop a model that provides an understanding of how brand knowledge and brand experience determine brand preference and to investigate its impact on brand repurchase intention. Accordingly, exploratory focus group discussions are employed followed by a survey of mobile phone users in Egypt. The findings provide insights into the relative importance of consumer perceptions on different brand knowledge factors in shaping brand preferences. It also demonstrates the significance of consumers’ experiential responses towards brands in developing their brand preferences that in turn influence brand repurchase intention. The model therefore offers managers a new perspective for building strong brands able to gain consumer preferences.