Sales Promotion Wars

Manufacturers and retailers, both independently and collectively, offer sales promotions to consumers. When faced with a sales promotion, to whom does a consumer ascribe causality for any satisfaction derived from the promotion? This article introduces attribution theory to explain why a consumer may (or may not) engage in athibutional processing in response to a sales promotion, the nature of that attributional process, and strategies that manufac- turers and retailers may use to influence attributional processing. A model of consumer attributions of sales promotions is offered.     

Optimal retail sales strategies for old and new products in monopoly and horizontal competition scenarios

Advances in technology have made product updates more frequent and allowed consumers to choose different versions of the same product based on their preferences. It is crucial for retailers to understand how to formulate optimal sales strategies based on those different consumer preferences. To this end, we develop game models that consider the heterogeneity of consumer preferences under both monopoly and horizontal competition scenarios and perform the sensitivity analysis to examine the impact of consumer proportions and consumer preferences on retailers’ sales strategies. The results show that (i) regardless of competition or monopoly status, the original retailer can always maximize profit by setting prices based on the market share of traditional consumers, as long as the retailer sells both new and old versions of the product; (ii) the greater the competitive advantage of the competitor, the more advantageous the hybrid sales mode; (iii) if the price of the old product is below a certain threshold, there will be a positive profit for the original retailer when selling both the old and new products; and (iv) when consumer acceptance of competing retailers is lower, entering the retail market is not a good choice for competing retailers.     

Price-aware enhanced dynamic recommendation based on deep learning

Price is one of the essential elements influencing consumer purchase behavior. Like consumers’ preferences in products, their price preferences also dynamically change over time. However, dynamic price preferences haven’t been fully considered in existed recommendation studies. In this study, we propose a deep learning-based dynamic recommendation model by considering consumers’ dynamic preferences in both product and price. We specially design a review-and-rating-based sequence generator to select products whose prices the consumers are satisfied with to form the new purchase sequence. We also develop a multi-level attention mechanism in the transformer layer to explore the correlations between consumers’ price choices and to combine the price preferences with the product preferences. Experimental results show the proposed model outperforms the state-of-the-art models on some real-world datasets. Our findings can help retailers understand consumers’ price preferences and make informed decisions related to pricing, discounting, and bundle sales strategies.     

Designing successful temporary loyalty programs: An exploratory study on retailer and country differences

Retailers increasingly adopt temporary loyalty programs (TLPs), in which consumers have limited time, often less than half a year, to save stamps and redeem highly discounted rewards. These programs often run alongside the retailers’ permanent loyalty programs in an attempt to increase customer engagement. Despite the growing popularity of TLPs, the literature on the topic remains limited. We address this gap by looking at the redemption rate, the industry’s primary success indicator, of almost 900 TLPs across a broad set of grocery retailers in 45 countries. We study the effects of four key design characteristics (the duration of the program, the discount offered, the spending requirement before an award can be redeemed, and the reward depth) on the redemption rate, and explore how these effects vary across a broad range of retailer and country characteristics. In doing so, we control for both a retailer’s potential self-selection into running a TLP and the potential endogeneity of the subsequent design choices. We derive a set of actionable results on how to design successful TLPs and show that high redemption rates are not only beneficial for the program operator and reward manufacturer, but also translate into higher sales and profit for the retailer.     

What distinguishes passive recipients from active decliners of sales flyers?

While sales flyer ad spending in Denmark has increased over the last decade, the proportion of consumers declining to receive such flyers has been ever-increasing. To address this paradox, attitudinal and behavioural factors distinguishing passive recipients from active decliners of sales flyers are examined. The results reveal that decliners compared to receivers are less price conscious and that they perceive flyers as more inconvenient and less useful. Although decliners generally use other media less for deal searching than receivers, they are more inclined to search for grocery deals on the Internet. To reach the decliners, retailers could focus on the possibilities of the Internet, but to stop the trend of escalating numbers of decliners, retailers will have to address the perceived inconvenience and uselessness of sales flyers.     

Why is Price Dispersion Higher Online than Offline? The Impact of Retailer Type and Shopping Risk on Price Dispersion

When physically similar products, of similar quality, are offered by retailers both online and offline, we often observe that the dispersion in prices of these products online is greater than the price dispersion offline. This observation runs counter to early theories that suggested price dispersion online would be smaller than that offline due to the ease of search and information availability online. This paper investigates and provides an explanation for this puzzling phenomenon by examining the impact of two important drivers of price dispersion: retailer type and consumers’ shopping risk. Retailer type refers to whether a retailer is a pure offline, pure online, or dual channel retailer. Shopping risk is defined as the product of consumers’ perceived risk of shopping and the transaction uncertainty related to shopping at different types of retailers.A game-theoretic approach is adopted to model consumers’ price search and product purchase, as well as price competition within and across retailer types in online and offline markets. Equilibrium pricing strategies are derived for different retailer types competing for different consumer segments with different levels of perceived shopping risk. The impact of retailer type and shopping risk on online versus offline price dispersion are quantified, and conditions when price dispersion is greater online than offline are identified.Results indicate that price dispersion is greater online when the number of pure online retailers is sufficiently large and is increasing in the number of pure online retailers. In addition, a reduction in online shopping risk may actually increase online price dispersion. Results further suggest that even without any online sales, dual channel retailers should maintain their online presence for the purpose of information dissemination, which justifies the importance for pure offline retailer to incorporate webrooming strategies, where consumers can search for prices online but purchase offline.     

From Fatwallet to eBay: An investigation of online deal-forums and sales promotions

Sales promotions are an important part of retail advertising strategy. Traditionally, research on sales promotions has generally assumed that the buyers are end consumers who do not engage in reselling, in large part due to high transaction costs. However, the recent Internet related technologies have dramatically lowered the cost of transferring goods between consumers, leading to relative ease of reselling activity amongst individual consumers. Little is known about the impact of this phenomenon on retailer's sales promotion strategy. In this research we investigate the reselling activity in online auctions for products that active deal seekers can obtain at deeply discounted prices from retailers. We further investigate the role of deal-forums in the resale process. Data is collected from an online deal-forum (http://www.fatwallet.com/) and eBay to test various reselling-related hypotheses. The results show that there is a significant abnormal increase in the number of newly posted auctions of a product after the deal information of this product is posted on deal-forum website. We also find that there is a significant price incentive for individuals to resell. The implications for sales promotion research and practice are discussed.     

The Sales Velocity Effect on Retailing

In an increasingly crowded marketplace, retailers need innovative ways of promoting products to their consumers. E-commerce retailers have utilized to great effect lists of top ranked products to promote product sales; the higher the sales rank, the more likely consumers buy that product. This influence to buy, based on observing what others bought is known as observational learning (OL). Prior OL research assumed that OL arises from observing a static outcome, such as the current sales rank of a product. However, prior research on intertemporal choice showed that people prefer outcomes with increasing trends over stable or decreasing trends. This suggests that observing an increasing sales rank, denoted as sales velocity, would have a positive effect on purchase likelihood. We conducted three studies to test the sales velocity effect. Results show that sales velocity has a significant effect on likelihood of purchases, reversing even participant preferences for a product with a higher sales rank. This effect is consistent across four broad products tested. For researchers, by joining the two previously disparate branches of research in OL and intertemporal choice, we addressed a gap in OL research which previously ignored the velocity dimension of OL. For retailers, the study demonstrated the impact of the sales velocity metric on making choices, and thus they could use sales velocity data as a cost-effective marketing tool for specific products.     

Something Free or Something Off? A Comparative Study of the Purchase Effects of Premiums and Price Cuts

As an alternative to promotional price cuts, retailers and manufacturers often rely on non-price promotion techniques, such as premium promotions, where consumers receive a free gift with the purchase of a product. We compare the effectiveness of premiums to that of price cuts, and study moderators of this comparative premium effectiveness. We use data from a large online shopping simulation study with more than 2,000 participants to model consumers’ purchase decisions in response to premiums and price cuts. Results indicate that the impact of premiums on purchase behavior is systematically lower than that of equivalent price cuts. However, a premium’s smaller sales impact may be offset by a cost advantage. This is especially true for private label brands where the premium’s purchase effects do not differ too much from those of a price cut. We calculate how large the cost advantage has to be for a premium to be more profitable than a price cut, and show that premiums entail risks as well as opportunities, for both manufacturers and retailers.     

Consumer Product Redistribution

Abstract

Formats for product redistribution are emerging and evolving, creating alternative channel options for consumers' disposition of unwanted possessions. These retail formats operate in both informal (e.g., garage sales) and formal (online auctions) economies. As consumers participate in redistribution channels, some retailers are confronted with new competition and the potential for declining sales. This article expands on both recycling and disposition literature by examining consumer disposition behavior and the flow of used products through various redistribution channels. Strategies are offered to address consumer disposition behaviors as well as to assist retailers in combating traditional and non-traditional competition.     

Using Trade Incentives to Promote Customer Relationships in a Retail Setting

Suppliers and retailers use a variety of techniques designed to motivate salespeople to engage in specific selling behaviors that will provide results that will assist in achieving either the supplier's or retailer's goals. One method that is commonly applied is the sales incentive. This research examines popular forms of incentives to assess the relationships that exist between the incentives offered and salesperson behaviors. The study also examines the types of incentives commonly used by both suppliers and retailers and salesperson perceptions of these incentives. To accomplish this, 95 salespeople working for a major automotive parts company responded to questions designed to assess their attitudes and behaviors toward incentives. The results provide information which may be valuable to manufacturers, retailers, and academicians as they investigate the use of incentive based compensation programs and sales force behavior.     

Have your cake and eat it too: how invoking post-purchase hyperopia mitigates impulse purchase regret

Marketing Letters - Impulse purchases are encouraged by retailers and can comprise a significant portion of a retailer’s sales. However, both consumers and researchers generally see impulse...     

Effects of sales promotion type and promotion depth on consumer perceptions: the moderating role of retailer reputation

This study uses a between-subjects experimental design to test the effect of two sales promotion formats (coupon versus markdown) with either high and low face values on consumer attitudes toward the deal, perceived product quality, and purchase intentions. The reputation of the retailer offering the deal is predicted to moderate the relationship between the promotional offer and consumer responses. Consumers perceive product quality to be higher when offered a high value coupon vs. markdown but there is no significant difference in perceived quality across promotion types when the promotion face value is low. When a deep price discount is offered by a retailer with a negative reputation, however, consumers have more favorable attitudes toward the deal and higher purchase intentions when provided with a markdown vs. coupon. Conversely, a high value coupon elicits more favorable evaluations than a markdown when the retailer has a positive reputation. When the value of the promotion is low and the retailer has a positive reputation, consumers have more positive deal attitudes and purchase intentions when offered a markdown vs. coupon. There is no significant difference in the effects of promotion type when the retailer has a negative reputation. The findings therefore establish retailer reputation as an important moderator of sales promotions effectiveness. This research is limited by the use of a single product category and a student sample. Process measures are also needed to validate the proposed theoretical conceptualization. The results provide managers insight into the type and value of the sales promotion to offer based on consumer perceptions of the retailer's reputation in the market.     

What Is the Right Delivery Option for You? Consumer Preferences for Delivery Attributes in Online Retailing

Nowadays, online retailers are offering a variety of delivery options consisting of varying combinations of delivery attributes. This study investigates how consumers value these delivery attributes (e.g., delivery speed, time slot, daytime/evening delivery, delivery date, and delivery fee) when selecting a delivery option for their online purchases. Mental accounting theory is used to frame the research and to suggest how mental accounts for money, time, and convenience influence consumer preferences for online delivery options. Specifically, the results of a conjoint analysis show that the most important attribute in shaping consumer preferences is the delivery fee, followed by nonprice delivery attributes. For individual attributes, significant differences are found in consumer preferences between gender and income groups. Cluster analysis reveals three consumer segments that show distinct preference structures: We identify a “price‐oriented,” a “time‐ and convenience‐oriented,” and a “value‐for‐money‐oriented” consumer segment. This study has practical implications for online retailers when implementing suitable delivery strategies and designing effective delivery options to maximize consumer satisfaction.     

What Initiatives Are British Food Retailers Taking to Improve Children’s Health and Nutrition?

Along with food manufacturers, retailers contribute directly to the national diet. While efforts to reformulate private-label products have been assessed, little research considers other voluntary initiatives to impact public health. We explore efforts targeting children’s health and nutrition. Making use of the corporate social responsibility reports of the seven leading retailers from 2006 to 2011, we examine the types of actions, by which retail chains and when. Before 2008, most retailers reported on initiatives promoting children’s nutrition education and physical activity in schools. Since 2009, references to such programs have decreased, with a shift toward child wellness. We find that retailers differ in approaches and commitment. Those with larger market shares mention initiatives more frequently. Most activities are related to nutrition education, developing cooking skills, and promotion of physical activity and not product reformulation. Our research suggests these efforts are not coordinated, might be misplaced, and do not persist over time.     

Preference to Local Food vs. Preference to “National” and Regional Food

In the environment of globalisation and progressive liberalisation of the market, many small local producers were excluded from the market as uncompetitive to the producers realising scale economy due to their presence in large global market and being able to meet requirements of large retailers’ chains. As there is growing consumers’ interest to recover their identity, those of the local cultures and traditional values, there is a new chance for those small local producers. The problems of locally produced food recently awakened interest and aroused many discussions of practitioners and scholars as well. The aim of the presented study has been to test the parameters that influenced preferences among food product branded as national, regional, or local product. Presented models identified several consumers’ attitudes and feelings that are the main predictors of the relation between consumers’ preferences for local food and the preferences for national or regional food. Food made by local producers is perceived by consumers as being of higher quality and better complying with their habits and requirements than “regional” or “national” food products.     

“I’ll wait for him”: Understanding when female shoppers prefer working with gay male sales associates

This article explores an under-researched area in retailing; namely, straight female shoppers’ preferences for working with gay male sales associates. Study 1 employs qualitative methodology to show that female shoppers often prefer working with gay male sales associates when they are older or heavier than female sales associates. Study 2 employs experimental methodology to show that female shoppers desire to work with gay male associates more than their straight male counterparts when they are purchasing merchandise requiring non-sexual intimacy, such as apparel and cosmetics. The results should help retailers understand why many female shoppers willingly, and comfortably, work with gay male sales associates and the role of gay associates in various retail departments.     

Optimal checkout strategies for online retailers

Growth in online retailing has driven retailers to focus on optimizing the consumers’ shopping journey. One of the most important aspects of online shopping is the checkout process offered by the retailer. This paper focuses on factors influencing retailers’ choice of providing either a flexible checkout or a restricted checkout option to consumers. We define a checkout strategy as flexible when consumers can purchase items in their shopping cart either as a guest or by logging into their account. In contrast, with a restricted checkout strategy, the consumers must log in to the account to make purchases. With a game-theoretic model and duopolistic framework, the current study identifies conditions in which online retailers might adopt symmetric strategies and those in which two ex-ante symmetric retailers might prefer asymmetric strategies. The analysis suggests that the relative proportion of privacy-conscious (PC) vs. convenience-conscious consumers (CC), additional utility due to account registration, reduction in transaction cost, and additional revenue due to targetability are the crucial determinants of the strategies adopted by online retailers.Specifically, we show that retailers adopt a restricted checkout strategy when additional revenues due to targeted advertising are relatively high. Retailers adopt a flexible checkout strategy when the proportion of CC consumers and additional revenues due to targeted advertising are relatively lower. Furthermore, an asymmetric equilibrium may also exist when the proportion of CC consumers is relatively high and additional revenues due to targeted advertising are in the intermediate range. Our modeling framework provides a consumer demand-based (rather than cost-based) justification as a plausible explanation for why we observe ex-ante identical retailers offering distinct checkout strategies.     

Perception of Risks and Preferences for Locally Grown Produce: A Marketing System Approach

In recent years, the “buy local” movement has escalated in popularity. This trend is redefining how value along the food chain is shared between producers, retailers, and consumers. A theoretical model was developed and used to evaluate how consumers formulate preferences for locally grown attributes, with an emphasis on consumers’ perceptions of food safety risk. Linkages between locally grown produce attributes, perceived macro outcomes, and value allocation to consumers are then examined using random utility discrete choice models. While results were mixed depending on frequency of purchasing locally grown produce, they do indicate that consumer preferences are driven by perceived food safety risk and other macro outcomes. For example, consumers who frequently purchase locally grown produce perceive these products to be environmentally friendly and to improve their quality of life.