Retailers' and manufacturers' price-promotion decisions: Intuitive or evidence-based? |
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| Institution: | 1. Ehrenberg-Bass Institute for Marketing Science, Business School, University of South Australia, Adelaide, Australia;2. Communicado Pty LTD, Melbourne, Australia;1. College of Business, Copeland Hall 530, Ohio University, Athens, OH 45701, United States;2. Department of Marketing, Saunders College of Business, Rochester Institute of Technology, 105 Lomb Memorial Dr., Rochester, NY 14623, United States;3. Department of Management and Marketing, Culverhouse College of Commerce, The University of Alabama, Box 870225, Tuscaloosa, AL, United States;1. Columbia University Business School, New York, NY 10027, USA;2. School of Economics and Management, Tsinghua University, Beijing 100084, China |
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| Abstract: | Consumer price promotions account for more than half of many manufacturers' marketing budgets, and require a significant time investment to manage. Amidst the considerable research on price promotions, little academic attention has been paid to how manufacturers and retailers make price-promotion decisions. Based on in-depth interviews with a broad range of managers, this study investigates factors that influence price-promotion decisions in durable and consumer goods industries. Findings suggest that (1) intuition and untested assumptions are the main inputs into these decisions; (2) practitioners lack solid empirical evidence to guide their actions, and their beliefs are often in stark contrast with academic knowledge about the effectiveness of price promotions; and (3) price promotions are typically not evaluated against the objectives according to which they were justified, impeding appropriate feedback for future decisions. Research priorities are outlined to advance evidence-based decision-making in this area. |
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