Promotional Framing of Green Products: Mediating Role of Sale Proneness

Abstract

The impact of sales promotion in boosting short-term sales is well established in the literature. While there are ample studies on the impact of sales promotion on conventional products in western countries, there is very scant research on the effect of promotions on green products and almost nonexistence research in emerging economies. This research addresses this gap by doing a comparative assessment of economically equivalent bonus pack sales promotion and price discount sales promotions on green versus non-green products through two experiments designed as a 2 (green product motivation: hedonic vs. utilitarian) × 2 (promotional frame: price discount vs. bonus pack) × 2 (discount level: low vs. high) between-subjects study, and 2 ( product types: green, non-green/control) × 2(promotional frame: price discount, bonus pack) between-subjects study. This research further examines the mediating role of sale proneness in the purchase process. The findings of this research indicate that buyers' preferences for promotion are quite varied for the purchase of green versus non-green products, and the price discount increases sale proneness which exerts a negative impact on product purchase willingness. Accordingly, this study has some theoretical and practical implications.     

Analyzing the Impact of Promotions on Manufacturer and Retailer Performance

Abstract

Promotional strategies used by manufacturers (or retailers) influence not only their own outcomes, but also the outcomes of retailers (or manufacturers). As cooperation of both the parties is needed for successful implementation of promotional strategies, the promotions used by either party should provide outcomes that are positive for the other party. The authors propose a framework for examining (1) the effect of promotional strategies on both manufacturer and retailer profitability and (2) which of two promotional strategies (retail price cut or coupon promotion) yields greater total profitability to achieve an exogenously given sales level. The proposed framework also helps in identifying conditions when conflict is likely to occur between manufacturer and retailer, and suggests a cooperative strategy to resolve the conflict.     

The Role of Retail Competition,Demographics and Account Retail Strategy as Drivers of Promotional Sensitivity

We study the determinants of sensitivity to the promotional activities of temporary price reductions, displays, and feature advertisements. Both the theoretical and empirical literatures on price promotions suggest that retailer competition and the demographic composition of the shopping population should be linked to response to temporary price cuts. However, datasets that span different market areas have not been used to study the role of retail competition in determining price sensitivity. Moreover, little is known about the determinants of display and feature response. Very little attention has been focused on retailer strategic decisions such as price format (EDLP vs. Hi-Lo) or size of stores. We assemble a unique dataset with all U.S. markets and all major retail grocery chains represented in order to investigate the role of retail competition, account retail strategy, and demographics in determining promotional response. Previous work has not simultaneously modeled response to price, display, and feature promotions, which we do in a Bayesian Hierarchical model. We also allow for retailers in the same market to have correlated sales response equations through a variance component specification. Our results indicate that retail strategic variables such as price format are the most important determinants of promotional response, followed by demographic variables. Surprisingly, we find that variables measuring the extent of retail competition are not important in explaining promotional response.     

Advertising budgets in competitive environments

Firms can approach advertising competition either by setting advertising budgets (as in the percentage of sales method) or target sales levels (as in the objective and task approach). We study firms’ incentives to adopt one or the other posture using a two-stage model of duopolistic competition. In the first stage, each firm chooses to commit either to an advertising budget, letting its sales follow from the market response function, or to a desired sales level, promising to adjust its advertising spending accordingly. In the second stage, firms choose the actual levels of their advertising budget or sales target. When prices are exogenous, we show that, due to strategic effects, if a firm benefits from its rival’s advertising (as when advertising increases awareness of the product category) then setting an advertising budget dominates setting a sales target. On the other hand, if a firm is harmed by its rival’s advertising (as when advertising increases the firm’s share of a fixed market), then committing to a sales level dominates. We extend these results in several directions and show that when firms engage in price competition as well as advertising the nature of advertising and product-market competition interact to determine whether setting an advertising budget or sales target dominates.

Perceived Impact of Promotional Support: Issues and Scale

Abstract

The purpose of this study is to come up with a scale for a new construct, perceived impact of promotional support (PIPS) and link it with sales performance through the mediators, sales effort and salesmanship skills. This paper involved three studies. In study 1, the authors came up with a new scale and in study 2 they tested it on a student sample. In study 3, they tested the scale on a sample of pharma salespersons (n?=?202) and also tested the conceptual model. The paper employed standard scale development procedures, tested the model with SEM and showed that the new scale was reliable and valid. Further, PIPS was found to impact sales performance through salesmanship skills. While PIPS impacted sales effort, the latter surprisingly did not affect sales performance. For the practitioner, our work suggests that promotional support is critical, not just for motivating salespersons to put in more effort, but also to enhance their salesmanship skills, which in turn improves their performance. Moreover, it demonstrates the positive effect of sales effort on salesmanship skills.     

The effects of competitive context on consumer response to price changes

ABSTRACT

This paper aims to understand how a brand’s price level, relative to its competitors, will affect consumers’ responses to price changes of the brand. The study uses experiments to examine brand choice responses to price increases and decreases across contexts differing in competitor brands and their respective prices. These experiments are conducted with six consumer goods categories. The research identifies three key factors that affect the size of responses to brand price changes – (1) passing a competitor brand’s price, (2) narrowing versus widening the price gaps with competitors, and (3) whether competitors are predominantly higher or lower priced brands.     

A meta-analysis of national brand and store brand cross-promotional price elasticities

This paper investigates whether price discounts by national brands influence private-label sales and vice versa through meta-analysis of 261 cross-price elasticity estimates from sixteen product-chains. On average, price reductions by national brands and private labels have more or less equal influence on each others' sales. However, there is greater variation in the effect of private-label price cuts across national brands. National brands with large market shares decrease private-label sales through price cuts but are seldom affected by private-label discounts. National brands with lower relative price have greater influence on private-label sales and are also affected more by private-label price cuts.     

Cause-Related Marketing: An Exploratory Study of Campaign Donation Structures Issues

ABSTRACT

Over the past decade, cause-related marketing (CRM) has become a popular and unique promotional tool for brands. Academic research indicates outcomes of such campaigns are generally positive for all stakeholders. Consumers feel they are making a difference, firms benefit from improved public image and increased sales, and the cause or nonprofit organization receives increased publicity and funding. However, there are ethical issues involved when linking a firm with a nonprofit organization as well as potential negatives (Smith and Stodghill 1994; Andreasan 1996; Meyer 1999; Polonsky and Wood 2001). An exploratory research study was undertaken to understand the impact of the structural elements of cause-related marketing campaigns, including how the donation is quantified, the size of the donation relative to the price of the product, the presence of donation deadlines and caps, and the level of promotion used to publicize the campaign. Findings suggest that the structural elements of cause-related marketing campaigns do influence consumers' perceptions of the campaigns. Based on these results, implications for CRM campaign managers and future research ideas are provided. This information will help practitioners, including marketing managers, advertising managers and advertising creative professionals to design the most effective communication tactics for a cause-related marketing campaign.     

Promotions and Purchase Decisions in Private Clubs

Abstract

This study investigated the use of price discount promotions at private clubs. The purpose was to determine whether the promotions led club members to purchase the promoted food entree items when dining at the club, and the effect of the promotions on the purchase of regular or non-promoted food and beverage items. Over three-fourths of the members who cited the promotion as a reason for visiting the club purchased one or more regular price items. Members visiting the club for the promotion spent more money on regular price items than on promoted items. Moreover, the majority of promotional purchases were made by members who did not visit the club in response to the promotional advertisement.     

“One-deal-fits-all?” On Category Sales Promotion Effectiveness in Smaller versus Larger Supermarkets

Even within a store chain and format, supermarket outlets often exhibit substantial differences in selling surface. For chain managers, this raises the issue of correctly anticipating the promotion lift, and of profitably managing promotion activities, across these outlets. In this paper, we conceptualize why and how store size influences the category sales effectiveness of four promotional indicators (depth of the promotional discount, display support, feature support, and whether the promotion is quantity-based). We then estimate the net moderating effect on four product categories for 103 store outlets belonging to four chains. For each of the promotion instruments, we find the percentage sales increases to be lower in large stores. For instance, whereas a 10% point increase in feature activity enhances category sales by about 1.64% in a 700 m² store, this figure drops to only 1.03% in a 1300 m² store – a 59% reduction. This moderating effect is especially pronounced for discount depth, the relative sales lift from a typical price cut being about 78% lower in the larger-sized outlet. However, since large outlets also have larger base sales, the picture changes when we consider absolute sales effects. The net outcome is that deeper discounts or quantity-based promotions do not systematically generate larger or smaller absolute sales bumps in large stores, whereas for in-store displays and features, we obtain a clear positive (be it less than proportional) link between store size and absolute category sales lift. When it comes to margin implications, we show that large stores gain higher profit from price cuts than small outlets only as long as the retailer keeps part of the manufacturer discount to himself. Managers can use these insights to improve their promotional forecasts across outlets, as well as to tailor their mix of instruments to store selling surface.     

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.     

The influence of price and brand loyalty on store brands versus national brands

Abstract

This article investigates how price and brand loyalty of three frequently purchased product categories can influence the purchase decision process of store brands versus national brands. A multinomial logit model was constructed to analyse the data obtained from a consumer panel. The results confirmed that brand loyalty is the main variable which influences the purchase decision process of both national and store brands. The influence of price on the purchase decision process is product specific. There is a clear distinction between the buyer's profile of store brands and national brands. But there is no evidence of any correlation between demographic variables and national brands or store brands.     

An exploration of the standardization of targeting strategies and the use of promotional disciplines on the web: A cross-national study

This study examines how leading corporations standardize their regional sites from the integrated marketing communication (IMC) perspective. In terms of standardizing targeting strategies, data show that many leading brands view the online audiences as one mass. Customers and media are the two most targeted and standardized stakeholders for all brands and in each of the product categories (i.e. non-durable goods, durable goods, and service). This study also reveals that financial communities/investors, communities, and channel members are the other three most targeted and standardized stakeholders, even though their rankings are somewhat different across the product categories. Employees, government regulators, and special-interest groups are seldom targeted through corporate websites. In terms of standardizing promotional disciplines on the web, advertising is the most standardized, followed by customer relations, direct marketing, public relations, and sales promotions for all brands and each product category. As a whole, service brands have the highest standardization mean, while durable goods rank second and non-durable goods are last. The three product categories do not significantly differ in terms of the standardization of promotional tactics. A Web Standardization Model is developed to be compatible and comparable to Moriarty and Duncan's Standardization Model.     

Servant Leadership,Proactive Work Behavior,and Performance Overall Rating: Testing a Multilevel Model of Moderated Mediation

ABSTRACT

Purpose: The goal of this paper is to investigate whether salesperson proactive behavior mediates the relationship between sales manager servant leadership and salesperson overall performance rating by the sales manager. Moreover, it examines whether salesperson customer orientation and political skill moderate the sales manager servant leadership ? salesperson proactive behavior ─ salesperson overall performance. Design/methodology/approach: Empirical analysis is based on dyadic data from 181 industrial salespeople and their sales managers in a range of different industries (including both manufacturing and service industries). To analyze the multilevel moderated mediation process, this investigation uses Multilevel Structural Equation Modeling (MSEM). Findings: Sales manager servant leadership was positively related to salespeople overall performance rating through their proactive behavior except when their customer orientation was low. Moreover, this relationship between sales manager servant leadership and overall performance rating through proactive work behavior was stronger the greater the salespeople consumer orientation and political skill. Research implications: The study suggests that sales manager servant leadership is indirectly related to salesperson overall performance rating through salesperson proactive behavior. The findings also support subsequent research on salesperson values, skills, and behaviors as moderators in the servant leadership – proactive behavior – overall performance rating relationship. Understanding how these salesperson factors interact with sales management leadership to produce organizational outcomes (e.g., stress, engagement, organizational commitment) are questions that sales researchers may wish to pursue via further study. Practical implications: Sales managers should employ servant leadership to stimulate salespeople proactive work behavior. This study clearly indicates the salespeople need to adopt customer orientation and to have political skill. Hence, sales managers need to try to improve the customer orientation and the political skill of their salespeople through selection procedures or training programs. Originality/value: The relationship between sales manager servant leadership and salesperson overall performance through proactive work behavior has not been addressed and tested in the literature to date.     

The relationship between in-store marketing and observed sales for organic versus fair trade products

To stimulate sales of sustainable products, such as organic and fair trade products, retailers need to know whether their in-store instruments effectively enhance market shares. This study uses sales data and a multilevel modeling approach to explain the market shares of sustainable products according to shelf layout factors, price level, price promotions, and consumer demographics. It argues that the effect of these variables differs between organic versus fair trade products, as buying motives might differ, organic buyers tend to be more loyal, and price is a more informative signal of quality for organic products. Results show that the number of facings has a positive relationship with the market share of fair trade brands, but not with the market share of organic brands. The same holds for the price difference with the leading brand, which is important for fair trade brands but not for organic brands. In contrast, an arrangement of the product category by brand is associated with higher market share for organic brands but not for fair trade brands. Additionally, placement at eye level and clustering of items benefits both types of sustainable brands, whereas they appear to be not very sensitive to price promotions. Finally, higher sales of sustainable products are found in areas where the customer base is older and has a higher education level.     

How retailer and competitor decisions drive the long-term effectiveness of manufacturer promotions for fast moving consumer goods

While both retailer and competitor decisions contribute to long-term promotional effectiveness, their separate impact has yet to be evaluated. For 75 brands in 25 categories, the author finds that the long-term retailer pass-through of promotions is 65 percent, yielding a long-run wholesale promotional elasticity of 1.78 before competitive response. However, competitors partially match the wholesale price reduction by 15 percent, which decreases promotional elasticity by 10 percent. The range of retailer and competitor response across the analyzed cases is very wide, and is affected by category and brand characteristics. As to the former, large categories yield stronger retailer response, while concentrated categories yield stronger competitor response. As to the latter, smaller brands face a fourfold disadvantage compared to leading brands: they obtain lower retail pass-through, lower retail support, and lower benefits from competing brand's promotions, while their promotions generate higher benefits to competitors. Interestingly, the mid-1990s move from off-invoice allowances towards scan-back deals only partially improves their promotional effectiveness compared to that of leading brands.     

Effects of prior brand usage and promotion on consumer promotional response

We examine how prior purchases influence consumer response to promotional activity in brand choice decisions. To improve understanding of the nature of this influence, we separate previous purchases into those on promotion and those not on promotion, and consider their differential impact on subsequent brand choices. Impact may be observed at the brand level, category level, or both and we suggest circumstances in which each might occur. Across four product categories, consumer sensitivity to price, price promotions, and feature advertisements increases for all brands in the product category following a promotional purchase but also decreases for the most recently purchased brand. The magnitudes of the results indicate that prior promotional purchases influence choice more than prior brand usage does. We offer managerial recommendations regarding promotional activities, for both retailers and manufacturers.     

Consumer Shows in the Promotion Mix

Abstract

Consumer shows present a unique promotional opportunity by presenting a forum for attracting consumers with a specific interest in the products featured at the show. In this study we examine auto show attendees' perceived differences and similarities between attendance at an automobile consumer show and the traditional showroom visits made by automobile shoppers. Results of the study indicate that the promotional value of the show had a modest but positive impact on vehicle buying and leasing, a considerable positive influence on brand and model selection, but little influence on choice of dealer. We discovered that attendees perceive sales personnel they met at the show to be more knowledgeable, trustworthy and friendly than those they met at a dealership (even though the sales personnel at the show work at dealerships). Finally, we found that among the group from which most incremental purchases would be expected-those who came to the show with negative intentions but who then purchased a vehicle-the show is viewed more as a substitute for entertainment than for other shopping activities. The promotional implications of these results are then explored.     

Promotional Products as Internal Marketing Communication Vehicles

Abstract

A study was conducted to assess the impact of using promotional products as internal communication vehicles in the context of a national insurance company's sales contest. It was expected that the frequent use of promotional products would not only increase salesperson performance, but would also result in a more positive attitude of both the communications and the contest.

As expected, the results indicate that the use of this type of internal communication can dramatically increase sales. Those salespeople receiving the promotional products each week generated 40% more new applications than the other groups. However, there was no appreciable difference between the group receiving occasional promotional products and the group receiving no promotional products. This suggests that a certain level of frequency must be achieved in order to affect behavior. Finally, contrary to expectations, attitudes among those receiving the promotional products were more negative than among the other groups. Possible theoretical and situational explanations for this outcome are discussed.