Pass-through timing

Trade promotions are the most important promotional tool available to a manufacturer. However trade promotions can achieve their objective of increasing short-term sales only if the retailer passes through these promotions. Empirical research has documented that there is a wide variation in retail pass-through across products. However little is known about the variations in pass-through over time. This is particularly important for products with distinct seasonal patterns. We argue that extant methods of measuring pass-through are inadequate for seasonal products. We therefore introduce a measurement approach and illustrate it using two product categories. We find interesting differences in pass-through for loss-leader products versus regular products during high demand and regular demand periods. We find that retailers use a deep and narrow pass-through strategy (high pass-through on loss-leader products, but small pass-through on regular products) during periods of regular demand and broad and shallow pass-through strategy (smaller, but similar pass-through on both loss-leader and regular products) during periods of high demand. Loss leader products continue to obtain higher pass-through in high demand periods, if the category's high demand period is also a high demand period for other product categories as well.

What Do We Know about Trade Promotions? Contributions,Limitations, and Further Research

The trade promotion area remains seriously under-researched compared with its share of the overall marketing mix budget. This review attempts to provide an up-to-date account of what we know about trade promotions. For eight major topics we elaborate on what that topic means in the context of trade promotions, why it has been deemed important, what empirical findings have emerged in that area, and proposeareas for future research.     

Promoting promotions: Does showcasing free gifts backfire?

Two experiments examine the effect of the visual size of a gift in a free gift promotion on consumer judgments. Results show that promotional offers that highlight the free gift (rather than the product) are less effective than those that highlight the product to be purchased. Increasing the visual size of the free gift leads to perceptions of poorer product quality and has unfavorable consequences for purchase intentions of the offer. We propose that the larger the size of the gift in a promotional ad, the higher the perceived component of gift value in the total promotional offer, and accordingly the lower the value of the promoted product. Therefore, visually larger gifts can backfire and hurt the overall promotional offer. The presence of price information about the product moderates these effects. Implications for the use of visual cues to draw inferences, and managerial implications for advertising free gift offers are discussed.     

The impact of store flyers on store traffic and store sales: a geo-marketing approach

This paper analyzes the impact of the composition of a retailers’ weekly store flyer on store performance. The paper presents and tests propositions on how a store flyer’s size, its average discount size, and the allocation of store flyer space to category and brand types, affects store traffic and sales. The moderating impact of location variables—socio-demographics of trading area inhabitants, characteristics of the store and competition—is also discussed and empirically tested. The outcomes provide key insights for retailers with regard to the financial ramifications of store flyer competition.     

Retailing as a career: a comparative study of marketers

This note reports how positions in retailing—particularly store-based positions—compare with other marketing-related positions. While much of the past literature concerning work experiences in retail settings is primarily perceptual and anecdotal, the results of this nationwide study are based on an examination of actual workplace experiences in marketing-related positions. The findings suggest that workplace experiences in corporate retailing are positive and equivalent to other marketing-related careers. However, workplace experiences in retail store management are less satisfying. The retail store managers studied were paid less, experienced less variety and autonomy on the job, felt less satisfied and committed to their work, and had greater turnover intentions compared to the other marketing managers studied. Managerial implications and recommendations are presented.     

Linkages of retailer awareness,retailer association,retailer perceived quality and retailer loyalty with purchase intention: A study of Indian food retail brands

The present study was an effort to explore the direct and indirect impacts (mediated through retailer loyalty) of retailer awareness, retailer association and retailer perceived quality on purchase intention. Seven hypotheses were developed with relevant literature support. The hypotheses were tested with primary data (n=355) collected through structured questionnaire using systematic sampling from food retail shoppers of age 18 years and above in Kolkata, a metropolitan city of India. Structural equation modeling statistical technique was used to test the hypotheses. Results revealed that retailer awareness, retailer association, retailer perceived quality and retailer loyalty have positive impacts on purchase intention. Results also found that the indirect impacts (mediated though retailer loyalty) of retailer awareness, retailer association and retailer perceived quality on purchase intention are stronger than the direct ones. Academic and managerial implications are further discussed.     

Alcohol Tax,Price–Quality Proxy and Discounting: A Reason Why Alcohol Taxes May Rebound

The increasing concern about the external costs of alcohol consumption has often led economists and policy‐makers to advocate taxes to internalise the social costs and target consumption. However, in certain markets for alcoholic drinks – particularly wine – price is not only a cost but also an indicator of quality, guiding consumer choice. There is, perhaps, a higher probability of ex post satisfaction with products at higher prices in a market with potential adverse selection. The price–quality proxy interacts with discounts, where the full price of the product before discount (referred to as the External Reference Price in the marketing literature) is used as a quality reference. This study shows that an alcohol tax in the presence of discounting may increase the perceived value of the product, and therefore persuade consumers to prefer the purchase of more expensive wines with the highest discount. As a consequence, consumers could favour products with higher alcohol content – which contradicts the objectives of the policy. Consequently, for an alcohol tax to be effective discounting of alcoholic beverages (in particular, wine) should be regulated to avoid the policy backfiring.     

When retailers and manufacturers advertise together; examining the effect of co-operative advertising on ad reach and memorability

Retailers often feature manufacturer brands in their advertising with the aim to drive sales for those brands and, at the same time, increase in-store traffic. The adoption of such co-operative advertising strategies should reach an expanded audience base comprising of store and brand buyers. Based on empirical evidence in non-retail settings, these buyers are more likely to remember the advertising than non-buyers. This usage-bias effect implies that co-operative advertisements achieve greater cut through than would be the case if either brand advertised alone. Our paper tests this hypothesis in the context of retailer advertisements that feature manufacturer brands in the US, UK and Australia. Our results confirm that a retail brand's shoppers are more likely to recall its advertisements than non-shoppers, extending the usage-bias generalisation to a retailing context. However, while co-operative advertising does expand the buyer-base reach, any uplift in ad-memorability is negated by a reduced ability for buyers of only one of the two brands to recall the advertisement. Information overload on cognitive processing is a possible explanation for this finding, and has implications for extracting value from any investment in co-operative advertising.     

The retailer's brand promotion strategy under competition: The impact of supply uncertainty

While retailers are committed to promoting product brands to increase sales quantity and brand visibility, retailers are exposed to supply uncertainty. Therefore, we explore the brand promotion strategies of retailers in a competitive model. We then investigate the decision model under three different brand strategies and explore the equilibrium outcomes of stakeholders under supply uncertainty. In addition, we analyze and discuss social welfare under different scenarios. The results show that when the promotion cost is high (i.e., the cost effect dominates the market expansion effect), neither retailer promotes the product brand. When the promotion cost is low (i.e., the market expansion effect dominates the cost effect), both retailers tend to promote the product brands. When the promotion cost and market expansion match each other, only one retailer promotes the product brand becomes the equilibrium strategy. It is worth noting that when both retailers promote the product brand, the retailer falls into a prisoner's dilemma. In addition, we find that the supply uncertainty level diminishes the cost affordability and the motivation of retailers to promote the product brands. Interestingly, the supply uncertainty level reduces the possibility of retailers being in a prisoner's dilemma. Besides, market expansion (supply uncertainty) contributes to improving (diminishing) social welfare.     

Fundamental basket size patterns and their relation to retailer performance

This study uses a sample of approximately 60,000 US households to document fundamental shopping basket size patterns across a range of retail types, and examines them in relation to retailer performance metrics (unit sales and dollar revenue). Specifically, this research addresses two main questions: 1) how do shopping basket metrics (mean and median number of items, the distribution of one, two, three … n items) differ by retail type, and 2) how does the Pareto ratio (sales generated by the heaviest 20%, and lightest 80% of buyers) apply to shopping baskets. The results show that basket size patterns in retailers are predictable. Shoppers purchase more items on average in retailers that offer a greater variety of items, and the distribution of basket sizes follows the Poisson lognormal model. The results also show that the largest 20% of shopping baskets on average generate 50% of unit sales, and 40% of dollar revenue. These results set additional benchmarks of the patterns that can be expected when looking at data on a basket-level. This research offers implications to practitioners by showing the importance of small and large baskets for retailer revenue and growth, which can guide more informed decision making to better manage their stores and brands.