Posted Content•
How Promotions Work
01 Jan 2010-pp 157-167
TL;DR: In this paper, an overview of the research and findings from the sales promotion literature is presented, which is intended to offer direction for future research in the area of sales promotion, as well as important sales promotion topics that have not yet been studied.
Abstract: By synthesizing findings across the sales promotion literature, this article helps the reader understand how promotions work. We identify and explain empirical generalizations related to sales promotion; that is, effects that have been found consistently in multiple studies involving different researchers. We also identify issues which have generated conflicting findings in the research, as well as important sales promotion topics that have not yet been studied. This overview of the research and findings from the sales promotion literature is intended to offer direction for future research in the area.
Citations
More filters
TL;DR: In this paper, the authors apply multivariate time-series models to the automobile industry, in which both new product introductions and promotional incentives are considered important performance drivers, and they investigate the short and long-term impact of such marketing actions on financial metrics, including top-line, bottom-line and stock market performance.
Abstract: Year after year, managers strive to improve financial performance and firm value through marketing actions such as new product introductions and promotional incentives. This study investigates the short- and long-term impact of such marketing actions on financial metrics, including top-line, bottom-line, and stock market performance. The authors apply multivariate time-series models to the automobile industry, in which both new product introductions and promotional incentives are considered important performance drivers. Notably, whereas both marketing actions increase top-line firm performance, their long-term effects strongly differ for the bottom line. First, new product introductions increase long-term financial performance and firm value, but promotions do not. Second, investor reaction to new product introduction grows over time, indicating that useful information unfolds in the first two months after product launch. Third, product entry in a new market yields the highest top-line, bottom-l...
570 citations
Posted Content•
01 Jan 2018
TL;DR: In this paper, the authors integrate the existing knowledge on the impact of marketing on firm value and present an agenda for future research challenges in this emerging area, and summarize the empirical findings to date on how marketing creates shareholder value.
Abstract: The marketing profession is being challenged to assess and communicate the value created by its actions on shareholder value. These demands create a need to translate marketing resource allocations and their performance consequences into financial and firm value effects. The objective of this article is to integrate the existing knowledge on the impact of marketing on firm value. The authors first frame the important research questions on marketing and firm value and review the important investor response metrics and relevant analytical models as they relate to marketing. Next, they summarize the empirical findings to date on how marketing creates shareholder value, including the impact of brand equity, customer equity, customer satisfaction, research and development and product quality, and specific marketing-mix actions. Then, the authors review emerging findings on biases in investor response to marketing actions. They conclude by formulating an agenda for future research challenges in this emerging area.
532 citations
Posted Content•
TL;DR: In this article, the authors present a theory of context-dependent choice in which a consumer's attention is drawn to salient attributes of goods, such as quality or price, and apply the model to study discounts and sales, and to explain demand for low deductible insurance.
Abstract: We present a theory of context-dependent choice in which a consumer's attention is drawn to salient attributes of goods, such as quality or price. An attribute is salient for a good when it stands out among the good's characteristics, in the precise sense of being furthest away in that good from its average level in the choice set (or more generally, an evoked set). A local thinker chooses among goods by attaching disproportionately high weights to their salient attributes. When goods are characterized by only one quality attribute and price, salience tilts choices toward goods with higher ratios of quality to price. We use the model to account for a variety of disparate bits of evidence, including decoy effects in consumer choice, context-dependent willingness to pay, balance of qualities in desirable goods, and shifts in demand toward low quality goods when all prices in a category rise. We then apply the model to study discounts and sales, and to explain demand for low deductible insurance.
493 citations
Book•
29 Feb 2000
TL;DR: In this article, the authors review five eras of model building in marketing, with special emphasis on the fourth and the fifth eras, the present and the future, and suggest some contributions models can make in the twenty-first century.
Abstract: We review five eras of model building in marketing, with special emphasis on the fourth and the fifth eras, the present and the future. At many firms managers now routinely use model-based results for marketing decisions. Given an increasing number of successful applications, the demand for models that are suitable in other contexts, will accelerate. At the same time the development of innovative modeling approaches pushes the practical use of models in new areas. The latter is especially critical in an environment that changes rapidly. We propose a perspective on the "new marketing" and suggest some contributions models can make in the twenty-first century.
488 citations
TL;DR: In this article, the authors used persistence modeling on weekly sales data of a perishable and a storable product derived from a scanner panel and developed and applied an impulse response approach to estimate the promotional adjustment period and the total dynamic effects of a price promotion.
Abstract: To what extent do price promotions have a long-term effect on the components of brand sales, namely, category incidence, brand choice, and purchase quantity? The authors answer this question by using persistence modeling on weekly sales data of a perishable and a storable product derived from a scanner panel. Their analysis reveals, first, that permanent promotion effects are virtually absent for each sales component. Next, the authors develop and apply an impulse response approach to estimate the promotional adjustment period and the total dynamic effects of a price promotion. Specifically, they calculate the long-term equivalent of Gupta’s (1988) 14/84/2 breakdown of promotional effects. Because of positive adjustment effects for incidence but negative adjustment effects for choice, the authors find a reversal of the importance of category incidence and brand choice: 66/11/23 for the storable product and 58/39/3 for the perishable product. The authors discuss the implications of the findings an...
446 citations
References
More filters
Posted Content•
TL;DR: This paper proposed a flexible choice model that partitions the market into consumer segments differing in both brand preference and price sensitivity, and applied it in a study of competition between national brands and private labels in one product category.
Abstract: Marketing scholars commonly characterize market structure by studying the patterns of substitution implied by brand switching. Though the approach is useful, it typically ignores the destabilizing role of marketing variables (e.g., price) in switching behavior. The authors propose a flexible choice model that partitions the market into consumer segments differing in both brand preference and price sensitivity. The result is a unified description of market structure that links the pattern of brand switching to the magnitudes of own- and cross-price elasticities. The approach is applied in a study of competition between national brands and private labels in one product category.
1,251 citations
TL;DR: In this paper, the effectiveness of a sales promotion can be examined by decomposing the sales "bump" during the promotion period into sales increase due to brand switching, purchase time acceleration, and stockp...
Abstract: The effectiveness of a sales promotion can be examined by decomposing the sales “bump” during the promotion period into sales increase due to brand switching, purchase time acceleration, and stockp...
1,089 citations
Posted Content•
TL;DR: This article developed a multinomial logit formulation of a reference-dependent choice model, calibrating it using scanner data, and found that consumers weigh losses from a reference point more than equivalent sized gains (loss aversion).
Abstract: Based upon a recently developed multiattribute generalization of prospect theory's value function (Tversky and Kahneman 1991), we argue that consumer choice is influenced by the position of brands relative to multiattribute reference points, and that consumers weigh losses from a reference point more than equivalent sized gains (loss aversion). We sketch implications of this model for understanding brand choice. We develop a multinomial logit formulation of a reference-dependent choice model, calibrating it using scanner data. In addition to providing better fit in both estimation and forecast periods than a standard multinomial logit model, the model's coefficients demonstrate significant loss aversion, as hypothesized. We also discuss the implications of a reference-dependent view of consumer choice for modeling brand choice, demonstrate that loss aversion can account for asymmetric responses to changes in product characteristics, and examine other implications for competitive strategy.
760 citations
TL;DR: When consumers are exposed to pricing and promotional activity by frequently purchased packaged goods, they may develop expectations that are used as points of reference in evaluating future activi... as discussed by the authors,.
Abstract: When consumers are exposed to pricing and promotional activity by frequently purchased packaged goods, they may develop expectations that are used as points of reference in evaluating future activi...
547 citations
TL;DR: In this article, single-source yogurt data are used to examine whether both internal and external reference prices affect purchase decisions, and both types of variables have significant effects on purchase probabilities.
Abstract: Single-source yogurt data are used to examine whether both internal and external reference prices affect purchase decisions. Internal reference prices are memory-resident prices based on actual, fair, or other price concepts. External reference prices are observed stimuli, such as “regular prices,” that stores may display along with a sale price for comparability. Discrete choice models with variables representing the two types of reference prices are estimated, and both types of variables are found to have significant effects on purchase probabilities. This suggests that consumers may use multiple reference points in evaluating price in purchase decisions. In addition, a model using an indicator of a sale price discount explains purchase probabilities as well as one that models the actual discount, which suggests that consumers may be reacting to the indication of savings rather than to the amount of the discount.
431 citations