Analysis of Sales Promotion Effects on Household Purchase Behavior

dummies add up to one. This implies that not all <strong>of</strong> them can be incorporated in the
analysis. It was chosen to exclude feature promotions from the analysis, because prior
research has shown that this type <strong>of</strong> promotions is <strong>of</strong>ten the least effective. Each promotion
type parameter estimate has to be interpreted as the extra effect <strong>of</strong> that specific promotion
type compared to feature promotions.
Display promotions are more effective than feature promotions. DF promotions
have the same impact as DP promotions, even though no economic price gain is attached to
them (the differences between the estimated coefficients are not significant, which is tested
by using DP promotions as the reference category, these results are not shown).
Apparently, Dutch consumers react to strong promotional signals (promotions without an
economic benefit attached to them, see Inman et al. (1990)) when it concerns a display.
<strong>Promotion</strong>al feature signals have less impact. A possible explanation for the different
effects for display and feature promotional signals could be that households that take the
trouble to look at features, also look whether there are price reductions (price gains)
attached to them. For US consumers, Inman et al. (1990) concluded that some consumers
react to promotion signals without considering relative price information. Anderson and
Simester concluded that sale signs increase demand. The households from our analysis set
do react to display and to combined display/feature signals. With respect to the combined
display/feature signal, the effect is even as much as for price cuts combined with a display.
As mentioned before, displays especially tend to work as promotional signals. To our
knowledge, the influence <strong>of</strong> promotion signals on sales has not been studied on a large
scale in the Netherlands before.
FP promotions have more influence than DP promotions (the difference in
estimates being significantly different from zero, results are not shown). Many prior studies
found that displays are more effective than feature activities, but for example Rossi and
Allenby (1993) found the opposite effect. The best communicated promotions (DFP) have
the strongest positive effect on the probability that a household makes use <strong>of</strong> a promotion.
<strong>Promotion</strong>s for the favorite brand have a large estimated regression coefficient
and therefore a strong impact on households when deciding whether to use the available
promotion or not. This effect is even on top <strong>of</strong> the effect <strong>of</strong> the specific promotion type
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