Analysis of Sales Promotion Effects on Household Purchase Behavior

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8 EMPIRICAL ANALYSIS TWO: SALES PROMOTION REACTION MECHANISMS 8.1 Introduction The approach we follow is tw<strong>of</strong>old. First, the intertemporal effects <strong>of</strong> sales promotions on household purchase behavior are studied (taking the pre- and post-promotional effects into account). Bucklin and Gupta (1999) conducted an investigation <strong>of</strong> UPC scanner data using both the practitioner’s and the academic view <strong>of</strong> the use <strong>of</strong> this data. They concluded that one <strong>of</strong> the immediate research needs was to develop simple, robust models that take the intertemporal effects into account and investigate the consumption effect. Second, we focus on the non-intertemporal part, namely decomposing the promotional bump. In both approaches, the household is the unit <strong>of</strong> analysis. Brand switching, purchase acceleration, purchase quantity, and category expansion are incorporated in our study. Store switching and repeat purchasing are left out. Store switching is not incorporated in the analyses because <strong>of</strong> lack <strong>of</strong> causal data regarding stores other than the primary store. The repeat purchasing effect is not incorporated because we only had data for a relatively short period <strong>of</strong> time. Besides, it is very difficult to investigate the enduring effect <strong>of</strong> a certain promotion when other promotions interfere. Fortunately, previous research indicates that the restrictive effect <strong>of</strong> not incorporating repeat purchasing is limited. Nijs et al. (2001), for example, concluded that category demand was found to be predominantly stationary around a fixed mean. This conclusion was based on examining category-demand effects <strong>of</strong> consumer price promotions across 560 consumer product categories over a 4-year period. The following questions will be answered in this chapter. (1) To what degree are the different sales promotion reaction mechanisms exhibited by the households? Do, for instance, promotions lead more <strong>of</strong>ten to brand switching than to purchase acceleration? (2) Do the sales promotion reaction mechanisms differ across product categories? In other words, are household reactions to sales promotions related with certain product category characteristics? (3) Do sales promotion reaction mechanisms differ across product categories at the individual household level? For instance, do households that switch brands in one category also do so in 159
another category? Or do households that switch brands in one category also buy more or sooner within the same category, but do not switch brands in other categories? In general, do promotions lead more to consistencies within a product category across the different sales promotion effects than across categories for each <strong>of</strong> the sales promotion reaction mechanisms? The empirical work in this chapter can be divided into the two parts that were mentioned before. In the first part, the three questions raised in this introduction are answered using the intertemporal approach <strong>of</strong> the sales promotion reaction mechanisms. In Section 8.2, data descriptions <strong>of</strong> both general measures <strong>of</strong> promotion response and the more in-depth reaction mechanism specific measures are provided. The hypotheses derived in Section 4.3 are tested in Section 8.3. Section 8.4 deals with the question whether or not the effects <strong>of</strong> sales promotions at the household level are consistent across categories. Does a household show the same effects <strong>of</strong> sales promotions for each product category or for certain sub-sets <strong>of</strong> categories? Or do households show more consistent effects <strong>of</strong> promotions within a category? In the second part <strong>of</strong> the empirical work, Section 8.5, the promotional bump decomposition (non-intertemporal) is presented. This chapter ends with the main findings and new insights obtained regarding the sales promotion reaction mechanisms. 8.2 General Results <strong>Promotion</strong> Response and <strong>Sales</strong> <strong>Promotion</strong> Reaction 160 Mechanisms Data from 200 households is used to estimate the sales promotion reaction mechanisms. As mentioned in Chapter 6, six product categories are included in this dissertation. It was found in the previous chapter that promotion response differs between product categories. Recall that a promotional utilization measure PU was defined in Section 5.4.2.1. It was also mentioned in that section that this promotional utilization measure is the aggregated equivalent <strong>of</strong> promotion response as empirically investigated in the prior chapter. The promotional brand switch measure BSp, defined in Section 5.4.2.2, is also an indicator for promotional utilization (for non-favorite brand promotions). Table 8.1 contains the estimates
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LINDA H. TEUNTER Analysis</
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Analysis o
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Voorwoord Soms valt de appel echt n
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Contents 1 INTRODUCTION AND OVERVIE
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5.4.2.3.1 Inter Purchase Time .....
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1 INTRODUCTION AND OVERVIEW 1.1 Int
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generally generated from a smaller
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switching, purchase acceleration, c
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strategy change (decrease in promot
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of promotions, or
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characteristics are important in ex
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Chapter 5 are applied to study the
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2 THEORIES OF CONSUMER BUYING BEHAV
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systematically explored the decisio
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the part of the co
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As mentioned before, Figure 2.3 is
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product use coupled with the import
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2.3.2 Stimulus-Response Model Appli
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2.3.2.2 Operant Conditioning In ope
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X is very popular that it will brin
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But, in contrast, economic theory c
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compared to a perceived benchmark -
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High need-for-cognition (NFC) indiv
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2.3.4.2 Literature Overview Our rev
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The previously described research h
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has its deficiencies. Any purchase
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Chandon et al. 2000). But deal pron
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2.4 Concluding Remarks Regarding th
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stimulus-organism-response model) c
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Shoemaker 1987). Several factors ha
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such as display promotions. Althoug
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3.2.3 Type of resi
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3.2.5 Education Education links to
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these advantages therefore could be
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less likely to seek variety. More e
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3.3.1 Store Loyalty Store loyalty s
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more often (probab
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Table 3.12 continued Hypothesis H9a
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4.2.1 Brand Switching Brand switchi
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involvement purchases for most cons
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Neslin (1998), there is a great nee
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are called “attributions.” Attr
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and less than 2 percent by stockpil
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into a unit sales decomposition and
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4.3.4 Storability/Perishability Sto
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Economic theory ignores mental deci
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seeking (cf. Assael 1987, Desphande
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there another factor that is relate
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Pr(event) 90 = 1+ 1 z e − Here Z
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5.4.2 Sales <stron
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It represents the fraction
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96 We measure possible time acceler
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promotional post-promotional purcha
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( 12) CategoryExpansion effect : 10
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PART II EMPIRICAL ANALYSIS 103
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more persons living together and di
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Page 121 and 122: Table 6.1 contains the results <str
Page 123 and 124: The age of the sho
Page 125 and 126: Table 6.4: Frequency distribution <
Page 128 and 129: 7 EMPIRICAL ANALYSIS ONE: DRIVERS O
Page 130 and 131: Table 7.1: Operationalization <stro
Page 132 and 133: during 435 shopping trips more than
Page 134 and 135: The variables size, age, and cycle
Page 136 and 137: 7.5 Results Drivers of</str
Page 138 and 139: esponsive the households within tha
Page 140 and 141: Table 7.3: Relationship promotion r
Page 142 and 143: indication that decreasing marginal
Page 148 and 149: Table 7.10: Relationship promotion
Page 154 and 155: 7.5.2.8 Variety Seeking Two intrins
Page 156 and 157: anymore. Therefore it is concluded
Page 158 and 159: Thus, store loyalty and promotion r
Page 160 and 161: dummies add up to one. This implies
Page 162 and 163: Table 7.22: Overview empirical test
Page 164 and 165: enacting-on-impulse hypothesis and
Page 166 and 167: Table 7.23: Summary of</str
Page 168: Table 7.24: Correlation error coeff
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Page 175 and 176: 164 In general, the average quantit
Page 177 and 178: Purchase frequency is defined as th
Page 179 and 180: Table 8.3: Product category rating
Page 181 and 182: Table 8.4: Pearson correlation betw
Page 183 and 184: We hypothesized that within impulse
Page 185 and 186: measure (PU). Referring to Figure A
Page 187 and 188: Table 8.6: Significant within categ
Page 189 and 190: looked at this promotional bump dec
Page 191 and 192: Table 8.8: Differences in promotion
Page 193 and 194: approach (about one third) are much
Page 195 and 196: promotions lead to large purchase t
Page 197 and 198: studies. Promotion
Page 199 and 200: Promotional extra
Page 201 and 202: categories revealed that the strong
Page 203 and 204: degree. When households switch bran
Page 205 and 206: specific sales promotion reaction m
Page 207 and 208: increasing (Inman and Winer 1998),
Page 209 and 210: indirectly from promotional purchas
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Page 213 and 214: 9.2.2.3 Deal Proneness With respect
Page 215 and 216: 204 related to promotion response.
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Andrews, K.Z. (1997), “Do Marketi
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Blattberg, R.C., Eppen, G.D. and J.
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Chintagunta, P. (1993), “Investig
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East, R. and K. Hammond (1996), “
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Gupta, Sachin and P.K. Chintagunta
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Kahn, B.E., Morrison, D.G.and G.P.
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Lattin, J.M. and R.E. Bucklin (1989
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McAlister, L. and E. Pessemier (198
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Petty, R.E. and J.T. Cacioppo (1981
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Shimp, T.A. (1990). Promoti
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Van Trijp, H.C.M. and J.B.E.M. Stee
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Winer, R.S., Bucklin, R.E., Deighto
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APPENDIX A4: Research Overview Tabl
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Table A4.1 continued Article Promot
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� Size of munici
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Table A7.1 continued Symbol Descrip
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Table A7.2: Data legitimacy check (
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Table A7.3: Results binary logistic
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Table A7.4: Results interacting wit
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Table A7.5: Results age and size no
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Table A7.5 continued Variable B S.E
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Table A8.1 continued Impulse BS TA
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Table A8.2 continued Number <strong
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Table A8.3: Relative occurrence and
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Figure A8.2: Decomposing total prom
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interessante aanbieding is. Combina
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aantalmerken in een categorie en im
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ERASMUS RESEARCH INSTITUTE OF MANAG
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Title: Beyond Generics;A closer loo
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Title: Planning and Control Concept
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