Analysis of Sales Promotion Effects on Household Purchase Behavior

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strategy change (decrease in promotional spending coupled with an increase in advertising spending) results in a decrease in market share for the company that instituted this strategy change. Thus, uncertainty exists about the effects <strong>of</strong> using or not using a promotional pricing strategy. Investigating the exact results from sales promotion expenditures on individual household purchase behavior is the mainspring <strong>of</strong> this study. Conflicting empirical results exist with respect to the causes <strong>of</strong> the promotional volume. As mentioned in the introduction, some researchers found that the majority <strong>of</strong> promotional volume comes from switchers, whereas others found opposite results. One possible explanation for these conflicting results is that sources <strong>of</strong> promotional volume are dependent on the characteristics <strong>of</strong> the product category (Blattberg and Wisniewski 1987). Instead <strong>of</strong> taking the promotion as the study object, we use the individual household as the point <strong>of</strong> departure. We do not investigate whether a certain promotion results in a sales increase; we investigate whether a certain household is influenced by a promotion it encounters during its shopping trip, and if so, in what way. The use <strong>of</strong> the term influence(d) deserves more attention. A possible criticism is that we cannot prove that a change observed in the individual household purchase behavior during a promotional period is actually a consequence <strong>of</strong> that promotion. There could be other causes for changes in purchase behavior. For example, if a specific household is organizing a large, fancy party, this might induce deviating purchasing behavior. An integrated promotional strategy (for example a price cut combined with advertising) might induce greater purchasing by a price-sensitive household than a price-cut in isolation would have caused. Furthermore, need for variety could be the cause <strong>of</strong> deviating purchase behavior, not the sales promotion present in the retail outlet. Our view is that this sort <strong>of</strong> phenomenon, while undoubtedly present, will have limited effects on our results. We study individual household purchase behavior over more than two years and for quite a large number <strong>of</strong> households, searching for general patterns. In addition, the influence <strong>of</strong> possible variety seeking behavior is accounted for. We therefore interpret the patterns found in changed purchase behavior during promotion periods as being caused by sales promotions. The degree to which a certain household is influenced by a promotion, is investigated for different types <strong>of</strong> promotions and a number <strong>of</strong> product classes. Are there households that respond to every sales promotion? Are there differences between households in the way they react to promotions, does one household 7
show consistent brand switch behavior, whereas a second household shows consistent purchase acceleration behavior? These are questions we want to answer with this study. In spite <strong>of</strong> the pivotal role played by sales promotions both in practice and academia, research at the micro-level appears to <strong>of</strong>fer little by way <strong>of</strong> generalizable conclusions. Despite the increase in the use and variety <strong>of</strong> sales promotions, much <strong>of</strong> the research on consumer response to promotion techniques has examined only one or two different types <strong>of</strong> promotions, not incorporating the product category effect. Many researchers conclude that price promotions cause short-term increases in sales, but whether these incremental sales are just ‘borrowed’ or real enlargements, still remains to be seen. In this dissertation, we will shed some light on the effects <strong>of</strong> sales promotions on individual household purchase behavior. 1.3 Research Questions With respect to the effects <strong>of</strong> sales promotions we have formulated one central research question. Under which conditions and in what way do sales promotions influence household purchase behavior? We have investigated the impact <strong>of</strong> sales promotions on purchase behavior at the individual household level. Blattberg and Neslin (1990) stated that the influence <strong>of</strong> sales promotions could be exerted in many ways. The consumer can be influenced to change purchase timing or purchase quantity, switch brands, increase consumption <strong>of</strong> the product category, switch stores, or search for promotions. However, not all consumers are influenced in the same way. For example, some consumers might be influenced to switch brands but not change their purchase timing, while others might be influenced to change timing but not brands. Still others might be influenced in both ways. Blattberg and Neslin (1990) concluded that promotion response is therefore a multidimensional concept. Most researchers simplify this situation by investigating the influence <strong>of</strong> one type <strong>of</strong> promotion, for example, couponing, on one type <strong>of</strong> behavior, for example, new product trial (Teel at al. 1980), for one product category. Henderson (1987) and Schneider and Currim (1991) are exceptions, studying and explicitly differentiating among several types 8
Page 1 and 2: LINDA H. TEUNTER Analysis</
Page 4 and 5: Analysis o
Page 6 and 7: Voorwoord Soms valt de appel echt n
Page 8 and 9: Contents 1 INTRODUCTION AND OVERVIE
Page 10 and 11: 5.4.2.3.1 Inter Purchase Time .....
Page 12 and 13: 1 INTRODUCTION AND OVERVIEW 1.1 Int
Page 14 and 15: generally generated from a smaller
Page 16 and 17: switching, purchase acceleration, c
Page 20 and 21: of promotions, or
Page 22 and 23: characteristics are important in ex
Page 24: Chapter 5 are applied to study the
Page 28 and 29: 2 THEORIES OF CONSUMER BUYING BEHAV
Page 30 and 31: systematically explored the decisio
Page 32 and 33: the part of the co
Page 34 and 35: As mentioned before, Figure 2.3 is
Page 36 and 37: product use coupled with the import
Page 38 and 39: 2.3.2 Stimulus-Response Model Appli
Page 40 and 41: 2.3.2.2 Operant Conditioning In ope
Page 42 and 43: X is very popular that it will brin
Page 44 and 45: But, in contrast, economic theory c
Page 46 and 47: compared to a perceived benchmark -
Page 48 and 49: High need-for-cognition (NFC) indiv
Page 50 and 51: 2.3.4.2 Literature Overview Our rev
Page 52 and 53: The previously described research h
Page 54 and 55: has its deficiencies. Any purchase
Page 56 and 57: Chandon et al. 2000). But deal pron
Page 58 and 59: 2.4 Concluding Remarks Regarding th
Page 60: stimulus-organism-response model) c
Page 63 and 64: Shoemaker 1987). Several factors ha
Page 65 and 66: such as display promotions. Althoug
Page 67 and 68: 3.2.3 Type of resi
Page 69 and 70:
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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6.4 Linking Household and Store Dat
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Table 6.1 contains the results <str
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The age of the sho
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Table 6.4: Frequency distribution <
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7 EMPIRICAL ANALYSIS ONE: DRIVERS O
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Table 7.1: Operationalization <stro
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during 435 shopping trips more than
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The variables size, age, and cycle
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7.5 Results Drivers of</str
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esponsive the households within tha
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Table 7.3: Relationship promotion r
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indication that decreasing marginal
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Page 146 and 147:
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Table 7.10: Relationship promotion
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Page 152 and 153:
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7.5.2.8 Variety Seeking Two intrins
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anymore. Therefore it is concluded
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Thus, store loyalty and promotion r
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dummies add up to one. This implies
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Table 7.22: Overview empirical test
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enacting-on-impulse hypothesis and
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Table 7.23: Summary of</str
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Table 7.24: Correlation error coeff
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another category? Or do households
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and unweighted. With respect to the
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164 In general, the average quantit
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Purchase frequency is defined as th
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Table 8.3: Product category rating
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Table 8.4: Pearson correlation betw
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We hypothesized that within impulse
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measure (PU). Referring to Figure A
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Table 8.6: Significant within categ
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looked at this promotional bump dec
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Table 8.8: Differences in promotion
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approach (about one third) are much
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promotions lead to large purchase t
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studies. Promotion
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Promotional extra
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categories revealed that the strong
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degree. When households switch bran
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specific sales promotion reaction m
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increasing (Inman and Winer 1998),
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indirectly from promotional purchas
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quantity downward for potato chips.
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9.2.2.3 Deal Proneness With respect
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204 related to promotion response.
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influenced by out-of</stron
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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
Page 280 and 281:
Title: Planning and Control Concept
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