Analysis of Sales Promotion Effects on Household Purchase Behavior

The first decomposition discussed assigns combined changes in purchase timing and
brand choice to the change in time, providing a lower limit for the strength <strong>of</strong> the brand switch
effect. The second decomposition assigns these combined changes to brand switching,
providing an upper limit for the strength <strong>of</strong> the brand switch effect. The upper limits obtained
are to a large extent in accordance with the elasticity based findings (74 percent <strong>of</strong> the effect
on promotional sales was attributed to brand switching). The differences found between the
elasticity based decomposition and the unit-sales based decomposition therefore do not seem
to originate only from differences in approach. The assumptions made are also very important.
Are accelerated brand switches due to a change in purchase timing, due to brand switching, or
due to both?
Finally, it is <strong>of</strong> interest to investigate which part <strong>of</strong> the total promotional unit sales is
really incremental and what part would have been purchased anyway (baseline sales). For
example, with respect to the overall effects <strong>of</strong> sales promotions, the total promotional unit
sales equal 6559 units. The incremental promotional unit sales equal 5753 units. The baseline
sales are equal to the difference, which is 806 units. Figure A8.2 contains the incremental
versus baseline sales across the categories and separately for each product category (in
percentages). In general, a promotion leads to a large increase in unit sales, almost seven times
as much units are purchased, varying across product categories from twice as much for potato
chip promotions up to nine times as much for c<strong>of</strong>fee promotions. <strong>Promotion</strong>s therefore have
large effects on unit sales, leading to large incremental current sales. But, a reasonable part <strong>of</strong>
these current incremental unit sales are borrowed from the future (across the categories at
most 34 percent, either borrowed in time (24 percent) or in quantity (10 percent)).
8.6 Conclusions
This chapter dealt with the second sub-question raised in Chapter 1. Can promotional
household purchase behavior be decomposed into the sales reaction mechanisms and, if so,
does this decomposition differ across product categories? First <strong>of</strong> all, measures have been
defined that measure the effect <strong>of</strong> promotions on household purchase behavior in an
intertemporal and comprehensive way. Application <strong>of</strong> those measures per and across product
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