Analysis of Sales Promotion Effects on Household Purchase Behavior

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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 189
categories revealed that the strongest (average) effects are: extra promotional volume (ranging between categories from 16% up to 96 %), followed by brand switching (ranging between categories from 7% up to 47%), and purchasing sooner (ranging between categories from 0% up to 21%). The promotional increase in unit sales was decomposed in two different ways. The first decomposition is based on distinguishing between purchases that would have taken place anyway at this moment, or purchases that are changed in time. The current additional expenditures are <strong>of</strong> interest, accounting for about 2/3 <strong>of</strong> the extra promotional unit sales. The second decomposition distinguishes between purchases coming from regular versus nonregular consumers. This different point <strong>of</strong> view showed that about 2/3 <strong>of</strong> the unit sales increase is due to brand switching, coming from non-regular consumers. <strong>Promotion</strong>s do turn out to be quite effective in drawing consumers from competitive brands. What is the contribution <strong>of</strong> decomposing the promotion unit sales effects using household level data instead <strong>of</strong> store level data? The different findings dealt with in this section, based on the two different ways <strong>of</strong> decomposing the promotional effects, can only be made explicit using household level data. These micro level data <strong>of</strong>fer a higher level <strong>of</strong> detail, leading to a direct understanding <strong>of</strong> for example choice behavior, and the relationship between purchase behavior and consumer socioeconomic characteristics (Russel and Kamakura 1994, Bucklin and Gupta 1992). Bucklin and Gupta (1999) stated that research is needed to develop simple, robust models that will provide better estimates <strong>of</strong> promotional sales that are truly incremental for the manufacturer. Van Heerde et al. (2002) decomposed the sales increase due to sales promotions using a unit sales approach, based on store level data, although they state that household data provide the best opportunity for decomposition. But, store level data are far more likely to be used by managers and they are also more representative. A disadvantage <strong>of</strong> using store level data instead <strong>of</strong> household level data is that it is impossible to recover the individual purchase behaviors that underlie models <strong>of</strong> household behavior (brand choice, purchase timing, and purchase quantity decisions) (Van Heerde et al. 2002). Their unit sales decomposition distinguishes three sources: cross-brand effects (the units that other brands lose at the time <strong>of</strong> the promotion), stockpiling effects (sales that are shifted from other weeks to the current week), and category expansion effects (the remainder <strong>of</strong> the unit sales increase). Unit sales that come from households that accelerated 190
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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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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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Table 7.10: Relationship promotion
Page 150 and 151: Table 7.12: Relationship promotion
Page 152 and 153: Table 7.13: 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
Page 171 and 172: another category? Or do households
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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
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Page 199: Promotional extra
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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
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Page 217 and 218: influenced by out-of</stron
Page 219 and 220: Andrews, K.Z. (1997), “Do Marketi
Page 221 and 222: Blattberg, R.C., Eppen, G.D. and J.
Page 223 and 224: Chintagunta, P. (1993), “Investig
Page 225 and 226: East, R. and K. Hammond (1996), “
Page 227 and 228: Gupta, Sachin and P.K. Chintagunta
Page 229 and 230: Kahn, B.E., Morrison, D.G.and G.P.
Page 231 and 232: Lattin, J.M. and R.E. Bucklin (1989
Page 233 and 234: McAlister, L. and E. Pessemier (198
Page 235 and 236: Petty, R.E. and J.T. Cacioppo (1981
Page 237 and 238: Shimp, T.A. (1990). Promoti
Page 239 and 240: Van Trijp, H.C.M. and J.B.E.M. Stee
Page 241 and 242: Winer, R.S., Bucklin, R.E., Deighto
Page 244 and 245: APPENDIX A4: Research Overview Tabl
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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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