Analysis of Sales Promotion Effects on Household Purchase Behavior

their purchases but also switched brands are attributed to stockpiling in this model. However,
they should be attributed to brand switching, not as current cross-brand effects, but as
dynamic cross-brand effects. The second decomposition treated in this chapter provides these
detailed insights, which can only be obtained using household level data. Finally, household
data <strong>of</strong>fer the opportunity to relate the purchase behavior found with consumer characteristics,
which could be very interesting to both manufacturers and retailers.
In general, promotions do result in large unit sales increases, for some categories
even increasing sales by a factor nine. But, on average, 40 percent is not true incremental
sales, as these purchases come from regular consumers and are borrowed at least partly from
other shopping trips. But, the assumptions made underlying the promotional bump
decomposition are important. Besides the type <strong>of</strong> decomposition chosen (elasticity based
versus unit sales based), the specific process to assign promotional sales to the possible
response patterns is found to be <strong>of</strong> crucial importance.
Both empirical approaches applied in this chapter (intertemporal and promotional
unit sales decomposition) show that the effects <strong>of</strong> sales promotions differ across product
categories. Based on the intertemporal approach, brand switching is the most prevalent effect
<strong>of</strong> sales promotions (in terms <strong>of</strong> occurrence), but the effect on unit sales is smaller when brand
switching is involved. It is therefore not the strongest effect. Brand switching is especially
exhibited for c<strong>of</strong>fee and candy bar promotions, the two higher priced product categories in
this research. <strong>Promotion</strong>s in categories that are <strong>of</strong>ten on promotion (potato chips and candy
bars) have a large effect on purchase quantity, but these extra purchases are borrowed from
future purchases to a large extent. The data presented in Chapter Six on the part <strong>of</strong> the sales
which could be attributed to promotional sales (Table 6.5) pointed out that about one third <strong>of</strong>
the total sales in the Netherlands for these two categories are promotional sales. When the
purpose <strong>of</strong> a promotion is to get rid <strong>of</strong> stock or to keep customers away from the market when
competitive promotions are expected, promotions within these categories are worthwhile. But
for increasing pr<strong>of</strong>its, retailers and manufacturers should try to avoid using a lot <strong>of</strong> promotions
for <strong>of</strong>ten purchased product categories.
With respect to the possible existence <strong>of</strong> deal proneness at the level <strong>of</strong> sales
promotion reaction mechanisms, consistencies within category across reaction mechanisms
and within reaction mechanism across categories were found, but only to a very modest
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