Analysis of Sales Promotion Effects on Household Purchase Behavior

increasing (Inman and Winer 1998), in-store promotions are becoming more and more
important.
A household encounters a lot <strong>of</strong> sales promotions for non-favorite brands.
Responding to these promotions would require brand switching. A lot <strong>of</strong> research has been
done on variety seeking, whether it is just random behavior, or there is some sort <strong>of</strong> intrinsic
drive in a person to seek variety (e.g., Pessemier and Handelsman 1984, Van Trijp et al. 1996,
Ainslie and Rossie 1998). It has been emphasized that intrinsically motivated and extrinsically
motivated variety seeking should be dealt with separately. The results in this research confirm
this separate treatment. Intrinsic variety seeking and extrinsic variety seeking are not related.
Shoppers that have an intrinsic drive to seek variety (switch a lot <strong>of</strong> brands when there are no
promotions) are not more promotion response. Brand switch research would benefit greatly by
isolating those brand switches that are <strong>of</strong> the intrinsic variety seeking type from those that are
extrinsically motivated before estimating parameters associated with these behaviors.
Besides making the distinction between in-store and out-<strong>of</strong> store promotions, it is
also <strong>of</strong> interest to examine whether favorite brand and non-favorite brand promotions have
different effects. <strong>Promotion</strong>s for favorite brands have a strong impact on the probability to
respond to a promotion (the relative probability to respond is multiplied with at least a factor
22.8). Furthermore, the promotional quantity purchased is bigger for favorite brands. This
seems to stress that promotions mainly result in purchases by consumers that would have
bought the brand anyway. But, for a specific brand, the number <strong>of</strong> regular consumers is most
<strong>of</strong> the time much smaller than the number <strong>of</strong> non-regular consumers and promotions can drive
these non-regular consumers to switch to the promoted brand, which is found to be about 60
percent <strong>of</strong> the total promotional unit sales. Furthermore, it is found that the probability to
respond to a non-favorite brand promotion is larger for non-store loyal households than for
store loyal households.
With respect to the different promotion types, the combined display/feature/price cut
promotion is the most effective, about nine times as effective as a feature promotion without a
price cut. <strong>Promotion</strong>al signals work, especially displays increase promotion response,
although their influence on promotion response is less than for promotions with an economic
gain attached to them. This is additional evidence that in-store promotions are used as
decision-making facilitators.
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