Analysis of Sales Promotion Effects on Household Purchase Behavior

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(Van Heerde et al. 2001, 2002), the results found show that the brand switch effect is, on average, at most about one third <strong>of</strong> the total unit sales effect. In this research, a promotional unit sales decomposition is used for the six product categories included. This decomposition <strong>of</strong> the extra promotional unit sales is found to differ across the 6 product categories incorporated in this research. <strong>Promotion</strong>s turn out to be very effective in drawing purchases to the promotional shopping trip, which is <strong>of</strong> interest to the retailer, either resulting in stockpiling and/or consumption increases (two third <strong>of</strong> the total effect), supporting the work <strong>of</strong> Van Heerde et al. (2001, 2002). But, a part <strong>of</strong> these additional current purchases are borrowed from future purchases made by regular consumers. The results found show that about two third <strong>of</strong> the current increase in promotional unit sales comes from non-regular consumers that were drawn from competitive brands, which is <strong>of</strong> interest to the manufacturer. Thus, besides the approach chosen to decompose the promotional sales bump (elasticity based or unit sales based), also the point <strong>of</strong> view chosen is <strong>of</strong> great importance. 9.3 Managerial Implications Retailers and manufacturers can use the findings from this thesis to develop better understanding <strong>of</strong> household reactions to sales promotions and perhaps indirectly to develop more pr<strong>of</strong>itable promotion strategies. Interesting findings are the following: • <strong>Promotion</strong>s result in large spikes in unit sales, overall almost 7 times as many units are purchased during a promotional period trip. Varying across product categories from twice as many units (potato chips) up to nine times as many units (c<strong>of</strong>fee, candy bars, and fruit juice). The main part <strong>of</strong> these extra unit sales (65 percent) comes from non-regular consumers. The remaining part is borrowed from future purchases <strong>of</strong> regular consumers (borrowed in time (24 percent) plus borrowed in quantity (10 percent)), but these borrowed purchases could lead to extra consumption. • Household variables such as size and composition <strong>of</strong> the household, social class, employment situation, store loyalty, purchase frequency, average basket size, etc. are 203
204 related to promotion response. Micro-marketing strategies therefore have potential. Retailers can use (or gather) this household information to develop better promotional strategies. The composition <strong>of</strong> the store environment (in terms <strong>of</strong> types <strong>of</strong> shoppers) partly determines the effectiveness <strong>of</strong> the promotional strategy. For example, neighborhoods consisting <strong>of</strong> double-income families without non-school age children turn out to be very promising for promotional strategies. • In-store and out-<strong>of</strong>-store promotions have different effects. The findings point out that promotions especially seem to function as in-store decision-making cues. Households with larger grocery budgets and less available time are found to be the most responsive towards in-store promotions. The grocery store environment presents a myriad <strong>of</strong> visual cues and information to consumers at the point <strong>of</strong> sale. A typical supermarket may <strong>of</strong>fer consumers the opportunity to make purchases from 30,000 distinct SKUs, and individual brands within these SKUs may present more than 100 separate pieces <strong>of</strong> information (price, size, product features and claims, nutrition information, ingredients, etc.) to the consumer. In such an information-rich environment, consumers will selectively attend to easily available information. Instore promotions can serve as important decision-making cues. As the number <strong>of</strong> young, two-person households in which both partners work and the amount <strong>of</strong> instore decision-making is increasing, the potential <strong>of</strong> in-store promotions is growing. • <strong>Promotion</strong>al signaling works. Display signals without a price cut attached to them do influence household purchase behavior, i.e. increase the probability <strong>of</strong> a purchase. • <strong>Promotion</strong>s can be beneficial for both the retailer and the manufacturer. The retailer is especially interested in drawing purchases towards the current shopping trip. <strong>Promotion</strong>s turn out to be very effective in drawing purchases to the promotional shopping trip, either resulting in stockpiling and/or consumption increases (about 2/3 <strong>of</strong> the total effect). But, about 30 percent <strong>of</strong> the current unit sales increase comes from non-regular consumers that accelerated their purchases and purchased a nonfavorite brand due to the promotion. This means that a manufacturer encounters an increase in promotional unit sales <strong>of</strong> about 60 percent, which is an attractive result. <strong>Promotion</strong>s are effective in drawing consumers from competitive brands. Finally, promotions are found to lead to increased consumption rates, especially for fruit
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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
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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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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
Page 197 and 198: studies. Promotion
Page 199 and 200: Promotional extra
Page 201 and 202: categories revealed that the strong
Page 203 and 204: degree. When households switch bran
Page 205 and 206: specific sales promotion reaction m
Page 207 and 208: increasing (Inman and Winer 1998),
Page 209 and 210: indirectly from promotional purchas
Page 211 and 212: quantity downward for potato chips.
Page 213: 9.2.2.3 Deal Proneness With respect
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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
Page 246: Table A4.1 continued Article Promot
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Page 251 and 252: Table A7.1 continued Symbol Descrip
Page 253 and 254: Table A7.2: Data legitimacy check (
Page 255 and 256: Table A7.3: Results binary logistic
Page 257 and 258: Table A7.4: Results interacting wit
Page 259 and 260: Table A7.5: Results age and size no
Page 261 and 262: Table A7.5 continued Variable B S.E
Page 263 and 264: 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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