Analysis of Sales Promotion Effects on Household Purchase Behavior

systematically explored the decision criteria consumers might use to make choices.
Although there has been a lot <strong>of</strong> empirical research applying the economic model (e.g.,
Allen and Bowley 1935, Wold 1952, Koyck et al. 1956), most <strong>of</strong> these studies focused on
commodities or on product categories (instead <strong>of</strong> branded products), and on price and
income elasticities.
Overall, the economic model has several attractive features. First <strong>of</strong> all, it has
proven to be an important descriptive tool. The economic model provides answers that are
mathematically rigorous, yet simple and intuitive. Furthermore, it has aided in the forecast
<strong>of</strong> the quantity bought. On the other hand, the economic model suffers from a number <strong>of</strong>
drawbacks. First <strong>of</strong> all, it is oversimplified. It fails to consider many real psychological,
social, and cultural determinants <strong>of</strong> this quantity bought. Second, the model provides only
limited guidance for managers. For example, marketers know that, in addition to income
and prices, advertising, promotion, product characteristics, and distribution policies
influence consumption, but the economic model provides little guidance in this regard.
Third, the economic model takes the utility function as given, ignoring the mental decision
processes underlying it.
Preferences are another facet <strong>of</strong> the economic model toward which economists
have been ambivalent. Some economists (e.g., Marshall 1938) have incorporated them in
their work, but most economists have ignored them. Marshall (1938) acknowledged that
households can have different utility functions. Purchases were dealt with at the household
level. Differences between for example poor and rich households were discussed. But, the
mainstream <strong>of</strong> economists did not make use <strong>of</strong> these insights. They drifted back to abstract,
technical discussions <strong>of</strong> purchase behavior. Marketers, however, were especially intrigued
by this individual approach, which led to the development <strong>of</strong> stimulus-response models, as
discussed in the next sub-section. Such a model does take the individual level into account.
It places considerable emphasis on marketing mix elements and the effects they have on
consumer actions. However, it does not specify how the marketing mix produces responses.
The stimulus-organism-response model, as discussed in section 2.2.3, strives to delineate
the structures and processes internal to the consumer, which actually regulate choices.
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