Analysis of Sales Promotion Effects on Household Purchase Behavior

Shoemaker 1987). Several factors have been identified. Income, size <strong>of</strong> the household,
composition <strong>of</strong> the household, education, and type <strong>of</strong> housing are just some examples <strong>of</strong>
household characteristics used to predict whether a household is likely to buy on deal or
not. Besides household characteristics, also psychographic variables (such as variety
seeking) have been used. Prior studies have come up with conflicting findings regarding the
drivers <strong>of</strong> promotion response. For example, some researchers found that income has a
negative influence on promotion response (e.g., Ainslie and Rossi 1998), whereas others
have found no effects (e.g., Webster 1965), non-linear effects (e.g., Narasimhan 1984), or
positive effects (e.g., Inman and Winer 1998). The following subsections each deal with
one specific possible driver <strong>of</strong> promotion response. Findings from prior research that
incorporated that specific relationship are discussed and tabulated, along with the
hypothesis derived. Arguments for specific shapes and signs <strong>of</strong> the relationship between
promotion response and a particular driver are mentioned. Possible interaction effects are
also discussed.
3.2.1 Income
Based on economic theory, it would be expected that households with lower income (and
therefore more limited shopping budgets) would be more price promotion responsive,
resulting in a negative relationship between income and promotion response (e.g., Urbany,
Dickson, and Kalapurakal 1996). On the other hand, households with higher income are
less restricted in their budget, which increases the probability <strong>of</strong> acting on impulse (e.g.,
Inman and Winer 1998), and therefore in-store promotion response. Bawa and Gosh (1999)
concluded that higher income households spend more during a shopping trip, which, in
turn, would result in a larger probability to buy on promotion. A third line <strong>of</strong> reasoning is
the following: income is expected to be positively related with education. Higher income
households therefore would have better information processing capabilities. They are better
able to judge a sales promotion <strong>of</strong>fered to them, possibly leading to stronger promotion
response (Robertson et al. 1984, Caplovitz 1963). Narasimhan (1984) found that middleincome
groups use coupon promotions the most. Webster (1965) and Blattberg et al.
52