Analysis of Sales Promotion Effects on Household Purchase Behavior

3.3.1 Store Loyalty
Store loyalty should be negatively related with out-<strong>of</strong>-store promotion response, because
these promotions <strong>of</strong>ten require store switching (Bawa and Shoemaker 1987). There is
evidence that store loyal people are less price sensitive (Bucklin and Lattin 1991, Kim et
al. 1999), thus also suggesting a negative relationship. Table 3.9 shows a summary <strong>of</strong> prior
empirical findings regarding the relationship between store loyalty and promotion response.
We hypothesize that store loyalty and promotion response are negatively related.
Table 3.9: Summary <strong>of</strong> studies relating store loyalty with promotion response
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Sign Relationship Study
+ Sirohi et al. (1998)
- Bawa and Shoemaker (1978)
Kim et al. (1999)
Hypothesis H11: Store loyalty and promotion response are negatively
related.
H11a: Store loyalty and promotion response are negatively
related, especially for out-<strong>of</strong>-store promotions.
3.3.2 Basket Size
On a given trip, the large basket shopper purchases in many product categories, and therefore
fulfills a relatively large percentage <strong>of</strong> his total needs on a single visit. This implies that out<strong>of</strong>-store
promotions for a wide array <strong>of</strong> categories <strong>of</strong>fer good opportunities to save money.
But these shoppers lack flexibility to take advantage <strong>of</strong> occasional price deals (Bell and Lattin
1998). Small basket size shoppers, on the other hand, can benefit from price variation in the
store. The total consumption needs are divided into many smaller baskets. Buying more
categories when the prices are relatively low, and deferring purchases when prices are high.
This seems to indicate that large basket shoppers are more focused on out-<strong>of</strong>-store sales
promotions, whereas small basket shoppers are more responsive towards in-store promotions.