Analysis of Sales Promotion Effects on Household Purchase Behavior

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elasticities can be attributed to three sets <strong>of</strong> exogenous variables: category factors, brand factors, and consumer factors. As Gupta (1988), they concluded that switching (i.e., secondary demand) is the most important effect <strong>of</strong> a promotion. However, that effect is not as dominant as reported by previously reported. <strong>Promotion</strong>s can also have a significant effect on primary demand for a product (i.e., purchase time and quantity choice). Furthermore, the magnitude <strong>of</strong> primary and secondary demand effects were found to vary substantially across brands and categories. The choice elasticity varied from 49% for butter to 94% for margarine. The time elasticity varied from 1% for liquid detergents to 42% for butter. The quantity elasticity varied from almost 0% for margarine to 45% for c<strong>of</strong>fee. The overall average decomposes elasticities into 75/11/14 percent for respectively brand/time/quantity. Up to 70% <strong>of</strong> this variance was explained by the category-, brand-, and consumer-specific factors, in this order <strong>of</strong> importance. All refrigerated products had much higher timing effects than quantity effects. All storable products showed the opposite patterns. Recall that Gupta (1988) obtained different results for the storable product category c<strong>of</strong>fee. Bell et al. (1999) attributed this to two factors. First, they use newer and different data. Second, while Gupta’s model addresses the ‘when’ question <strong>of</strong> purchase timing, Bell et al. focus on the ‘whether’ question. No differences were found in brand choice elasticities related to storability. The overall elasticity decomposition distinguishing between storable and nonstorable products resulted in 75/3/22 for storable products versus 75/17/8 for nonstorable products. But, as noted and researched by Van Heerde et al. (2001, 2002), there is a big difference between the promotional bump decomposition depending on whether this is derived using elasticities or unit-sales effects. Researchers decomposing the sales promotion elasticity into brand switching, purchase quantity, and purchase timing (e.g., Gupta 1988, Chiang 1991, Chinatagunta 1993, Bucklin et al. 1998, Bell et al. 1999) concluded on average that 74% is due to brand switching (secondary demand effects) and the remainder is due to timing acceleration and quantity increases (primary demand effects). Van Heerde et al. (2001, 2002) argued that the decomposition <strong>of</strong> unit sales effects is theoretically and managerially more relevant than the decomposition <strong>of</strong> elasticities. The former decomposition considers promotional sales effects in terms <strong>of</strong> comparable units (unit sales), whereas the latter is constructed in terms <strong>of</strong> percentage changes <strong>of</strong> non-comparable units (probabilities and purchase quantities). Van Heerde et al. (2001, 2002) transformed the elasticity-based results 79
into a unit sales decomposition and show that the two decompositions differ to a large degree. It was concluded that on average, the unit sales effect consists <strong>of</strong> roughly one third attributable to other brands, one third to stockpiling, and one third to category expansion. Furthermore, Van Heerde et al. (2002) showed how the decomposition results are moderated by characteristics <strong>of</strong> the price promotion. As mentioned above, a number <strong>of</strong> researchers found evidence for differences in household reactions towards sales promotions across product categories. The next section presents a short overview <strong>of</strong> possible relationships between product category characteristics and the sales promotion reaction mechanisms. 4.3 Product Category Characteristics Related to <strong>Sales</strong> <strong>Promotion</strong> 80 Reaction Mechanisms Several researchers have investigated the topic <strong>of</strong> sales promotion reaction mechanisms (see Section 6.2). They investigated what specific effects sales promotions had, whether the size <strong>of</strong> these effects was consistent across categories (which turned out not to be the case) and identified segments <strong>of</strong> households based on the exhibited sales promotion reaction mechanisms (some households turned out mainly to switch brands due to promotions whereas other households exhibited all reaction mechanisms). But, what is lacking is theoretical and empirical knowledge about what product category characteristics influence promotion response. The following sub-sections each deal with one specific product category characteristic. The selection <strong>of</strong> product category characteristics is based on a literature overview. 4.3.1 Average Price Level Based on the results <strong>of</strong> Bell et al. (1999), we hypothesize that promotions for categories with a high price will have the largest response, especially as a result <strong>of</strong> purchase acceleration (H1).
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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
Page 40 and 41: 2.3.2.2 Operant Conditioning In ope
Page 42 and 43: X is very popular that it will brin
Page 44 and 45: But, in contrast, economic theory c
Page 46 and 47: compared to a perceived benchmark -
Page 48 and 49: High need-for-cognition (NFC) indiv
Page 50 and 51: 2.3.4.2 Literature Overview Our rev
Page 52 and 53: The previously described research h
Page 54 and 55: has its deficiencies. Any purchase
Page 56 and 57: Chandon et al. 2000). But deal pron
Page 58 and 59: 2.4 Concluding Remarks Regarding th
Page 60: stimulus-organism-response model) c
Page 63 and 64: Shoemaker 1987). Several factors ha
Page 65 and 66: such as display promotions. Althoug
Page 67 and 68: 3.2.3 Type of resi
Page 69 and 70: 3.2.5 Education Education links to
Page 71 and 72: these advantages therefore could be
Page 73 and 74: less likely to seek variety. More e
Page 75 and 76: 3.3.1 Store Loyalty Store loyalty s
Page 77 and 78: more often (probab
Page 79 and 80: Table 3.12 continued Hypothesis H9a
Page 81 and 82: 4.2.1 Brand Switching Brand switchi
Page 83 and 84: involvement purchases for most cons
Page 85 and 86: Neslin (1998), there is a great nee
Page 87 and 88: are called “attributions.” Attr
Page 89: and less than 2 percent by stockpil
Page 93 and 94: 4.3.4 Storability/Perishability Sto
Page 95 and 96: Economic theory ignores mental deci
Page 97 and 98: seeking (cf. Assael 1987, Desphande
Page 99 and 100: there another factor that is relate
Page 101 and 102: Pr(event) 90 = 1+ 1 z e − Here Z
Page 103 and 104: 5.4.2 Sales <stron
Page 105 and 106: It represents the fraction
Page 107 and 108: 96 We measure possible time acceler
Page 109 and 110: promotional post-promotional purcha
Page 111 and 112: ( 12) CategoryExpansion effect : 10
Page 114: PART II EMPIRICAL ANALYSIS 103
Page 117 and 118: more persons living together and di
Page 119 and 120: 6.4 Linking Household and Store Dat
Page 121 and 122: Table 6.1 contains the results <str
Page 123 and 124: The age of the sho
Page 125 and 126: Table 6.4: Frequency distribution <
Page 128 and 129: 7 EMPIRICAL ANALYSIS ONE: DRIVERS O
Page 130 and 131: Table 7.1: Operationalization <stro
Page 132 and 133: during 435 shopping trips more than
Page 134 and 135: The variables size, age, and cycle
Page 136 and 137: 7.5 Results Drivers of</str
Page 138 and 139: 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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enacting-on-impulse hypothesis and
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Table 7.23: Summary of</str
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Table 7.24: Correlation error coeff
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another category? Or do households
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and unweighted. With respect to the
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164 In general, the average quantit
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Purchase frequency is defined as th
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Table 8.3: Product category rating
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Table 8.4: Pearson correlation betw
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We hypothesized that within impulse
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measure (PU). Referring to Figure A
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Table 8.6: Significant within categ
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looked at this promotional bump dec
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Table 8.8: Differences in promotion
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approach (about one third) are much
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promotions lead to large purchase t
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studies. Promotion
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Promotional extra
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categories revealed that the strong
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degree. When households switch bran
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specific sales promotion reaction m
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increasing (Inman and Winer 1998),
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indirectly from promotional purchas
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quantity downward for potato chips.
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9.2.2.3 Deal Proneness With respect
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204 related to promotion response.
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influenced by out-of</stron
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Andrews, K.Z. (1997), “Do Marketi
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Blattberg, R.C., Eppen, G.D. and J.
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Chintagunta, P. (1993), “Investig
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East, R. and K. Hammond (1996), “
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Gupta, Sachin and P.K. Chintagunta
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Kahn, B.E., Morrison, D.G.and G.P.
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Lattin, J.M. and R.E. Bucklin (1989
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McAlister, L. and E. Pessemier (198
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Petty, R.E. and J.T. Cacioppo (1981
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Shimp, T.A. (1990). Promoti
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Van Trijp, H.C.M. and J.B.E.M. Stee
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Winer, R.S., Bucklin, R.E., Deighto
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APPENDIX A4: Research Overview Tabl
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Table A4.1 continued Article Promot
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� Size of munici
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Table A7.1 continued Symbol Descrip
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Table A7.2: Data legitimacy check (
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Table A7.3: Results binary logistic
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Table A7.4: Results interacting wit
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Table A7.5: Results age and size no
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Table A7.5 continued Variable B S.E
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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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