Assessing the impact of a very successful price promotion on brand, category and competitor sales

Abstract

Many studies have examined the short‐term and long‐term effects of price promotions. This study adds to previous research by examining, in some depth, the effects of a massively successful price promotion in a consumer goods category. This study sought to determine if this large price promotion had any: longer‐term effect on brand volume; short‐term effect on total category volume for the retailer; short‐term effect on competing retailers; and longer‐term effect on category sales for the retailer that ran the promotion. The results showed that this promotion did not have any longer‐term (positive or negative) effect on the brand, but it did expand the total category for the retailer, albeit temporarily. Sales dropped slightly for one competing retailer at the time of the promotion, but not for the other two retailers in the market. Finally, the study found that the promotion was followed by a decline in total category volume for the retailer, suggesting some degree of purchase acceleration or stockpiling by consumers. The results suggest that the longer‐term negative effect on category volume cancelled out approximately two thirds of the gains of the price promotion to the retailer.

The Impact of Price Promotions on Producer Strategies in Markets With Large Product Heterogeneity

“…The choice exercise contains 255 different wines, entailing that the brand-switching elasticity cannot be derived from the present dataset (specific work on the impact of discounting on brand choices can be found in Bijmolt, Van Heerde, & Pieters, 2005, Dawes, 2004, and Mela, Gupta, & Lehmann, 1997. Consequently, we analyze segment choice elasticity: Wines can be grouped in segments by color and country of origin, as see in Figure 4.…”

Cause‐related marketing: a new perspective on achieving campaign objectives amongst fast moving consumer goods

“…Brand managers know that consumers typically use the extra volume they have bought faster than their normal rate of consumption (Chandon and Wansink, 2002;Ailawadi and Neslin, 1998). It is therefore not surprising to find prolific use of sales promotion within FMCG markets (Dawes, 2004). In such cases it is used as a point of differentiation amongst a plethora of me-too products and as a short-term competitive device (Jones, 1990).…”

An Examination of Sales Promotion Programs in Hong Kong: What the Retailers Offer and What the Consumers Prefer

“…A number of explanations have been forwarded for the increasing popularity of promotions (Dawes, 2004;Dickson & Sawyer, 1990;Low & Jakki, 2000;Quelch, 1983). One of the key factors is the changing relationship with advertising.…”