Retailers' and manufacturers' price-promotion decisions: Intuitive or evidence-based?

Published on Jul 1, 2017in Journal of Business Research
· DOI :10.1016/J.JBUSRES.2016.05.020
Svetlana Bogomolova14
Estimated H-index: 14
(UniSA: University of South Australia),
Marietta Szabo1
Estimated H-index: 1
,
Rachel Kennedy12
Estimated H-index: 12
(UniSA: University of South Australia)
Sources
Abstract
Consumer price promotions account for more than half of many manufacturers' marketing budgets, and require a significant time investment to manage. Amidst the considerable research on price promotions, little academic attention has been paid to how manufacturers and retailers make price-promotion decisions. Based on in-depth interviews with a broad range of managers, this study investigates factors that influence price-promotion decisions in durable and consumer goods industries. Findings suggest that (1) intuition and untested assumptions are the main inputs into these decisions; (2) practitioners lack solid empirical evidence to guide their actions, and their beliefs are often in stark contrast with academic knowledge about the effectiveness of price promotions; and (3) price promotions are typically not evaluated against the objectives according to which they were justified, impeding appropriate feedback for future decisions. Research priorities are outlined to advance evidence-based decision-making in this area.
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