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.
#1Nicole Hartnett(UniSA: University of South Australia)H-Index: 6
#2Rachel Kennedy(UniSA: University of South Australia)H-Index: 12
Last. Luke Greenacre(UniSA: University of South Australia)H-Index: 10
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Advertisements vary enormously in their sales effectiveness, so choosing the more effective advertisements to air is an important marketing task. Such decisions are often made intuitively. This study assesses the intuitive predictions made by a global sample of marketers regarding which television ads are more or less sales effective. The findings show that marketersÂ’ predictions were correct no more often than random chance. Multivariate analysis suggests that those with category experience an...
#1Nicole Hartnett(UniSA: University of South Australia)H-Index: 6
#2Rachel Kennedy(UniSA: University of South Australia)H-Index: 12
Last. Luke Greenacre(UniSA: University of South Australia)H-Index: 10
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Advertising creative is widely accepted as critical to advertising success. However, generalizations of what works in applied settings across different conditions are few. The present study replicates the seminal work of Stewart and Furse (1986), who investigated the effect of more than 150 creative devices on several copy-testing measures of advertising effectiveness. We replicate the analysis using the original codebook but examine the link to in-market, short-term sales effectiveness. We use ...
Last. Igor Makienko(UNR: University of Nevada, Reno)H-Index: 4
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Price discounts are common retail promotional tools that are defined by their size and duration. Consumers possess a general schema in which they believe that retailers are motivated to associate larger price discounts with shorter durations and smaller price discounts with longer durations. However, factors influencing promotion management frequently lead retailers to present discount size/duration combinations that are incongruent with this schema. What are the consequences for retailers of pr...
This article introduces the Special Issue on simple versus complex methods in forecasting. Simplicity in forecasting requires that (1) method, (2) representation of cumulative knowledge, (3) relationships in models, and (4) relationships among models, forecasts, and decisions are all sufficiently uncomplicated as to be easily understood by decision-makers. Our review of studies comparing simple and complex methods— including those in this special issue—found 97 comparisons in 32 papers. None of ...
#2Kesten C. Green(UniSA: University of South Australia)H-Index: 16
Last. Andreas Graefe(LMU: Ludwig Maximilian University of Munich)H-Index: 18
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This paper proposes a unifying theory of forecasting in the form of a Golden Rule of Forecasting. The Golden Rule is to be conservative. A conservative forecast is consistent with cumulative knowledge about the present and the past. To be conservative, forecasters must seek all knowledge relevant to the problem, and use methods that have been validated for the situation. A checklist of 28 guidelines is provided to implement the Golden Rule. This article’s review of research found 150 experimenta...
Last. John Fernie(St And: University of St Andrews)H-Index: 26
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Purpose – This paper aims to explore the applied context of grocery retail pricing practice to understand how pricing executives approach “regular price” decision-making (as opposed to promotional pricing). The study seeks to inductively develop a model of regular price decision-making in grocery retailing. Design/methodology/approach – The research uses an inductive methodology involving interviews with pricing executives working for grocery retailers that account for approximately 85 per cent ...
#2Steven Dunn(UniSA: University of South Australia)H-Index: 3
Last. Richard Volpe(USDA: United States Department of Agriculture)H-Index: 10
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Abstract Price promotions dominate the modern grocery retail environment. This paper documents the prevalence and nature of these price promotions (i.e., deal types and discount depths) in the United States and United Kingdom. The analysis comprises of 23 categories across five retail chains. One of the key findings is that multiple-unit promotions – deal types that have been under-researched – account for approximately half of all price promotion activity. The analysis also identifies an increa...
Featured price cuts are a popular tool among brand manufacturers and retailers. However, there is increasing concern about the net sales and revenue gains from these promotions, because retailers and manufacturers may simply be subsidizing consumers who shop around. Thus, the (co-)occurrence of a brand's promotions across retailers has been placed high on the promotion-planning agenda. This article examines the mechanisms underlying out-of-phase versus in-phase schedules and empirically demonstr...
In making pricing decisions, managers can chose from several pricing strategies. To ensure long-term business success, pricing choices need to balance numerous requirements, from revenue streams to keeping customers happy. The complexity of pricing decisions and time pressures that often accompany them prompt the need for fast, simplified decision algorithms. The present exploratory study examines the ways in which considerations of price fairness and competitive strategy combine in managers' de...
Abstract Customer concentration inside a store is of pivotal importance for retail management, acquiring controversial contributions about the best number of consumers in the floor space to ensure an enjoyable and pleasant experience. Indeed, the excessive concentration of people (crowd) might discourage from shopping in that location, while on the other hand, a certain traffic to the store generates profit for retailers. The aim of this paper is to support retailers’ informed decisions by refin...
Last. Stephan M. Liozu(Case Western Reserve University)H-Index: 15
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Abstract How does the bounded rationality of managers affect pricing? We examine this under-researched question by examining how different psychological traits of managers relate to new product pricing practices and how these pricing practices, in turn, relate to new product performance. To do so, we survey 302 American marketing, sales, and pricing managers responsible for new product pricing decisions in business markets. Among others, our study identifies conformity and intuition as distinct ...
#2Ernest Baskin(""St. Joe's"": Saint Joseph's University)H-Index: 11
Abstract Redeeming purchases using discounted credit (i.e., store credit bought at a lower price than its face value) is widespread, but its mental accounting implications remain unclear. This work finds that consumers making multiple redemptions on separate occasions with the same discounted credit do not perceive all redemptions as equally discounted. Redemptions made earlier in that discounted credit’s spending life cycle (upstream redemptions) are perceived as less discounted than redemption...
Abstract Supermarket catalogues (also known as store flyers or circulars) are a popular retail tool for influencing shoppers’ behaviour and increasing store sales. Past research has documented varying effects of catalogue promotions on consumer behaviour, but it has not focused specifically on the psychographic and behavioural characteristics of catalogue users. This research aims to fill this gap through an analysis of a representative sample of 506 South Australian consumers. The results show ...
Drawing on 55 interviews with executives across five online fashion retailers, this paper explores the challenges of price setting and management. We develop a descriptive model of ‘locked-in’ pric...
Internet and its accessible devices (e.g., mobiles, computers) are the unmitigated blessings to the people. Nowadays, internet connectivity almost eliminates all kinds of blockades for the verification of authentication, comparison of prices, and services for a product. Consequently, the market has been becoming more competitive compared to decision making. In this paper, we construct a multi-channel supply chain (MCSC) frameworks with traditional channels as well as a direct channel (DC), where...
Since 2016, organized retailers in Colombia have struggled against a new retail format: Hard-discount stores. This sales channel fulfills essential shopping basket products with consistent low prices. To be competitive and preserve their market position, organized retailers must improve their processes and their pricing decisions. Promotions and discounts have been considered as an effective alternative to compete. This study analyzes the impact of joint prices decisions over the individual and ...
The study investigates the long-term erosion of repeat-purchase loyalty among consumers who purchase brands in a one-year base period. The study utilises a five-year consumer panel of continuous reporters. We identify brand buyers in a base year, then calculate the proportion that fail to buy the brand in later years. We analyse the top 20 brands in 10 consumer goods categories We find pronounced erosion in repeat-buying over the long-term. The proportion of buyers from a base year that fail to ...
Independent store managers—who constitute a substantial portion of the retailing sector—often have limited resources with which to practice the formalized, data-driven pricing processes prescribed in the literature. On that basis, this article addresses how independent convenience store managers arrive at prices and whether their practices are effective. To begin with, 33 interviews with independent convenience store managers identified six common beliefs and ten practices underlying managers’ i...