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Posted: February 26th, 2022
Sahni, Chintagunta and Zou 2017 We find that the offers cause the average expenditure to increase significantly
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Sahni, Chintagunta and Zou 2017 We find that the offers cause the average expenditure to increase significantly, by $3.03 (a 37.2% increase) during the promotion window. However, the redemption rate of these offers is low. Importantly, ninety percent of these gains are not through redemption of the offers. The individuals who spent more on the platform in the past are more responsive to the offers; and the effect of the offers is significantly higher among individuals who did not transact on the platform in the year before the offer was given. Interestingly, the promotion causes carryover to the week after the promotion expires; we find that spending increases by $1.55 in the week after the offer expires. Additionally, we find evidence for cross category spillovers to non-promoted products – offers not applicable to a ticket genre cause an increase in spending in that genre. We conclude that emailed offers can serve as a form of “advertising” for the firm’s products rather than tools of price discrimination.
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Want to gain distribution, encourage stock at certain levels (for example, prior to running a consumer promotion), encouraging the channel to promote.
Push Marketing
Shelf Space Higher levels of inventory to limit stockouts Effort Coop advertising offset the impact of competitive promos
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General Motors ran a price promotion “You pay what we (employees) pay” in the summer of 2005 that was imitated after five weeks by it two major U.S. competitors. Increased sales, but at a loss of $5000 per vehicle. Overall negative impact. Cadillac sponsored a Super Bowl post-game show to promote the ability of its V- Series cars to hit 60 mph in less than five seconds. Created a special Web site promoting a “Five Second Film Competition”- shoot and upload a five-second film on any topic. More than 2.5 million consumers visited the site, 2600 submited films, in the four months following the promotion, Cadillac V-series sales jumped by 25%.
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One interesting idea is to spend more time attempting to design promotions that are easy for consumers to adopt and difficult for competitors to imitate.
Home Depot – employing Olympic athletes. Flexible work week and benefits. Created stronger links to the Olympics than many other Olympic sponsors. Plus lots of publicity.
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