Please or squeeze? Brand performance implications of constrained and unconstrained multi-item promotions

Existing research on price promotions typically investigates the effects of single-product promotions. However, brand managers often promote multiple items simultaneously to bolster the performance of a complete brand line. This paper investigates the brand performance implications of such multi-item promotions. We distinguish between two types of multi-item promotions: traditional, unconstrained multi-item promotions that grant a discount irrespective of the size or composition of the purchase set, and constrained multi-item promotions that require consumers to purchase specific quantities (self-bundling) or even predetermined combinations (fixed bundling) of promoted items. Using a normative consumer decision model, the authors analyze the relative effectiveness of these promotions in terms of unit sales and revenue impact and show that promotion performance is moderated by consumers’ preference for variety. The authors find that unconstrained multi-item promotions outperform single-item promotions, especially in markets without variety-seeking. In markets with variety seeking, unconstrained multi-item promotions are not as effective in stealing extra sales from competition because consumers prefer to spread their purchases across all items, including competitive ones. However, in those markets, self-bundling promotions are particularly effective because they force consumers to adopt larger amounts of the promoted items at the expense of competitors. Finally, in neither type of market does fixed bundling substantially improve promotion performance

Please or Squeeze? Brand performance implications of constrained and unconstrained multi-item promotions

Existing research on price promotions typically investigates the effects of single-product promotions. However, brand managers often promote multiple items simultaneously to bolster the performance of a complete brand line. This paper investigates the brand performance implications of such multi-item promotions. We distinguish between two types of multi-item promotions: traditional, unconstrained multi-item promotions that grant a discount irrespective of the size or composition of the purchase set, and constrained multi-item promotions that require consumers to purchase specific quantities (self-bundling) or even predetermined combinations (fixed bundling) of promoted items. Using a normative consumer decision model, the authors analyze the relative effectiveness of these promotions in terms of unit sales and revenue impact and show that promotion performance is moderated by consumers' preference for variety. The authors find that unconstrained multi-item promotions outperform single-item promotions, especially in markets without variety-seeking. In markets with variety seeking, unconstrained multi-item promotions are not as effective in stealing extra sales from competition because consumers prefer to spread their purchases across all items, including competitive ones. However, in those markets, self-bundling promotions are particularly effective because they force consumers to adopt larger amounts of the promoted items at the expense of competitors. Finally, in neither type of market does fixed bundling substantially improve promotion performance.Marketing Price promotion Retailing Nonlinear programming

Consumer choice models on the effect of promotions in retailing

This doctoral thesis contains three empirical essays regarding the effect of promotions on consumer choices in a retailing context. The first essay studies the scheduling of featured price cuts for national brands, across retail chains. It shows that coordinating promotions across chains influences the performance outcomes for both manufacturers and retailers in several consumer packaged goods (CPG) categories. The second essay investigates the impact of consumers’ decision making processes on store-flyer and discount promotions. It shows that the effect of such promotions depends on whether a consumer follows a brand-focused structure (in which case s/he disproportionately substitutes between retailers) or a retailer-focused structure (in which case s/he primarily switches among brands within a given retail chain), and that a mixture of these structures is at work in CPG categories. The third essay examines large-scale promotional events (“Savings Weeks”). It provides insights into the mechanisms that set these events apart from ‘business-as-usual’ promotions, and sheds light on how they influence households’ retailer visit and spending decisions

A micro-analysis of the influence of retail promotions on the healthiness of breakfast cereal purchases.

An unhealthy diet is associated with obesity, negative health outcomes and increasing public costs such as health care expenses and unemployment. A lower socio-economic status population has a higher incidence of obesity, yet it is these groups that are most susceptible to food marketing tools. One common tool are retail promotions such as temporary price reductions and multi-buy offers. This study investigates retail purchases made under different promotion types through the lens of the retailer and the consumer. The aim of the study is to examine the influence of retail promotions on sales and purchases of healthy and less healthy breakfast cereals. Further, it investigates the role of retail promotions on improving the healthiness of purchases and the evidence whether promotions can encourage healthier eating patterns. In order to achieve the above-mentioned aim, the study employs a sample from Kantar Worldpanel scanner data using Scotland as a case study across breakfast cereal purchases. The primary contribution of this study is adding knowledge to the food economics literature on the role of retail promotions and the main novelty is that the study investigates across different retail promotion types and their influence on sales as well as purchases. The study examines price and volume promotions across the perspective of retailers, consumers, and policy. Further, this study uses the UK FSA nutrient profiling score to assess the healthiness of each product in the dataset linking less healthy dietary patterns to ultra-processed foods analysing the whole food category breakfast cereals. The research results have a number of policy implications that can help shape consumer’s diets for the better through improving the market environment by promoting healthier products. The results indicate that retail promotions are more likely to be applied to less healthy breakfast cereal products across both price and volume promotions used by the retailers. Moreover, the results reveal that both retail promotions increase purchases and therefore, the consumption across households. Further, both retail promotion types decrease the overall healthiness of households encouraging the healthiest and least healthy households to purchase unhealthier breakfast cereals – therefore retail promotions impact the diet of consumers and might be one factor contributing to the obesity crisis among adults and children. Strict regulations through the UK government are necessary to have a stronger impact with policy implications identifying practical strategies and enabling healthier food shopping which will help improve consumer diets in the long term. The results clearly show the potential for promotions in a pro- health strategy and one policy approach might be to restrict retail promotions on less healthy products and at the same time encourage price reductions and multi-buy offers on healthy products only. The thesis informs on the debate of the role of different retail promotion types in unhealthy eating and provides evidence on the potential for price discounting to promote healthier eating patterns, particularly among socio-economic groups exhibiting the poorest diets