Feature and discounts promotions are among the most frequently used marketing instruments in the consumer packaged goods (CPG) landscape. Using a flexible generalized extreme-value model, this study analyses the effect of national brand feature and discount promotions in a multi-retailer and multi-brand setting, in which households can use different decision routes to choose a (national or private label) brand and store. Across nine CPG categories, our results reveal that in each category a mixture of decision routes prevails: about 55 % of households exhibiting a brand focus (i.e. primarily select a brand, and then choose between stores offering that brand), the remaining 45 % showing evidence of a retailer focus (i.e. rather substituting brand offers within a visited store). These decision routes entail different patterns of competition between brands and stores, and come with differences in promotion response: feature ads triggering stronger (weaker) reactions among households with a brand (retailer) focus in almost all categories, and discount depth hardly affecting households with a retailer focus. As such, especially for less-frequently purchased categories, the brand-focus decision route leads to larger net promotion benefits for the retailer and, despite the stronger brand-cannibalization, even for the manufacturer. Managerial implications are discussed.
Brand and store choice Decision structures National brand promotions Feature ads Discounts
This is a preview of subscription content, log in to check access.
Ailawadi, K. L., Beauchamp, J. P., Donthu, N., Gauri, D. K., & Shankar, V. (2009). Communication and promotion decisions in retailing: A review and directions for future research. Journal of Retailing, 85(1), 42–55.CrossRefGoogle Scholar
Baltas, G., Argouslidis, P. C., & Skarmeas, D. (2010). The role of customer factors in multiple store patronage: A cost-benefit approach. Journal of Retailing, 86(1), 37–50.CrossRefGoogle Scholar
Gauri, D. K., Sudhir, K., & Talukdar, D. (2008). The temporal and spatial dimensions of price search: Insights from matching household survey and purchase data. Journal of Marketing Research, 45(2), 226–240.CrossRefGoogle Scholar
Kushwaha, T., & Shankar, V. (2013). Are multichannel customers really more valuable? The moderating role of product category characteristics. Journal of Marketing, 77(4), 67–85.CrossRefGoogle Scholar
Mehta, N., & Ma, Y. (2012). A multicategory model of consumers’ purchase incidence, quantity, and brand choice decisions: Methodological issues and implications on promotional decisions. Journal of Marketing Research, 49(4), 435–451.CrossRefGoogle Scholar
Srinivasan, S., Pauwels, K., Hanssens, D. M., & Dekimpe, M. G. (2004). Do promotions benefit manufacturers, retailers, or both? Management Science, 50(5), 617–629.CrossRefGoogle Scholar
Steenkamp, J.-B. E. M., van Heerde, H. J., & Geyskens, I. (2010). What makes consumers willing to pay a price premium for national brands over private labels? Journal of Marketing Research, 47(6), 1011–1024.CrossRefGoogle Scholar
van Heerde, H., Leeflang, P. S. H., & Wittink, D. R. (2004). Decomposing the sales promotion bump with store data. Marketing Science, 23(3), 317–334.CrossRefGoogle Scholar