Foundations and Trends® in Marketing > Vol 3 > Issue 4

Promotion Dynamics

Scott A. Neslin, Dartmouth College, Tuck School of Business, USA, scott.a.neslin@dartmouth.edu Harald J. van Heerde, University of Waikato, Department of Marketing, New Zealand, heerde@waikato.ac.nz
 
Suggested Citation
Scott A. Neslin and Harald J. van Heerde (2009), "Promotion Dynamics", Foundations and TrendsĀ® in Marketing: Vol. 3: No. 4, pp 177-268. http://dx.doi.org/10.1561/1700000010

Published: 29 Oct 2009
© 2009 S. A. Neslin and H. J. van Heerde
 
Subjects
Sales Promotion
 
Keywords
PromotionsPricingSalesConsumersMarketingConsumer behaviorPsychologyIndustrial organization
 

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In this article:
1 Introduction
2 Basic Model Without Dynamic Effects
3 Stockpiling and Deceleration
4 State Dependence
5 Reference Prices
6 Price Sensitivity
7 Permanent Effects
8 Competition
9 Summary
A Details on the Promotion Dynamics Simulation
Acknowledgments
References

Abstract

Promotions affect sales after the immediate sales bump. In other words, they have dynamic effects on consumer purchase behavior outside the period of the promotional offer. The objective of this monograph is to present a comprehensive overview of the various dynamic effects of promotions. We believe there is an opportunity for such a monograph since the literature on dynamic promotion effects is vast and quite scattered. There have been so many researchers who have worked in this field across decades, using very wide-ranging terminologies, methodologies and data, that we believe there is a need to catalogue the current state of affairs. To keep the discussion centered on a common theme, we focus in particular on the dynamic effects of price promotions, (rather than non-price promotions) offered to consumers (rather than to the trade or to sales force).

DOI:10.1561/1700000010
ISBN: 978-1-60198-280-3
104 pp. $75.00
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ISBN: 978-1-60198-281-0
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Table of contents:
1. Introduction
2. Basic model without Dynamic Effects
3. Stockpiling and Deceleration
4. State Dependence
5. Reference prices
6. Price Sensitivity
7. Permanent Effects
8. Competition
References
Appendix: Details on the Promotion Dynamics Simulation

Promotion Dynamics

Firms spend a significant part of their marketing budgets on sales promotions. Since the impact of promotions on sales is usually immediate and strong, promotions are attractive to results-oriented managers seeking to increase sales in the short term. There are few, if any, other marketing instruments that are equally effective. Promotions also affect sales after the immediate sales bump. In other words, they have dynamic effects on consumer purchase behavior outside the period of the promotional offer. Promotion Dynamics presents a comprehensive overview of the various dynamic effects of promotions. Since the literature on dynamic promotion effects is vast and quite scattered, and there have been so many researchers who have worked in this field across decades using very wide-ranging terminologies, methodologies and data, there is a need to catalogue the current state of affairs. To keep the discussion centered on a common theme, the authors focus in particular on the dynamic effects of price promotions (rather than non-price promotions) offered to consumers (rather than to the trade or to sales force). Promotion Dynamics has two target audiences: The first is marketing students and marketing professionals seeking insights into the dynamic effects of promotions. For this audience, the dynamic effects are illustrated with several graphs that show what has been found in the literature and indicates what managers can do with these findings. The second audience is academic researchers new to the promotions area who are interested in studying dynamic promotion effects. This audience will benefit from model equations and the literature summary but also derive inspiration from suggestions for future research.

 
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