Figure 1From “What is a price promotion?”
Purchase of the target brand by promotion expectation
Respondents classed as expecting a deal chose the brand less often when it came, and far less often when it did not.
Figure 1Purchase of the target brand by promotion expectation
Source: Kalwani and Yim (1992), Table 3, p. 98. Share of respondents who chose the target brand in week 11: expected a promotion and was offered one, 30 of 51; did not expect one and was offered one, 33 of 42; expected one and was offered none, 6 of 42; did not expect one and was offered none, 21 of 53. A respondent was classed as expecting a promotion after seeing the brand on promotion in at least half of the ten earlier weeks. 188 student respondents, two hypothetical detergent brands, one laboratory experiment.
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Each line names a claim related to this exhibit, its source, and how it was checked.
- A KY92-C4 Frequent promotions can create promotion expectations, after which consumers typically buy only on promotion; in week 11 every respondent had to choose one of the two brands, so the design measures switching, not deferral; expectation was inferred at a 50 per cent frequency threshold chosen by grid search; Table 3: purchase with promotion 59% (30 of 51) when expected and 79% (33 of 42) when not, without promotion 14% (6 of 42) when expected and 40% (21 of 53) when not; the loss of an expected promotion weighs more than a surprise one, a loss aversion phenomenon (pp. 91, 94 to 98): "they needed to purchase laundry detergent from a local supermarket"; "Brand choice was obtained by requesting the respondent to select one of the two brands for purchase."; "Though we did not set out to elicit expectations for promotional activity as we did for price"; "consumers who have been exposed to frequent price promotions in support of a given brand may come to form promotion expectations and typically will purchase the brand only when it is price promoted"; "the promotion frequency threshold of 50% or more of the time is adopted in the operationalization because it provides the highest adjusted"; "We see that 59% of the 51 respondents who were offered a price promotion on the target brand and expected a promotion on it purchased the brand in contrast to 79% of the 42 respondents"; "only 14% of the respondents who expected a promotion on the target brand purchased it without a price promotion in contrast to 40%"; "consumers' response to the loss of an expected promotion is stronger than their response to a surprise or unexpected promotion"Kalwani & Yim. (1992)
Grades: A, verified against the printed page of the primary source · B, primary source, text layer only · C, authoritative secondary · D, reported.
From the essay
Pricing & revenue architecture
What is a price promotion?
A price promotion is a temporary price cut announced to buyers. It lifts sales at once, and buyers who see it often may buy the brand less without it.
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