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Patterns of consumer response to retail price differentials

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  • Jorge M. Oliveira-Castro
  • Gordon R. Foxall
  • Teresa C. Schrezenmaier

Abstract

Decomposing price elasticity suggests that the major impact of promotions is on brand switching rather than increased consumption. Consumers may also buy smaller quantities of more expensive brands when compared to cheaper ones (inter-brand elasticity). Using panel data for the purchases of 80 consumers buying nine product categories over a 16-week period, we verified that inter-brand elasticities occur, and report the relative importance of intra- and inter-brand elasticities in determining quantity price elasticity per shopping occasion for the product category. Brands were classified by informational (socially mediated) and utilitarian (product-mediated) benefits. Intra-brand elasticity was higher than utilitarian inter-brand elasticity, which was higher than informational inter-brand elasticity.

Suggested Citation

  • Jorge M. Oliveira-Castro & Gordon R. Foxall & Teresa C. Schrezenmaier, 2005. "Patterns of consumer response to retail price differentials," The Service Industries Journal, Taylor & Francis Journals, vol. 25(3), pages 309-335, April.
    • Handle: RePEc:taf:servic:v:25:y:2005:i:3:p:309-335
    DOI: 10.1080/02642060500050392
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    Cited by:

    1. Jorge M. Oliveira-Castro & Gordon R. Foxall & Victoria K. James, 2008. "Individual differences in price responsiveness within and across food brands," The Service Industries Journal, Taylor & Francis Journals, vol. 28(6), pages 733-753, July.
    2. Jorge M. Oliveira-Castro & Gordon R. Foxall & Victoria K. James & Roberta H.B.F. Pohl & Moema B. Dias & Shing W. Chang, 2008. "Consumer-based brand equity and brand performance," The Service Industries Journal, Taylor & Francis Journals, vol. 28(4), pages 445-461, May.
    3. Foxall, Gordon R. & Yan, Ji & Oliveira-Castro, Jorge M. & Wells, Victoria K., 2013. "Brand-related and situational influences on demand elasticity," Journal of Business Research, Elsevier, vol. 66(1), pages 73-81.
    4. Rafael Barreiros Porto & Jorge Mendes de Oliveira-Castro & Diogo Conque Seco-Ferreira, 2010. "What consumers say and do: planned and actual amounts bought in relation to brand benefits," The Service Industries Journal, Taylor & Francis Journals, vol. 31(15), pages 2559-2570, September.

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