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Estimating cannibalizing effects of sales promotions: The impact of price cuts and store type

Author

Listed:
  • Rod Mccoll

    (Rennes SB - Rennes School of Business)

  • Renaud Macgilchrist

    (Rennes SB - Rennes School of Business)

  • Shuddhasattwa Rafiq

    (Deakin University [Melbourne Burwood])

Abstract

To evaluate the financial impact of supermarket sales promotions, managers must estimate how much new demand comes from cannibalizing the base product compared with other sources. However, investigations into cannibalization are scant. Using vector autoregression analytical framework applied to three years of supermarket scanner data, and sales promotions for pound cake, we estimate cannibalization effects for two common price reductions (10% and 15%), across large, medium and small supermarkets. The sales bumps varied across supermarkets for each price cut while cannibalization effects were substantial only in large supermarkets, with moderate effects in medium stores and no effects in small supermarkets.

Suggested Citation

  • Rod Mccoll & Renaud Macgilchrist & Shuddhasattwa Rafiq, 2020. "Estimating cannibalizing effects of sales promotions: The impact of price cuts and store type," Post-Print hal-02502697, HAL.
    • Handle: RePEc:hal:journl:hal-02502697
    DOI: 10.1016/j.jretconser.2019.101982
    Note: View the original document on HAL open archive server: https://rennes-sb.hal.science/hal-02502697v1
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    1. ReynerPérez-Campdesuñer & Alexander Sánchez-Rodríguez & Gelmar García-Vidal & Rodobaldo Martínez-Vivar & Margarita De Miguel-Guzmán, 2020. "Influence of theStructure of Product Portfolio Performance in aSmall Business Retail," International Journal of Business and Social Research, MIR Center for Socio-Economic Research, vol. 10(1), pages 23-34, January.
    2. Drezner, Zvi & Eiselt, H.A., 2024. "Competitive location models: A review," European Journal of Operational Research, Elsevier, vol. 316(1), pages 5-18.
    3. Katakam, Bharath Shashanka & Bhukya, Ramulu & Bellamkonda, Raja Shekhar & Samala, Nagaraj, 2021. "Longitudinal analysis versus cross-sectional analysis in assessing the factors influencing shoppers’ impulse purchase behavior – Do the store ambience and salesperson interactions really matter?," Journal of Retailing and Consumer Services, Elsevier, vol. 61(C).
    4. Tsai, Pei-Hsuan & Tang, Jia-Wei & Chen, Chih-Jou, 2022. "Partnerships that go places: How to successfully market products from vendor partners at retail stores from the vendors’ perspective," Journal of Retailing and Consumer Services, Elsevier, vol. 64(C).
    5. Stephanie Jane S. Garduce & Kathlene Gene C. Dionio & Blessie S. Tamayo & Ramil Jr. M. Budlong & Chrisha Ellaine M. Vale, 2024. "Examining the Correlation Between Product Pricing and Sales Performance of Sari-Sari Stores," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(6), pages 2900-2918, June.
    6. Pawel Kalczynski & Zvi Drezner & Morton O’Kelly, 2025. "Multi-facility location models incorporating multipurpose shopping trips," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 47(2), pages 455-475, June.
    7. Li, Zonghuo & Wang, Di & Yang, Wensheng & Jin, Hyun Seung, 2022. "Price, online coupon, and store service effort decisions under different omnichannel retailing models," Journal of Retailing and Consumer Services, Elsevier, vol. 64(C).
    8. Holzer, Patrick Sebastian, 2020. "The effect of time-varying factors on promotional activity in the German milk market," Journal of Retailing and Consumer Services, Elsevier, vol. 55(C).
    9. Jean-Baptiste Débordès & Gilles Caporossi & Denis Larocque, 2021. "Is my cross-promotion profitable? Evaluation of game-to-game cannibalization in free-to-play mobile games," Journal of Marketing Analytics, Palgrave Macmillan, vol. 9(3), pages 173-184, September.
    10. Taku Moriyama & Masashi Kuwano, 2022. "Causal inference for contemporaneous effects and its application to tourism product sales data," Journal of Marketing Analytics, Palgrave Macmillan, vol. 10(3), pages 250-260, September.
    11. ReynerPérez-Campdesuñer & Alexander Sánchez-Rodríguez & Gelmar García-Vidal & Rodobaldo Martínez-Vivar & Margarita De Miguel-Guzmán, 2020. "Influence of theStructure of Product Portfolio Performance in aSmall Business Retail," International Journal of Business and Social Research, LAR Center Press, vol. 10(1), pages 23-34, January.
    12. Sergiy Tkachuk & Szymon {L}ukasik & Anna Wr'oblewska, 2024. "Consumer Transactions Simulation through Generative Adversarial Networks," Papers 2408.03655, arXiv.org.
    13. Ramazan Esmeli & Mohamed Bader-El-Den & Hassana Abdullahi, 2021. "Towards early purchase intention prediction in online session based retailing systems," Electronic Markets, Springer;IIM University of St. Gallen, vol. 31(3), pages 697-715, September.
    14. Zhuang, Yiming & Xu, Xun, 2025. "Flash sale or continuing Sale? Examining the timing flow of E-tailers’ promotion effects," Journal of Retailing and Consumer Services, Elsevier, vol. 86(C).

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