Dynamic cross-sales effects of price promotions: Empirical generalizations
In this research we use the framework of market-basket analysis and techniques from modern multivariate time-series analysis to measure and explain the dynamic impact of a price promotion on the sales of a complementary product. The large scale of this research enables us to derive empirical generalizations. We contribute to the literature in drawing the following conclusions: Firstly, we illustrate that using an intense promotion strategy, characterized by deeper and more frequent price promotions, has a negative impact on the cross-price effect. Secondly, we show that using the same brand name (umbrella branding) for two complements has a beneficial influence on the cross-price effect. Finally, we show that price levels of the products are important moderators in explaining persistent cross-price effects.
|Date of creation:||Nov 2004|
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- B. Vindevogel & D. Van Den Poel & G. Wets, 2004. "Why promotion strategies based on market basket analysis do not work," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 04/262, Ghent University, Faculty of Economics and Business Administration.
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- D. VAN DEN POEL & Jan J. DE SCHAMPHELAERE & G. WETS, 2003. "Direct and Indirect Effects of Retail Promotions," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 03/202, Ghent University, Faculty of Economics and Business Administration.
- Evans, Lewis & Wells, Graeme, 1983. "An alternative approach to simulating var models," Economics Letters, Elsevier, vol. 12(1), pages 23-29.
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