A Market Experiment on Trade Promotion Budget and Allocation

Miguel Gomez, Vithala Rao and Hong Yuan

No 55928, Working Papers from Cornell University, Department of Applied Economics and Management

Abstract: We design a market experiment to examine how firm size and ability to choose trade promotion types influence trade promotion budget, its allocation and channel profits. Our experimental results show that larger manufacturers offer smaller trade promotion budgets. Manufacturers with ability to influence the allocation decision favor scan-backs while retailers favor off-invoices. Trade promotion decisions affect profit sharing within the channel but not total channel profit. We validate these findings with an econometric analysis of survey data from supermarket executives. Overall, our results suggest that market experiments can shed light on trade promotion outcomes for which industry data are sparse.

Keywords: Marketing (search for similar items in EconPapers)
Pages: 37
Date: 2009-09-16
New Economics Papers: this item is included in nep-exp
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Persistent link: https://EconPapers.repec.org/RePEc:ags:cudawp:55928

DOI: 10.22004/ag.econ.55928

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