Dynamic cross-sales effects of price promotions: Empirical generalizations

B. Vindevogel (), Dirk Van den Poel and G. Wets
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G. Wets: -

Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium from Ghent University, Faculty of Economics and Business Administration

Abstract: 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.

Keywords: Empirical generalizations; market-basket analysis; cross-price elasticities; promotion strategy; multivariate time-series techniques; retailing. (search for similar items in EconPapers)
Pages: 26 pages
Date: 2004-11
New Economics Papers: this item is included in nep-bec
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Persistent link: https://EconPapers.repec.org/RePEc:rug:rugwps:04/276

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