Dynamic cross-sales effects of price promotions: Empirical generalizations

B. Vindevogel (), Dirk Van den Poel () and 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)
New Economics Papers: this item is included in nep-bec
Date: Written
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Persistent link: http://EconPapers.repec.org/RePEc:rug:rugwps:04/276

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