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Retailers' and manufacturers' price-promotion decisions: Intuitive or evidence-based?

Svetlana Bogomolova, Marietta Szabo and Rachel Kennedy

Journal of Business Research, 2017, vol. 76, issue C, 189-200

Abstract: Consumer price promotions account for more than half of many manufacturers' marketing budgets, and require a significant time investment to manage. Amidst the considerable research on price promotions, little academic attention has been paid to how manufacturers and retailers make price-promotion decisions. Based on in-depth interviews with a broad range of managers, this study investigates factors that influence price-promotion decisions in durable and consumer goods industries. Findings suggest that (1) intuition and untested assumptions are the main inputs into these decisions; (2) practitioners lack solid empirical evidence to guide their actions, and their beliefs are often in stark contrast with academic knowledge about the effectiveness of price promotions; and (3) price promotions are typically not evaluated against the objectives according to which they were justified, impeding appropriate feedback for future decisions. Research priorities are outlined to advance evidence-based decision-making in this area.

Keywords: Price promotions; Decision-making; Retailer; Manufacturer; Intuition (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:eee:jbrese:v:76:y:2017:i:c:p:189-200