Effects of Price Promotions on Variety-Seeking and Reinforcement Behavior

Barbara E. Kahn and Jagmohan S. Raju
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Barbara E. Kahn: University of Pennsylvania
Jagmohan S. Raju: University of California, Los Angeles

Marketing Science, 1991, vol. 10, issue 4, 316-337

Abstract: A stochastic model is proposed to examine how changes in frequency of price discounts affect brand choice decisions of consumers who exhibit variety-seeking and reinforcement behavior. It is shown that the effect on choice depends on whether the brand offering discounts is a major or minor brand in the product category. This model extends the existing literature on stochastic models of variety-seeking behavior by explicitly incorporating switching due to promotions along with intrinsic switching due to variety-seeking. The model yields testable hypotheses which are supported in a laboratory experiment and on analyses of the IRI cracker data.

Keywords: choice models; promotions; buyer behavior; segmentation (search for similar items in EconPapers)
Date: 1991
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Citations: View citations in EconPapers (25)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormksc:v:10:y:1991:i:4:p:316-337

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