The Impact of Dealing Patterns on Purchase Behavior

Aradhna Krishna
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Aradhna Krishna: Columbia University

Marketing Science, 1994, vol. 13, issue 4, 351-373

Abstract: We explore the effect of dealing patterns on consumer purchase behavior by developing a normative purchase quantity model that can incorporate dealing pattern. The model adds to the stream of research on optimal purchasing policy by demonstrating how dealing patterns can be incorporated in a simple manner in dynamic programming models. Implications for purchase behavior are derived by employing the model in a numerical simulation in which time between deals is characterized by a Weibull distribution. The flexibility of the Weibull distribution enables us to establish how particular facets of the dealing distribution (e.g., certainty in deal timing, minimum time between deals) affect consumer behavior with respect to optimal purchase quantity, inventory, etc. One of the implications of the model is that the average quantity purchased on deal should be larger when there is greater certainty in deal timing. The model also shows that the average quantity purchased on deal should be larger when deals are spaced further apart. even though the buyer is presented with the same number of deals. We test certain model implications in a laboratory experiment and find actual behavior varying across dealing patterns in a manner consistent with model implications.

Keywords: promotions; buyer behavior; price expectations; inventory models; decision making under uncertainty (search for similar items in EconPapers)
Date: 1994
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Citations: View citations in EconPapers (23)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormksc:v:13:y:1994:i:4:p:351-373

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