Advertising, incentives, and the upsell: how advertising differentially moderates customer- vs. retailer-directed price incentives’ impact on consumers’ preferences for premium products

Chadwick J. Miller (), Daniel C. Brannon, Jim Salas and Martha Troncoza
Additional contact information
Chadwick J. Miller: Washington State University
Daniel C. Brannon: University of Northern Colorado
Jim Salas: Pepperdine University
Martha Troncoza: Kennesaw State University

Journal of the Academy of Marketing Science, 2021, vol. 49, issue 6, No 1, 1043-1064

Abstract: Abstract Many durable goods firms use price promotion strategies and advertising simultaneously to impact consumer preferences among vertically differentiated product offerings. In this research, we use a large secondary dataset of automotive purchases (N = 323,959) to investigate how advertising spending differentially moderates the positive impact of both customer- and retailer-directed price incentives on consumers’ premium level of purchase for vertically differentiated products. We find that higher advertising spending magnifies the positive impact of customer-directed price incentives on consumers’ preference for more premium purchases. In contrast, higher advertising spending attenuates the positive impact of retailer-directed price incentives on consumers’ preference for more premium purchases. Our work is distinct from previous research, which has almost exclusively focused on the CPG industry and the effects of advertising and price promotions on general demand metrics—instead of consumers’ preferences for premium products. Our work has important implications for practitioners and consumer welfare.

Keywords: Incentives; Retailer; Customer; Advertising; Premium purchase (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://link.springer.com/10.1007/s11747-021-00791-1 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:joamsc:v:49:y:2021:i:6:d:10.1007_s11747-021-00791-1

Ordering information: This journal article can be ordered from
https://www.springer ... gement/journal/11747

DOI: 10.1007/s11747-021-00791-1

Access Statistics for this article

Journal of the Academy of Marketing Science is currently edited by John Hulland, Anne Hoekman and Mark Houston

More articles in Journal of the Academy of Marketing Science from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().