Decomposing the sales promotion bump accounting for cross-category effects

Peter S.H. Leeflang, Josefa Parreño Selva, Albert van Dijk, Dick R. Wittink

Research output: Contribution to journalArticle

Abstract

Extant research on the decomposition of unit sales bumps due to price promotions considers these effects only within a single product category. This article introduces a framework that accommodates specific cross-category effects. Empirical results based on daily data measured at the item/SKU level show that the effects of promotions on sales in other categories are modest. Between-category complementary effects (20%) are, on average, substantially larger than between-category substitution effects (11%). Hence, a promotion of an item has an average net spin-off effect of (20 - 11 =) 9% of its own effect. The number of significant cross-category effects is low, which means that we expect that, most of the time, it is sufficient to look at within-category effects only. We also find within-category complementary effects, which implies that competitive items within the category may benefit from a promotion. We find small stockpiling effects (6%), modest cross-item effects (22%), and substantial category-expansion effects (72%). The cross-item effects are the result of cross-item substitution effects within the category (26%) and within-category complementary effects (4%). Approximately 15% (= 11% / 72%) of the category-expansion effect is due to between-category substitution effects of dependent categories.
Original languageEnglish
Pages (from-to)201-214
Number of pages14
JournalInternational Journal of Research in Marketing
Volume25
Issue number3
DOIs
Publication statusPublished - Sep 2008

Keywords

  • cross-category effects
  • decomposition
  • brand sales model
  • store-level scanner data
  • daily data

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