Is 3/4 of the sales promotion bump due to brand switching?
Author InfoHeerde, H.J. van Gupta, S. Wittink, D.R. (Tilburg University, Center for Economic Research) Abstract Several researchers have decomposed sales promotion elasticities based on household scanner panel data. A key result is that the majority of the sales promotion elasticity, about 74 percent on average, is attributed to secondary demand effects (brand switching) and the remainder to primary demand effects (timing acceleration and quantity increases). We demonstrate that this result does not imply that if a brand gains 100 units in sales during a promotion the other brands in the category lose 74 units (74 percent). We offer a complementary decomposition measure based on unit sales. This measure shows the ratio of the current cross-brand unit sales loss to the current own-brand unit sales gain during promotion, and we report empirical results for this measure. We also derive analytical expressions that transform the elasticity decomposition into a decomposition of unit sales ef
Author InfoHeerde, H.J. van Gupta, S. Wittink, D.R. (Tilburg University, Center for Economic Research) Abstract Several researchers have decomposed sales promotion elasticities based on household scanner panel data.A key result is that the majority of the sales promotion elasticity, about 74 percent on average, is attributed to secondary demand effects (brand switching) and the remainder to primary demand effects (timing acceleration and quantity increases).We demonstrate that this result does not imply that if a brand gains 100 units in sales during a promotion the other brands in the category lose 74 units (74 percent).We offer a complementary decomposition measure based on unit sales.This measure shows the ratio of the current cross-brand unit sales loss to the current own-brand unit sales gain during promotion, and we report empirical results for this measure.We also derive analytical expressions that transform the elasticity decomposition into a decomposition of unit sales effects
