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Price Promotions and Popular Events

Wiebke I.Y. Keller, Barbara Deleersnyder and Karen Gedenk

JM Insights in the Classroom

Full Citation: ​
Keller, Wiebke I.Y., Barbara Deleersnyder, and Karen Gedenk (2019), “Price Promotions and Popular Events,” Journal of Marketing, 83 (1), 73–88.

Insight:
Superbowl, the Olympics, or the FIFA World Cup. In addition to advertising, firms run price promotions at local retailers. But is this actually a good idea? A study examining consumers’ responses to price promotions during popular events finds that these kinds of price promotions can generate a stronger response than the same promotion at non-event times, but only for brands that either have a high or a low category-event fit. Guidelines for CPG managers are discussed.

Abstract:
Managers often use popular events, such as the Olympics, to advertise their brands more heavily. But can manufacturers and retailers also capitalize on these events to enhance the response to their price promotions? This study empirically examines whether the sales response to price promotions is stronger or weaker around events than at non-event times, and what factors drive this relative promotion response. Studying 242 brands from 30 CPG categories in the Netherlands over more than four years, the authors find that a price promotion offered around a popular event often generates a stronger sales response than the same promotion at non-event times, with a price promotion elasticity that is 9.3% larger, on average, during events. Still, the variance in relative promotion response across brands and events is high, and the authors identify several drivers that managers should consider before shifting promotions towards event times. Currently, managers often do not take these drivers into account. This study provides guidelines how to improve promotional timing decisions in relation to popular events.

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Topic Areas: ​
Advertising; Entertainment marketing (e.g., Sports, Movies, Hospitality, Tourism); Marketing Communications; Marketing Strategy; ​​​

Special thanks to Kelley Gullo and Holly Howe, Ph.D. candidates at Duke University, for their support in working with authors on submissions to this program. 

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Wiebke I.Y. Keller is Assistant Professor of Marketing, Eberhard Karls University of Tuebingen, Germany.

Barbara Deleersnyder is Associate Professor of Marketing, Tilburg University, The Netherlands.

Karen Gedenk is Professor of Marketing, University of Hamburg, Germany.