Price promotions: examining the buyer mix and subsequent changes in purchase loyalty

Abstract

PurposeThis paper aims to investigate the extent to which temporary price promotions attract people who do not normally buy a brand, and whether buyers change their propensity to buy the promoted brand afterwards.Design/methodology/approachThe study analyses promotions in 18 consumer goods categories in the UK and USA. It calculates the proportion of promotion purchasers that have bought a brand at least once in their last five purchases and the Share of Category Requirements of those purchasers. These figures are then compared to normal-price purchasers.FindingsThe study finds the majority of price-promotion buyers already bought the brand at least once in their last five category purchases (average = 77 per cent). This figure is similar to that for normal-price purchases (average = 81 per cent). Average Household SCR to the brand is also very similar for price-promotion purchases compared to normal price purchases. Therefore, promotions do not attract a markedly different mix of buyers. Furthermore, buyer propensity to buy the brand is the same after a promotion purchase as it was before.Research limitations/implicationsA contribution of the paper is that it supports a theory of consumers as cognitive misers, who screen out promotion information about unfamiliar brands. The paper also highlights that in packaged-goods markets, consumers can be generally seen as experienced buyers, who do not learn new information from buying brands they have previously purchased.Practical implicationsThe managerial implication is that price promotions must be judged on their immediate profitability. There seems little recourse to the idea they can result in “try it, like it, buy it again later” effects.Originality/valueWhile many studies have examined the effects of price promotions, this is the first to explicitly compare the mix of buyers attracted from a price promotion to that which occurs when a brand is sold at normal price.