Promotion and Grocery Store Performance: The Role of Promotion Scope

摘要

Price promotions are important marketing tools with huge short-term impact on a retailer's performance.In consumer good industry, over 25% revenue attributes to discounts.Using promotions, retailers expect more customers to visit the store and buy more profitable products.However, empirical evidence of the relationship between price promotions and retailer performance are mixed and often contradictory.Price promotions are found to positively influence a retailer's performance by increasing store traffic and the sales of non-promoted products/categories.On the other hand, price promotions are often downvoted for sacrificing the sales of high-margin substitution categories/products, inducing price-searching behaviors, and lowering customers’reference prices. So far, one important dimension of price promotion: promotion scope, receives very little attention from literature.Our research aim at exploring the effect of promotion scope from a retailer's perspective and the research question is: How does price promotion scope influence a retailer's performance?