Marketing Letters

, Volume 6, Issue 3, pp 221–233 | Cite as

Brand promotions as a lottery

  • Sanjay K. Dhar
  • Claudia González-Vallejo
  • Dilip Soman
Article

Abstract

This paper shows that imprecisely stated discounts in brand promotions offered in the form of a low-probability lottery can lead to higher sales (purchase intentions) and consequently profits than equally costly conventional promotions offering a precise discount on the entire stock. Results from two different experimental studies support our findings. For high-probability lottery-like promotions, imprecise discounts lead to a lower performance for the brand than conventional promotions. We attempt to explain the findings by drawing on the behavioral decision theory literature.

Key words

Price promotions impact of promotions decision making under ambiguity 

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Copyright information

© Kluwer Academic Publishers 1995

Authors and Affiliations

  • Sanjay K. Dhar
    • 1
  • Claudia González-Vallejo
    • 2
  • Dilip Soman
    • 1
  1. 1.Graduate School of BusinessThe University of ChicagoChicago
  2. 2.Center for Policy ResearchUniversity of Albany, SUNYUSA

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