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The effects of price promotion depth on new and mature products

Journal of Brand Management volume 21, pages 202–215 (2014)Cite this article

Abstract

Although the short-term effects of price promotion depth on mature product sales volume and sales revenue are well known, empirical studies on the long-term effects of price promotions are relatively scarce. This study employs two models, a generalized linear autoregression model and a linear mixed model, to analyze the effects of promotion depth on sales revenue for a 106-weeks period. Using learning theory as a framework, the researchers also examine the effects of price promotions on new and mature consumer packaged goods sales. Across 10 store-level point-of-sales data sets, our results indicate that promotion depth does not affect brand extension sales but does positively influence line extension and mature product sales. We address the theoretical and managerial implications of these interesting results in the second half of the article.

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Authors and Affiliations

  1. College of Business Administration Chonbuk National University, Baekjedaero 567, Jeonju, 561756, South Korea

    Sunhee Choi, Wesley Friske, Sangno Lee & James Wilcox

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  1. Sunhee Choi
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  2. Wesley Friske
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  3. Sangno Lee
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  4. James Wilcox
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Correspondence to Sangno Lee.

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Choi, S., Friske, W., Lee, S. et al. The effects of price promotion depth on new and mature products. J Brand Manag 21, 202–215 (2014). https://doi.org/10.1057/bm.2014.1

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  • DOI: https://doi.org/10.1057/bm.2014.1

Keywords

  • brand extension
  • line extension
  • price promotion
  • retailing
  • scanner data