Publication
Title
Something free or something off? A comparative study of the purchase effects of premiums and price cuts
Author
Abstract
As an alternative to promotional price cuts, retailers and manufacturers often rely on non-price promotion techniques, such as premium promotions, where consumers receive a free gift with the purchase of a product. We compare the effectiveness of premiums to that of price cuts, and study moderators of this comparative premium effectiveness. We use data from a large online shopping simulation study with more than 2,000 participants to model consumers' purchase decisions in response to premiums and price cuts. Results indicate that the impact of premiums on purchase behavior is systematically lower than that of equivalent price cuts. However, a premium's smaller sales impact may be offset by a cost advantage. This is especially true for private label brands where the premium's purchase effects do not differ too much from those of a price cut. We calculate how large the cost advantage has to be for a premium to be more profitable than a price cut, and show that premiums entail risks as well as opportunities, for both manufacturers and retailers. (C) 2017 New York University. Published by Elsevier Inc. All rights reserved.
Language
English
Source (journal)
Journal of retailing. - New York, N.Y.
Publication
New York, N.Y. : 2018
ISSN
0022-4359
Volume/pages
94 :1 (2018) , p. 5-20
ISI
000428828600002
Full text (Publisher's DOI)
Full text (publisher's version - intranet only)
UAntwerpen
Faculty/Department
Research group
Publication type
Subject
Affiliation
Publications with a UAntwerp address
External links
Web of Science
Record
Identification
Creation 02.08.2018
Last edited 17.09.2021
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