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Evaluating promotional pricing effectiveness using convenience store daily sales data

Author

Listed:
  • Naragain Phumchusri

    (Chulalongkorn University)

  • Warot Kosawanitchakarn

    (Chulalongkorn University)

  • Sirawich Chawanapranee

    (Chulalongkorn University)

  • Sirawish Srimook

    (Chulalongkorn University)

Abstract

One of the activities that can grab customers attention and rise sales for convenience stores is promotional pricing strategy. Our study aims to examine the effects of promotional pricing and other factors on sales. Six categories of products with 286 SKUs are explored. Four models are compared, and the results show that autoregressive-distributed lag model provides the lowest mean absolute percentage error (MAPE). This model can also capture the interaction between promotion and non-promotion products. Price elasticity of each product is found to be different, and it results different optimal prices for the maximum profit. Moreover, factors like holidays, the beginning of the month, or weekend, can uplift sales at a specific time. Unlike previous literature, this paper focuses on daily sales and related recent factors such as the number of COVID-19 cases. The methodology presented in this research provides guidelines for retailers to measure their pricing strategy and can be managerial insights for other retailers’ future strategy.

Suggested Citation

  • Naragain Phumchusri & Warot Kosawanitchakarn & Sirawich Chawanapranee & Sirawish Srimook, 2023. "Evaluating promotional pricing effectiveness using convenience store daily sales data," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 22(5), pages 362-373, October.
    • Handle: RePEc:pal:jorapm:v:22:y:2023:i:5:d:10.1057_s41272-022-00415-5
    DOI: 10.1057/s41272-022-00415-5
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    References listed on IDEAS

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