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Optimizing time limits in retail promotions: an email application

Author

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  • R C Hanna

    (Carroll School of Management)

  • P D Berger

    (Boston University)

  • L J Abendroth

    (Boston University)

Abstract

Most marketing managers know intuitively that once a customer delays a purchase decision, the potential is high that the purchase may be put off indefinitely. In response, marketing managers usually set ‘deadlines’ or time limits for how long an offer is available. However, research has shown that, while time limits can help motivate customers to buy now rather than later (or not at all), time limits that are over/under restrictive may actually hurt response more than help. We consider two opposing forces of time, namely awareness and urgency. Longer time limits allow for greater awareness of an offer, which, everything else being equal, should lead to a larger response. At the same time, longer time limits also reduce the urgency of an offer leading consumers to delay their purchase (perhaps) indefinitely and thus, everything else being equal, lead to a lower response. Using decision calculus, we model the optimal time limit for promotional offers and demonstrate its use in an email marketing application. Email marketing has emerged as a profitable tool for companies like Amazon and JCrew who regularly use email to communicate promotional offers to their customers because of its low cost to implement and its relatively high response rates. This research contributes to the field by providing marketing managers a methodology for determining superior choices for time limit in promotional offers.

Suggested Citation

  • R C Hanna & P D Berger & L J Abendroth, 2005. "Optimizing time limits in retail promotions: an email application," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 56(1), pages 15-24, January.
    • Handle: RePEc:pal:jorsoc:v:56:y:2005:i:1:d:10.1057_palgrave.jors.2601804
    DOI: 10.1057/palgrave.jors.2601804
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    References listed on IDEAS

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    Cited by:

    1. Even, Adir & Shankaranarayanan, G. & Berger, Paul D., 2010. "Managing the Quality of Marketing Data: Cost/benefit Tradeoffs and Optimal Configuration," Journal of Interactive Marketing, Elsevier, vol. 24(3), pages 209-221.
    2. Paul D Berger, 2016. "One man’s path to marketing analytics," Journal of Marketing Analytics, Palgrave Macmillan, vol. 4(1), pages 1-13, March.
    3. Mead, James A. & Richerson, Rob & Li, Wenjing, 2020. "Dynamic Right-Slanted Fonts Increase the Effectiveness of Promotional Retail Advertising," Journal of Retailing, Elsevier, vol. 96(2), pages 282-296.
    4. Richard C. Hanna & Scott D. Swain & Paul D. Berger, 2016. "Optimizing time-limited price promotions," Journal of Marketing Analytics, Palgrave Macmillan, vol. 4(2), pages 77-92, July.

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