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Sales Promotion Models

In: Handbook of Marketing Decision Models

Author

Listed:
  • Harald J. Heerde

    (Massey University)

  • Scott A. Neslin

    (Tuck School of Business, Dartmouth College)

Abstract

Firms spend a significant part of their marketing budgets on sales promotions. Since the impact of promotions on sales is usually immediate and strong, promotions are attractive to results-oriented managers seeking to increase sales in the short term. This chapter discusses models for measuring sales promotion effects. Part I focuses on descriptive models, i.e. models that describe, analyze, and explain sales promotion phenomena. We start by discussing models for analyzing the immediate impact of promotions and decomposing the resulting sales promotion bump into a variety of sources. Next we examine what happens after the immediate bump, and describes models for measuring feedback effects, reference price effects, learning effects, permanent effects, and competitive reactions. Next we turn to descriptive models for promotions aimed at retailers (“trade promotions”), and discuss forward buying and pass-through. In Part II we discuss normative models, i.e. models that tell the decision maker what is the best (profit maximizing) decision on sales promotion activities. We cover models for planning promotions to consumers as well as decision models on trade promotions for manufacturers, and normative retailer models for optimal forward buying and pass-through. Part III concludes this chapter with a summary, practical model guidelines, and directions for future research.

Suggested Citation

  • Harald J. Heerde & Scott A. Neslin, 2017. "Sales Promotion Models," International Series in Operations Research & Management Science, in: Berend Wierenga & Ralf van der Lans (ed.), Handbook of Marketing Decision Models, edition 2, chapter 0, pages 13-77, Springer.
    • Handle: RePEc:spr:isochp:978-3-319-56941-3_2
    DOI: 10.1007/978-3-319-56941-3_2
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    Citations

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    Cited by:

    1. Epstein, Leonardo D. & Inostroza-Quezada, Ignacio E. & Goodstein, Ronald C. & Choi, S. Chan, 2021. "Dynamic effects of store promotions on purchase conversion: Expanding technology applications with innovative analytics," Journal of Business Research, Elsevier, vol. 128(C), pages 279-289.
    2. Jee, Teck Weng, 2021. "The perception of discount sales promotions – A utilitarian and hedonic perspective," Journal of Retailing and Consumer Services, Elsevier, vol. 63(C).
    3. Xiao Liu, 2023. "Dynamic Coupon Targeting Using Batch Deep Reinforcement Learning: An Application to Livestream Shopping," Marketing Science, INFORMS, vol. 42(4), pages 637-658, July.
    4. Bombaij, Nick, 2021. "Effectiveness of loyalty programs," Other publications TiSEM 095c506d-5b5c-4ea3-9b41-a, Tilburg University, School of Economics and Management.
    5. Boone, Tonya & Ganeshan, Ram & Jain, Aditya & Sanders, Nada R., 2019. "Forecasting sales in the supply chain: Consumer analytics in the big data era," International Journal of Forecasting, Elsevier, vol. 35(1), pages 170-180.
    6. Bigdellou, Saeide & Aslani, Shirin & Modarres, Mohammad, 2022. "Optimal promotion planning for a product launch in the presence of word-of-mouth," Journal of Retailing and Consumer Services, Elsevier, vol. 64(C).
    7. Haiqing Hu & Pandu R. Tadikamalla, 2020. "When to launch a sales promotion for online fashion products? An empirical study," Electronic Commerce Research, Springer, vol. 20(4), pages 737-756, December.
    8. Peng Vincent Zhang & Seoyoung Kim & Anindita Chakravarty, 2023. "Influence of pull marketing actions on marketing action effectiveness of multichannel firms: A meta-analysis," Journal of the Academy of Marketing Science, Springer, vol. 51(2), pages 310-333, March.
    9. Philipp Aschersleben & Winfried J. Steiner, 2022. "A semiparametric approach to estimating reference price effects in sales response models," Journal of Business Economics, Springer, vol. 92(4), pages 591-643, May.
    10. Moodley, Raymond & Chiclana, Francisco & Caraffini, Fabio & Carter, Jenny, 2020. "A product-centric data mining algorithm for targeted promotions," Journal of Retailing and Consumer Services, Elsevier, vol. 54(C).
    11. Oğuz Çetin & Adam J. Mersereau & Ali K. Parlaktürk, 2020. "Management and Effects of In-Store Promotional Displays," Manufacturing & Service Operations Management, INFORMS, vol. 22(3), pages 481-494, May.

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