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Pocketing The Trade Deal

Author

Listed:
  • Armstrong, Marcia K.
  • Gerstner, Eitan
  • Hess, James D.

Abstract

Retailers frequently pocketed trade deals but magnified them when they passed ?nything through. Nothing other than anecdotal evidence has been published in intervening two decades since Chevalier and Curhan's study to document changes occurring in trade promotion offers and retail response. Filling this void, the paper begins with an empirical analysis of all trade promotion offers over a recent two year Period to one retail chain and its response. The paper concludes with a simple model that identifies the forces that break down channel coordination when trade promotions are relied upon. These include consumer difference in willingness to pay and retailer differences in the importance of store traffic draw from the promoted brand.

Suggested Citation

  • Armstrong, Marcia K. & Gerstner, Eitan & Hess, James D., 1994. "Pocketing The Trade Deal," Promotion in the Marketing Mix: What Works, Where and Why, April 28-29, 1994, Toronto, Canada 279598, Regional Research Projects > NECC-63: Research Committee on Commodity Promotion.
    • Handle: RePEc:ags:rr6394:279598
    DOI: 10.22004/ag.econ.279598
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    References listed on IDEAS

    as
    1. Gerstner, Eitan & Hess, James D, 1991. "A Theory of Channel Price Promotions," American Economic Review, American Economic Association, vol. 81(4), pages 872-886, September.
    2. Robert C. Blattberg & Alan Levin, 1987. "Modelling the Effectiveness and Profitability of Trade Promotions," Marketing Science, INFORMS, vol. 6(2), pages 124-146.
    3. John Conlisk & Eitan Gerstner & Joel Sobel, 1984. "Cyclic Pricing by a Durable Goods Monopolist," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 99(3), pages 489-505.
    4. Eitan Gerstner & Duncan Holthausen, 1986. "Profitable Pricing When Market Segments Overlap," Marketing Science, INFORMS, vol. 5(1), pages 55-69.
    5. Narasimhan, Chakravarthi, 1988. "Competitive Promotional Strategies," The Journal of Business, University of Chicago Press, vol. 61(4), pages 427-449, October.
    6. Jeuland, Abel P & Narasimhan, Chakravarthi, 1985. "Dealing-Temporary Price Cuts-by Seller as a Buyer Discrimination Mechanism," The Journal of Business, University of Chicago Press, vol. 58(3), pages 295-308, July.
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    Cited by:

    1. Davis, Scott, 1994. "When Do Price Promotions Make Sense," Promotion in the Marketing Mix: What Works, Where and Why, April 28-29, 1994, Toronto, Canada 279599, Regional Research Projects > NECC-63: Research Committee on Commodity Promotion.

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