THE LONG-TERM IMPACT OF PROMOTIONS ON CONSUMER STOCKPILING BEHAVIOR

Although brands have increased their promotional spending substantiall y in many categories over the past decade, panel-based research into c onsumer stockpiling behavior typically has assumed that consumers' dec isions regarding whether and how much to purchase have remained invari ant to this increase. The authors develop a varying parameter model of purchase incidence and purchase quantity to ascertain whether this in crease in promotions has affected households' stockpiling decisions in the long term. The authors estimate the model on the basis of more th an eight years of panel data for a frequently purchased, nonfood, cons umer packaged-goods product. The results suggest that consumers' stock piling behavior has changed over the years. The increased long-term ex posure of households to promotions has reduced their likelihood of mak ing category purchases on subsequent shopping trips. However, when hou seholds do decide to buy, they tend to buy more of a good. Such behavi or is indicative of an increasing tendency to ''lie in wait'' for espe cially good promotions. This change appears to have some deleterious r amifications for category profitability.