Kl. Ailawadi et Sa. Neslin, THE EFFECT OF PROMOTION ON CONSUMPTION - BUYING MORE AND CONSUMING ITFASTER, Journal of marketing research, 35(3), 1998, pp. 390-398
The authors empirically demonstrate the existence of flexible consumpt
ion rates in packaged-goods products, how this phenomenon can be model
ed, and its importance in assessing the effectiveness of sales promoti
on. They specify an incidence, choice, and quantity model in which cat
egory consumption varies with the level of household inventory. The au
thors use two different functions to relate consumption rates to house
hold inventory and estimate the models using scanner panel data from t
wo product categories: yogurt and ketchup, Both functions provide a si
gnificantly better fit than a conventional model, which assumes a cons
tant daily usage rate. They also have strong discriminant validity; yo
gurt consumption is found to be much more flexible with respect to inv
entory than ketchup consumption is. The authors use a Monte Carte simu
lation to decompose the long-term impact of promotion into brand switc
hing and consumption effects and conclude with the implications of the
ir findings for researchers and managers.