Measuring the Short-Term Effect of In-Store Promotion and Retail Advertising on Brand Sales: A Factorial Experiment

Abstract

In a replicated in-store factorial experiment with 12 national brands in six nonperishable consumer goods categories, the authors find price deal elasticities in the [2–11] range, with larger values for smaller brands. Those elasticities increase 20% to 180% when deals are advertised by the retailer; the rates of increase are smaller for the leading brands. The price deal cross-elasticities of the higher priced brands are found to be smaller than those of the other brands; they are in the [2–2.7] range. Optimal retail deal rates are shown to be robust to model specification.