Journal of Marketing Research · 1995 · 213 citations · 0 references
BusinessMarketingMarketing ManagementMicroeconomicsPricing StrategyPricing TheoryCompetitive PricingConsumer Demand AnalysisDemand AnalysisDemand TheoryPrice ElasticityPricing AnalyticsConsumer Demographic AnalysisDemand Elasticity AnalysisPrice Elasticity ModelingPrice Response ModelingPrice Sensitivity ModelingPromotional Pricing EffectsPromotional Pricing StrategySupermarket Economics
Using weekly scanner data for 18 product categories, the authors estimated store‑specific price elasticities for 83 supermarkets and related them to demographic and competitor variables of each store’s trading area. They found that 11 demographic and competitive variables explain on average 67 % of the variation in price response, with consumer demographics having a stronger influence than competition, suggesting opportunities for more effective pricing strategies.
Using weekly scanner data representing 18 product categories, the authors estimated store-specific price elasticities for a chain of 83 supermarkets. They related these price sensitivities to a comprehensive set of demographic and competitor variables that described the trading areas of each of the stores. Despite the inability of previous research to find much of a relationship between consumer characteristics and price sensitivity, 11 demographic and competitive variables explain on average 67% of the variation in price response. Moreover, the authors found that the consumer demographic variables are much more influential than competitive variables. Their findings open the possibility for more effective everyday and promotional pricing strategies that exploit store-level differences in price sensitivity.