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The influence of price and promotion on package size propensity

The influence of price and promotion on package size propensity PurposeThe constantly changing prices, promotions, and packaging options have made decision making more complex for consumers of packaged goods. The purpose of this paper is to explore how price and promotions influence consumer propensity to buy a certain package size.Design/methodology/approachScanner panel data for shelf-stable salad dressing obtained from Information Resources Inc. were used to compute the proportion of large packages bought, the relative price paid for large packages, propensity to use various types of promotions, and a behavioral covariate for each household. Data of over 5,600 households were analyzed using a multiple regression analysis for hypothesis testing.FindingsThe positive nature of relationship between the relative price of large packages and the proportion of large packages bought demonstrates the suboptimal nature of consumer decision making. The inefficiency is partially attributable to the abundance of promotions, to consumers’ lack of price awareness, and to the use of heuristics by consumers. Also, consumers who are prone to use promotions such as displays and temporary price reductions tend to purchase larger packages. They are more likely to buy impulsively and base their decisions on heuristics. In contrast, consumers who are influenced by featured price cuts and who utilize coupons tend to purchase smaller packages.Research limitations/implicationsData were obtained from grocery stores; only a single product category was studied.Practical implicationsOffer coupons and advertise featured price cuts on small packages to increase the sales of smaller packages. To move large packages successfully, retailers should rely more on in-store displays and temporary price reductions.Originality/valueThe impact of price and promotions on package size propensity has never been investigated. This study is also one of the few that uses a household-level analysis based on observable purchase data for consumer packaged goods. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Journal of Business Emerald Publishing

The influence of price and promotion on package size propensity

Ghosh, Amit K.
American Journal of Business , Volume 32 (2): 11 – Jun 5, 2017
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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
1935-5181
DOI
10.1108/AJB-10-2016-0032
Publisher site
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Abstract

PurposeThe constantly changing prices, promotions, and packaging options have made decision making more complex for consumers of packaged goods. The purpose of this paper is to explore how price and promotions influence consumer propensity to buy a certain package size.Design/methodology/approachScanner panel data for shelf-stable salad dressing obtained from Information Resources Inc. were used to compute the proportion of large packages bought, the relative price paid for large packages, propensity to use various types of promotions, and a behavioral covariate for each household. Data of over 5,600 households were analyzed using a multiple regression analysis for hypothesis testing.FindingsThe positive nature of relationship between the relative price of large packages and the proportion of large packages bought demonstrates the suboptimal nature of consumer decision making. The inefficiency is partially attributable to the abundance of promotions, to consumers’ lack of price awareness, and to the use of heuristics by consumers. Also, consumers who are prone to use promotions such as displays and temporary price reductions tend to purchase larger packages. They are more likely to buy impulsively and base their decisions on heuristics. In contrast, consumers who are influenced by featured price cuts and who utilize coupons tend to purchase smaller packages.Research limitations/implicationsData were obtained from grocery stores; only a single product category was studied.Practical implicationsOffer coupons and advertise featured price cuts on small packages to increase the sales of smaller packages. To move large packages successfully, retailers should rely more on in-store displays and temporary price reductions.Originality/valueThe impact of price and promotions on package size propensity has never been investigated. This study is also one of the few that uses a household-level analysis based on observable purchase data for consumer packaged goods.

Journal

American Journal of Business – Emerald Publishing

Published: Jun 5, 2017

References

  • Pricing practices: a critical review of their effects on consumer perceptions and behaviour
  • The effect of perceived risk dimensions on purchase intentions: an empirical evidence from India private labels market
  • Consumption of salad dressing and nutrient intake of the US population
  • Consumer price awareness in food shopping: the case of quantity surcharges