THE IMPACT OF TEMPORARY PROMOTIONAL ACTIVITIES ON SUPERMARKET SALES AND PROFITS (MARKETING, RETAIL)

ROCKNEY GLENN WALTERS, Purdue University

Abstract

The major goal of this dissertation is to measure the impact of temporary promotional activities such as retail newspaper advertising, product displays and price reductions on product sales and retailer profits. By determining the impact of these frequently employed promotional variables it is possible to differentiate among promotional tactics on the basis of sales increases and/or profit contribution which can aid the retailer in the design of future promotional activities. To measure the effect of temporary promotional activities an in-store experiment characterized by a full factorial design will be developed and implemented. The experiment will be conducted across eight stores affiliated with a large midwestern supermarket chain. Four distinct product categories are promoted with the consumer response to the promotions being measured by the chain's scanning system. The retailer also provides profitability information on the product categories under examination which permits a broader investigation of the effect of promotional activities than has been previously possible. The early portion of the dissertation presents the results of past in-store experiments in the retail promotions area and discusses in detail, their contributions and limitations. Using these studies as background, the in-store experiment is developed and hypotheses are derived. To measure the impact of temporary promotions, three sets of dependent measures are employed: unit sales of the promoted brand, with unit sales of the non-promoted brands in the product category, and the profit impact of the promotion measured at the product category level. The analysis of the data received from the in-store experiment proceeds sequentially. It is shown that price reductions and product displays had a statistically significant impact on product sales and retailer profits. The results of various analyses show the unit sales of the promoted brand and certain non-promoted brands to be significantly affected by the promotional activities. In contrast, retailer profits were not significantly affected by the temporary promotions. In addition to these analyses, univariate analysis of variances and descriptive measures of association are used to interpret the results of the experiment. The final chapter of the dissertation contains the managerial implications of the study, the contributions of the present study to retail management and marketing theory, and brief recommendation for further research.

Degree

Ph.D.

Subject Area

Marketing

COinS