Effects of price promotions on variety-seeking and reinforcement behavior

Effects of price promotions on variety-seeking and reinforcement behavior

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Article ID: iaor1993476
Country: United States
Volume: 10
Issue: 4
Start Page Number: 316
End Page Number: 337
Publication Date: Sep 1991
Journal: Marketing Science
Authors: ,
Keywords: statistics: experiment, behaviour, decision theory
Abstract:

A stochastic model is proposed to examine how changes in frequency of price discounts affect brand choice decisions of consumers who exhibit variety-seeking and reinforcement behavior. It is shown that the effect on choice depends on whether the brand offering discounts is a major or minor brand in the product category. This model extends the existing literature on stochastic models of variety-seeking behavior by explicitly incorporating switching due to promotions along with intrinsic switching due to variety-seeking. The model yields testable hypotheses which are supported in a laboratory experiment and on analyses of the IRI cracker data.

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