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Retail price promotion influences for product varieties in grocery stores: evidence from Spain

María Pilar Martínez Ruiz (Facultad de Ciencias Sociales, University of Castilla‐La Mancha, Spain)
Alejandro Mollá Descals (Departamento de Comercialización e Investigación de Mercados, Facultad de Economía, University of Valencia, Valencia, Spain)

International Journal of Retail & Distribution Management

ISSN: 0959-0552

Article publication date: 9 May 2008

Abstract

Purpose

This paper aims to focus on measuring and assessing the sales impact of temporary retail price discounts on all brands within a product subcategory as well as across other subcategories that differ slightly on composition and taste.

Design/methodology/approach

To test these effects, the study uses a regression approach to analyse data of several fast moving consumer good subcategories obtained from a Spanish supermarket.

Findings

The results confirm that temporary retail price reductions increase brand sales of the promoted brands, especially at weekends. Some brands gained sales at the expense of sales of substitute items within the same subcategory and also from sales of competing items in other subcategories.

Research limitations/implications

The results of the current research suggest the presence of brand substitution effects within the analysed subcategories. In particular, while asymmetrical cross‐price effects are detected in only two subcategories, neighbourhood cross‐price effects have been evidenced in most subcategories. When considering the general product categories, certain substitution effects have been also evidenced: neighbourhood cross‐price effects are detected in most subcategories whilst asymmetrical cross‐price effects are not evidenced.

Practical implications

Retailers can learn from the experiences of a cross‐subcategory competition in order to determine which prices and discounts should set at the variety level. Though grocery retailers implement several decisions at the category level, brand level or even brand size level, it is valuable to learn from the experiences of a cross‐subcategory competition in order to determine whether or not it is interesting to set prices at the variety level.

Originality/value

The contribution in this paper consists not only of the measurement and assessment of the sales impact of temporary retail price discounts on all brands within a product subcategory as well as across other subcategories that differ slightly on composition and taste, but also of the application with data from the Spanish market.

Keywords

Citation

Pilar Martínez Ruiz, M. and Mollá Descals, A. (2008), "Retail price promotion influences for product varieties in grocery stores: evidence from Spain", International Journal of Retail & Distribution Management, Vol. 36 No. 6, pp. 494-517. https://doi.org/10.1108/09590550810873956

Publisher

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Emerald Group Publishing Limited

Copyright © 2008, Emerald Group Publishing Limited