Unintended Consequences of Promotions: Should Managers Worry About Consumer Stockpiling?

Gangwar, M and Kumar, N S and Rao, R C (2015) Unintended Consequences of Promotions: Should Managers Worry About Consumer Stockpiling? Working Paper. SSRN. (Submitted)

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Abstract

Increase in sales due to promotions could come at the expense of competitors; such sales come from consumers who have relatively weak brand preferences. Increased sales from consumers with strong brand preferences are likely to be at the expense of the promoted brand. In other words, brand loyal consumers can take advantage of promotions to stockpile for future consumption. Thus, loyal consumers who would be otherwise willing to buy at high prices can strategically stockpile at low prices. What is its impact on firms’ profits? How should firms adapt to consumer stockpiling? To answer these questions we model a duopoly competing for loyal and switching consumers.

Affiliation: Indian School of Business
ISB Creators:
ISB CreatorsORCiD
Gangwar, Mhttps://orcid.org/0000-0003-0661-5922
Item Type: Monograph (Working Paper)
Uncontrolled Keywords: Game Theory, Consumer Stockpiling, Promotional Strategies, Loyal Consumers, Interior Mass Point, Pricing Distribution, Pricing
Subjects: Marketing
Depositing User: Mohan Dass
Date Deposited: 12 Apr 2019 09:01
Last Modified: 23 Apr 2019 12:19
URI: http://eprints.exchange.isb.edu/id/eprint/807
Publisher URL: https://papers.ssrn.com/sol3/papers.cfm?abstract_i...
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