Stockpiling a consumers stockpile when good is on sale promotion then does not increase demand but instead encourages consumers to buy earlier and forego later purchases On aggregate level, stockpiling effect is small, may be a more significant issue at individual level 11-11
11-11 Stockpiling consumers stockpile when good is on sale consumers stockpile when good is on sale -- promotion then does not increase promotion then does not increase demand but instead encourages demand but instead encourages consumers to buy earlier and forego later consumers to buy earlier and forego later purchases purchases On aggregate level, stockpiling effect is On aggregate level, stockpiling effect is small, may be a more significant issue at small, may be a more significant issue at individual level individual level
Types of Consumer Promotional tools Coupons a Manufacturers'coupons a 300 billion coupons issued, 293 billion thrown away only makes sense(according to P&g) when a new product is introduced. a in response to competition, or to target a consumer base who wont purchase unless a coupon is issued
11-12 Types of Consumer Promotional Tools Coupons Coupons Manufacturers’ coupons Manufacturers’ coupons 300 billion coupons issued, 293 billion 300 billion coupons issued, 293 billion thrown away thrown away only makes sense (according to P&G) only makes sense (according to P&G) when a new product is introduced, when a new product is introduced, in response to competition, or in response to competition, or to target a consumer base who won’t purchase to target a consumer base who won’t purchase unless a coupon is issued. unless a coupon is issued
Coupons(cont) Package Coupons peel-off on-pack in-pack 口 Electronic Coupons a Retailer's coupons 11-13
11-13 Coupons (cont) –Package Coupons peel-off on-pack in-pack Electronic Coupons Electronic Coupons Retailer’s Coupons Retailer’s Coupons
Use of promotions depends on the stage of the PRODUCT LIFE CYCLE Intro Growth Maturity Decline
Use of promotions depends on the stage of the PRODUCT LIFE CYCLE . . . Intro Growth Maturity Decline
Firm May have 3 Principal Concerns Wants to take advantage of consumer heterogeneity a wants to price competitively Wants to price a product line so as to develop interrelationships among items
11-15 Firm May Have 3 Principal Concerns: Wants to take advantage of consumer Wants to take advantage of consumer heterogeneity heterogeneity Wants to price competitively Wants to price competitively Wants to price a product line so as to Wants to price a product line so as to develop interrelationships among items develop interrelationships among items