Access

You are not currently logged in.

Access your personal account or get JSTOR access through your library or other institution:

login

Log in to your personal account or through your institution.

If You Use a Screen Reader

This content is available through Read Online (Free) program, which relies on page scans. Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.

Price Competition under Stockpiling and Flexible Consumption

David R. Bell, Ganesh Iyer and V. Padmanabhan
Journal of Marketing Research
Vol. 39, No. 3 (Aug., 2002), pp. 292-303
Stable URL: http://www.jstor.org/stable/1558595
Page Count: 12
  • Read Online (Free)
  • Download ($24.00)
  • Subscribe ($19.50)
  • Cite this Item
Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
Price Competition under Stockpiling and Flexible Consumption
Preview not available

Abstract

Conventional wisdom suggests that the main effect of price promotion is on brand switching (i.e., secondary demand); however, some recent studies demonstrate that the primary demand expansion effect can be considerably larger than previously believed. A significant driver of this primary demand effect is consumer stockpiling in response to price promotions. Indeed, experimental studies have shown that additional inventory on hand can lead to an endogenous increase in consumption. The authors develop a model of price competition between firms in response to the stockpiling and subsequent consumption dynamics of consumers. In this setting, the flexible consumption effect causes more intense price competition, deeper promotions, and an increase in the frequency of promotions. The authors use two years of scanner panel data from eight product categories and 4313 stockkeeping units to test three implications of the theoretical model; they find strong support for each.

Page Thumbnails

  • Thumbnail: Page 
292
    292
  • Thumbnail: Page 
293
    293
  • Thumbnail: Page 
294
    294
  • Thumbnail: Page 
295
    295
  • Thumbnail: Page 
296
    296
  • Thumbnail: Page 
297
    297
  • Thumbnail: Page 
298
    298
  • Thumbnail: Page 
299
    299
  • Thumbnail: Page 
300
    300
  • Thumbnail: Page 
301
    301
  • Thumbnail: Page 
302
    302
  • Thumbnail: Page 
303
    303