TY - JOUR
T1 - An empirically derived taxonomy of retailer pricing and promotion strategies
AU - Bolton, Ruth N.
AU - Shankar, Venkatesh
N1 - Funding Information:
We thank the editors, three anonymous reviewers, and participants at presentations at Harvard University and INSEAD for useful comments. We also thank the Marketing Science Institute (MSI) for financial support, and Information Resources, Incorporated and the A.C. Nielsen Company for contributing the data sets. Our thanks are also due to Valerie Durrant, Xing Pan, and Ying-Ping Yu for their assistance in assembling the data.
PY - 2003
Y1 - 2003
N2 - Most research categorizes grocery retailers as following either an Every Day Low pricing (EDLP) or a High Low (Hi-Lo) pricing strategy at a store or chain level, whereas this paper studies retailer pricing and promotions at a brand-store level. It empirically examines 1,364 brand-store combinations from 17 chains, 212 stores and six categories of consumer package goods in five U.S. markets. Retailer pricing and promotion strategies are found to be based on combinations of four underlying dimensions: relative price, price variation, deal intensity and deal support. At the brand-store level, retailers practice five pricing strategies, labeled Exclusive, Moderately Promotional, Hi-Lo, EDLP, and Aggressive pricing. Surprisingly, the most prevalent pricing strategy is not Hi-Lo pricing strategy as is widely believed. It is one characterized by average relative brand price, low price variation, medium deal intensity, and medium deal support. The findings provide some initial benchmarks and suggest that retailers should closely monitor their competitors' price decisions at the brand level.
AB - Most research categorizes grocery retailers as following either an Every Day Low pricing (EDLP) or a High Low (Hi-Lo) pricing strategy at a store or chain level, whereas this paper studies retailer pricing and promotions at a brand-store level. It empirically examines 1,364 brand-store combinations from 17 chains, 212 stores and six categories of consumer package goods in five U.S. markets. Retailer pricing and promotion strategies are found to be based on combinations of four underlying dimensions: relative price, price variation, deal intensity and deal support. At the brand-store level, retailers practice five pricing strategies, labeled Exclusive, Moderately Promotional, Hi-Lo, EDLP, and Aggressive pricing. Surprisingly, the most prevalent pricing strategy is not Hi-Lo pricing strategy as is widely believed. It is one characterized by average relative brand price, low price variation, medium deal intensity, and medium deal support. The findings provide some initial benchmarks and suggest that retailers should closely monitor their competitors' price decisions at the brand level.
KW - Multivariate data analysis
KW - Pricing
KW - Promotion
KW - Retailing
KW - Strategy
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U2 - 10.1016/j.jretai.2003.09.005
DO - 10.1016/j.jretai.2003.09.005
M3 - Article
AN - SCOPUS:0345448346
SN - 0022-4359
VL - 79
SP - 213
EP - 224
JO - Journal of Retailing
JF - Journal of Retailing
IS - 4
ER -