Abstract

Knowing how the quantity consumers buy changes as a function of changes in price is crucial to several marketing activities, including pricing, price promotion and assortment. This is particularly relevant in the case of routinely purchased packaged goods, for which price variations that occur during a year are in most part related to price promotions associated with competing brands. The significant short-term increase in sales related to retail price promotions is very familiar to practitioners and researchers and has been interpreted as an empirical generalization in marketing (cf. Blattberg et al., 1995).