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Characterising the deal-proneness of consumers by analysis of price sensitivity and brand loyalty: an analysis in the retail environment

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Abstract:

This study characterises the 'deal-proneness' of consumers by analysis of the consumer-level characteristics of price sensitivity and brand loyalty. The study first develops a multinomial logistic (MNL) latent class model suitable for use with universal product code (UPC) point-of-sale (hypermarket) scanner data. The model is then used to assess the deal-proneness of consumers with respect to monetary promotions (price reductions) and non-monetary promotions (store flyers). The results show that almost 47% of consumers can be considered deal-prone, in that both kinds of sales promotions have a significant effect on their choice behaviour. The findings provide important insights for retail management in seeking to optimise the results obtained from promotional budgets.

Keywords: deal-proneness; latent class approach; price reductions; retail promotional budget; sales promotions; store flyers

Document Type: Research Article

DOI: http://dx.doi.org/10.1080/09593960902780922

Affiliations: Department of Management and Business Administration, Faculty of Business and Economics, University of Almeria, Spain

Publication date: February 1, 2009

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