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The proper interpretation of sales promotion effects: supplement elasticities with absolute sales effects
Author(s) -
van Heerde Harald J.
Publication year - 2005
Publication title -
applied stochastic models in business and industry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.413
H-Index - 40
eISSN - 1526-4025
pISSN - 1524-1904
DOI - 10.1002/asmb.577
Subject(s) - promotion (chess) , interpretation (philosophy) , sales promotion , economics , sales force , marketing , sales management , business , microeconomics , econometrics , computer science , political science , politics , law , programming language
Sales promotions such as temporary price reductions are frequently used by managers to stimulate sales in the short run. Marketing academics and practitioners tend to rely on price elasticities to summarize sales promotion effects. Although elasticities have some attractive benefits such as the invariance to measurement units, they have led to three misinterpretations in the marketing literature, as described in this paper. The proper theoretical and managerial interpretation of sales promotion effects is obtained by expressing effects in terms of absolute sales. Copyright © 2005 John Wiley & Sons, Ltd.