Profitability of price promotions if stockpilling increases consumption
2004-03-19
Research Paper
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Price promotions induce consumers to purchase higher-than-usual quantities, resulting in higher stocks that lead to increased consumption. We show for a stylized model with a single shop and a single loyal customer that because of this stockpiling effect, promotions can be profitable even if they do not attract extra customers.
Automatically Extracted Terms
- price
- product
- period
- consumer
- strategy
- price promotions
- purchase
- profit
- probability
- model
- consumption
- charge
- utility
- promotion
- example
- stockpiling
- stock
- effect
- consumer shops
- stockpiling effect
