Measuring Short- and Long-run Promotional Effectiveness on Scanner Data Using Persistence Modeling

The use of price promotions to stimulate brand and firm performance is increasing. We discuss how (i) the availability of longer scanner data time series, and (ii) persistence modeling, have lead to greater insights into the dynamic effects of price promotions, as one can now quantify their immediate, short-run, and long-run effectiveness. We review recent methodological developments, and illustrate how the analysis of numerous brands and product categories has resulted in various empirical generalizations. Finally, we argue that persistence modeling should not only be applied to traditional performance metrics such as sales, but also to metrics such as firm value and customer equity.