Does Purchase Without Search Explain Counter-Cyclic Pricing?

Haviv, Avery

doi:10.2139/ssrn.2610915

Cited by 10 publications

(6 citation statements)

References 55 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…The ultimate outcome of these opposing processes is not clear a priori. Several studies have found stronger price sensitivity at demand peaks and around seasonal events (e.g., Haviv 2013;Nevo and Hatzitaskos 2006), although some categories have shown weaker price sensitivity (Chevalier, Kashyap, and Rossi 2003). Overall, however, price sensitivity is expected to increase during periods of peak demand.…”

Section: Intrayear Advertising and Pricing Effectiveness Evolutionsmentioning

confidence: 99%

“…This asymmetry in reactions to price changes is expected to be amplified during periods of peak demand. In such periods, consumers are more actively looking for the best deal (Haviv 2013), which bolsters the memorization of exact prices (Mazumdar and Monroe 1990). Reactions to price reductions/ increases should then become stronger as consumers gain a better understanding of the profits/losses.…”

Section: Asymmetries In Reactions To Price Changesmentioning

confidence: 99%

“…Advertising effectiveness in terms of elasticities of sales could be higher at peak demand as consumers more actively search for products that best suit their needs (e.g., Haviv 2013). Increased attention to advertising and a stronger motivation to process it ultimately translates into higher purchase probabilities (e.g., Keller 1993; Morris et al 2002; Petty and Cacioppo 1986; Rucker, Petty, and Priester 2007).…”

Section: Research Frameworkmentioning

confidence: 99%

See 2 more Smart Citations

Riding the Waves: Revealing the Impact of Intrayear Category Demand Cycles on Advertising and Pricing Effectiveness

Gijsenberg

2017

Journal of Marketing Research

View full text Add to dashboard Cite

Going beyond traditional seasonality, this research introduces the concept of the intrayear category demand cycle. This phenomenon reflects demand cycles most consumer packaged goods categories experience throughout the year, with periods of higher demand following periods of lower demand. The author argues that acknowledging the existence of these cycles and understanding their impact on both advertising and pricing effectiveness and practice is critical for marketers. Specifically, the author demonstrates how both advertising and price elasticities and observed advertising and prices evolve along these cycles for a unique set of 252 brands—ranging from high-advertising, high-priced “premium mass” brands to low-advertising, low-priced “value niche” brands—in 61 consumer packaged goods categories. Overall, both advertising efectiveness and observed advertising are found to be stronger at demand peaks. Surprisingly, consumer reactions to price decreases are weaker at demand peaks, whereas reactions to price increases remain unchanged. However, effectiveness evolutions and observed action patterns along these intrayear cycles are both markedly diverse across the different types of brands.

show abstract

Section: Intrayear Advertising and Pricing Effectiveness Evolutionsmentioning

confidence: 99%

Section: Asymmetries In Reactions To Price Changesmentioning

confidence: 99%

Section: Research Frameworkmentioning

confidence: 99%

See 1 more Smart Citation

Riding the Waves: Revealing the Impact of Intrayear Category Demand Cycles on Advertising and Pricing Effectiveness

Gijsenberg

2017

Journal of Marketing Research

View full text Add to dashboard Cite

show abstract

“…Consumer stockpiling behavior of packaged goods has been widely studied in both the empirical marketing (Erdem, Imai, and Keane (2003), Sun (2005), Chan, Narasimhan, and Zhang (2008), Seiler (2013), Liu and Balachander (2014), Haviv (2014), Osborne (2018b)) and empirical industrial organization literatures (Pesendorfer (2002), Hendel and Nevo (2006), Hendel and Nevo (2013), Wang (2015), Pires (2016), Osborne (2018a)). Prices often follow a "hi-lo" pattern where they take on a low promotional value for one or two weeks, and return to a higher regular retail price for a longer period of time.…”

Section: Introductionmentioning

confidence: 99%

Identification and Estimation of Forward-Looking Behavior: The Case of Consumer Stockpiling

Ching

Osborne

2020

Marketing Science

View full text Add to dashboard Cite

Understanding how forward-looking consumers respond to price promotions in storable goods markets is an important area of research in empirical marketing and industrial organization. In prior work, researchers have assumed that consumers in these markets are very forward-looking, and calibrated their weekly discount factors to levels around 0.9995. This calibration has been used because earlier research has assumed that a consumer’s storage cost is a continuous function of inventory, which rules out exclusion restrictions that can be used to identify the discount factor. We show that by properly modeling storage cost as a step function of inventory (because storage cost depends on the number of packages stored, instead of the actual amount of inventory), natural exclusion restrictions arise that allow for the discount factor to be point identified. In an application to a storable good category, we find that weekly discount factors are very heterogeneous across consumers, and are on average 0.71. We show through a counterfactual exercise that if one used a model that fixed the discount factor to be consistent with the standard calibrated value, one would overpredict the effect of increased promotional depth for a product on its quantity sold by 18% in the short term, and 15% in the long term.

show abstract

“… This literature investigates empirically and theoretically the positive association between low prices and demand peaks, providing different explanations: collusion in Rotemberg and Woodford (); search costs in Warner and Barsky () and Haviv (); advertising loss‐leader products in Chevalier et al . () and DeGraba (); price sensitivity with substitution to less expensive brands during peaks in Nevo and Hatzitaskos (); changes in consumers’ valuations in Guler et al .…”

mentioning

confidence: 99%

Inelastic Buyers and Competition

Calzolari

Ichino

Manaresi

et al. 2017

The Economic Journal

View full text Add to dashboard Cite

We measure precisely how competition limits the capacity of sellers to appropriate surplus from less elastic consumers. The evidence originates from pricing strategies of Italian pharmacists in response to exogenous inflows of parents of newborn babies among their buyers. Population-based laws allow us to use a regression discontinuity design to compare different competitive environments. While more newborn babies have no effect on the price of hygiene products under intense competition, we observe a price increase when competition is low. This effect is not driven by increasing costs because for nappies, demanded by newborns only, we see no effect independently of competition.

show abstract

Does Purchase Without Search Explain Counter-Cyclic Pricing?

Cited by 10 publications

References 55 publications

Riding the Waves: Revealing the Impact of Intrayear Category Demand Cycles on Advertising and Pricing Effectiveness

Riding the Waves: Revealing the Impact of Intrayear Category Demand Cycles on Advertising and Pricing Effectiveness

Identification and Estimation of Forward-Looking Behavior: The Case of Consumer Stockpiling

Inelastic Buyers and Competition

Contact Info

Product

Resources

About