When value- and experience-related trade promotions influence retailers’ sales: the moderating role of retail format strategy and channel structure
ISSN: 0309-0566
Article publication date: 22 September 2021
Issue publication date: 23 November 2021
Abstract
Purpose
As manufacturers and retailers aim to increase return on marketing investments, value- vs experience-related trade promotions gain attention. These two trade promotions become complicated in the presence of different retail format strategies (generalist vs specialist) and channel structures (direct to retailer vs distributors). Building on trade promotion literature, this study aims to show the main effect of value-related and experience-related trade promotions on retailers’ sales and the moderating role of different retail strategies and channel structures.
Design/methodology/approach
The authors use unique panel data from 8 personal care brands with 1,920 observations to test the hypotheses. The authors investigate how consumer goods manufacturer sells products using different channels structures and retail strategies. Estimated panel regressions provide the empirical evidence and robustness analyzes provide extra confidence to the findings.
Findings
Results reveal higher retail sales when the manufacturer invests in value-related trade promotions rather than experience-related trade promotions. The results also demonstrate how the manufacturer successfully invests in trade promotion by adequately accounting for channel structure and retail strategy. While temporary price reduction’s positive effect on retail sales is enhanced in generalist retailers (e.g. supermarket stores), shelf display’s positive impact is enhanced in specialist retailers (drug stores).
Research limitations/implications
The authors used unique panel data accounting for 15 months, limiting the findings. The results supported the investment allocation decisions in each period. However, future research may evaluate the effectiveness over a longer period and thoroughly address each investment’s seasonal effects.
Practical implications
The authors unveil how retailers achieve higher sales with value-related trade promotions when compared to experience-related trade promotions. The authors also shed light on the way manufacturers design their relationships with generalist and specialist retailers by working in direct and indirect channels. Trade promotions yield better results when the direct channel structure couples with a retailer’s generalist strategy.
Originality/value
The empirical findings help manufacturers achieve success in trade promotions by developing an equitable evaluation to contrast value- and experience-related promotions accounting for generalist and specialist retail strategies and direct and indirect channels.
Keywords
Acknowledgements
The authors thank the anonymous reviewers for their comments.
Authors contribution: The First three authors contribute equally to this paper.
Citation
Claro, D., Vieira, V.A., Agnihotri, R. and Serer, R. (2021), "When value- and experience-related trade promotions influence retailers’ sales: the moderating role of retail format strategy and channel structure", European Journal of Marketing, Vol. 55 No. 12, pp. 3099-3128. https://doi.org/10.1108/EJM-10-2020-0762
Publisher
:Emerald Publishing Limited
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