Long-Run Effects of Promotion Depth on New Versus Established Customers: Three Field Studies, Marketing Science
We use the results of three large-scale field experiments to investigate how the depth of a current price promotion affects future purchasing of first-time and established customers. While most previous studies have focused on packaged goods sold in grocery stores, we consider durable goods sold through a direct mail catalog. The findings reveal different effects for first-time and established customers. Deeper price discounts in the current period increased future purchases by first-time customers (a positive long-run effect) but reduced future purchases by established customers (a negative long-run effect). We investigate alternative explanations for these findings including purchase acceleration, selection, customer learning and increased deal sensitivity.
Eric T. Anderson, Duncan Simester
Anderson, T. Eric, and Duncan Simester. 2004. Long-Run Effects of Promotion Depth on New Versus Established Customers: Three Field Studies. Marketing Science. 23(1): 4-20.