The battle for health and beauty: What drives supermarket and drugstore category-promotion lifts?

This paper studies promotion-induced competition between supermarkets and drugstores, resulting from increased channel blurring and category overlap. It documents the relative impact of price cuts and feature ads at the two channels, and establishes substantive factors underlying their differences i...

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Bibliographic Details
Published in:International journal of research in marketing 2016-09, Vol.33 (3), p.557-577
Main Authors: van Lin, Arjen, Gijsbrechts, Els
Format: Article
Language:English
Subjects:
Advertising campaigns
Channel blurring
Competition
Drug stores
Drugstores
Feature ads
Price cuts
Promotion competition
Store flyers
Studies
Supermarkets
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Summary:This paper studies promotion-induced competition between supermarkets and drugstores, resulting from increased channel blurring and category overlap. It documents the relative impact of price cuts and feature ads at the two channels, and establishes substantive factors underlying their differences in promotion effectiveness. Estimates from a household-level model of category purchase incidence, store choice, and quantity, in five large health and beauty-care categories, show that the promotion effects are much larger for supermarket than drugstore chains. Though this partly follows from asymmetries in the channels' drawing power and from differences in in-store response, a key driver is the accessibility of promotional price information: because they are visited more frequently than drugstores and their store flyers are read more often, supermarkets gain relatively more from price cuts and feature ads than drug chains. Managerial implications are discussed.
ISSN:0167-8116
1873-8001
DOI:10.1016/j.ijresmar.2015.09.002