Europanel Webinar – June 15th 2023
Thursday 15.06.2023 at 13:00 CET (12:00 GMT)
Duration 60 minutes
Topic: How regulatory focus explains brand sales price response asymmetry
How can price promotions increase long-term sales if consumers are loss averse, i.e. are more upset with the return to regular price than they are pleased with the promotion? This study adopts the perspective of regulatory focus, the ability of individuals to control their behavior, to derive expectations why response to price changes varies. Regional employment stability is the market-level context influencing individuals’ regulatory focus. The authors propose that price promotions relate with stronger sales response in more resilient versus less resilient labor markets, yet sales response to price increases is weaker in these markets. The empirical analysis quantifies the effect based on a multi-level analysis of 243,150 product-store time series of 2,178 brands in 742 retail stores (110 retail chains) across 50 U.S. metro areas. Results show that managers can better predict brand sales response to a price decrease (higher in more resilient markets) and a price increase (higher in less resilient markets) via an accessible market-level metric, i.e., labor market resilience.
Professor Koen Pauwels
Northeastern University, Boston