Consumer Perceptions of Promotional Activity

Abstract

Several models of consumer response to promotions suggest that a current decision on brand and purchase quantity depends on the expected time until the next price reduction and the expected size of future reductions. In spite of the importance of expected deal frequency and expected deal price to a consumer's decision, relatively little empirical work has been reported on those topics. The authors investigate several aspects of consumer perceptions of deal frequency and deal prices. First, a conceptual model is presented to describe how consumers develop and use those perceptions. Second, results of an extensive survey are used to estimate the degree of consumer knowledge about deal frequency and deal prices. Third, hypotheses about which types of consumers have better knowledge of promotions are tested. Results from the survey indicate that many consumers are reasonably accurate about deal frequency and sale price. In addition, recall on deal frequency and sale price is higher for consumers with larger family sizes and those who read weekly fliers for items on sale, devote a higher percentage of product class purchases to the brand, and purchase the package size more frequently. It is lower for older buyers.