The Battle for Health and Beauty: What Drives Supermarket and Drugstore Category-Promotion Lifts?

International Journal of Research in Marketing, 33(3), 557-577, 2016

56 Pages Posted: 13 Feb 2018

See all articles by Arjen van Lin

Arjen van Lin

Tilburg University

Els Gijsbrechts

Tilburg University - Center for Economic Research (CentER)

Date Written: 2016

Abstract

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.

Keywords: promotion competition, category sales, retail channels, channel blurring, supermarkets, drugstores, store flyers, feature ads

Suggested Citation

van Lin, Arjen and Gijsbrechts, Els, The Battle for Health and Beauty: What Drives Supermarket and Drugstore Category-Promotion Lifts? (2016). International Journal of Research in Marketing, 33(3), 557-577, 2016. Available at SSRN: https://ssrn.com/abstract=3116221

Arjen Van Lin (Contact Author)

Tilburg University ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Els Gijsbrechts

Tilburg University - Center for Economic Research (CentER) ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

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