Price thresholds in a promotion Intensive environment: how consumers optimally make decisions on how much to buy

Abstract

How do consumers behave when they are confronted with price promotions at the retail level? Do they buy as much as they can and stock for future? Do they postpone their purchases in anticipation of further price cuts? Do they decide not to buy at all? What do these responses mean to the retailer? Does he maximize his sales? Does he maximize his profits? Does he lose? In this article, Banerjee and Divakar examine the behaviour of the consumers in a promotion intensive retail environment. Based on their findings, they draw implications for promotion management in the retailing context.