How does point-of-purchase advertising influence sales? A randomized field study

Abstract

Point of Purchase (POP) advertising is ubiquitous; it is hard to find a retail store, fast food restaurant, or convenience store that does not have signs and banners advertising various brands. Despite its frequent use, not much research has examined the impact of POP advertising on sales of the product, probably because it is difficult to exactly quantify its influence and distinguish it from price promotion signs. Building on past work on recency of persuasive influence, malleable versus stable consumer preferences, retail aesthetics, technology, and competitor activity, we propose that POP advertising is at best likely to have no influence on sales and at worst could have a negative influence. To disentangle the causal influence of POP advertising we used a randomized field study. The study included over 300 stores from a large retailer, two product categories, one hedonic and one functional, and sales pre and post intervention. The analyses indicated no positive influence of POP advertising on sales; in one case the influence is negative. Along with theoretical insights, the result informs managerial practice that money currently spent on POP advertising could potentially be spent on other profitable marketing activities.