Bibliographische Detailangaben
Beteiligte: Cui, Tony Haitao, Raju, Jagmohan S., Zhang, Z. John
In: Marketing Science, 27, 2008, 5, S. 779-795
veröffentlicht:
Institute for Operations Research and the Management Sciences (INFORMS)
Medientyp: Artikel, E-Artikel

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weitere Informationen
Umfang: 779-795
ISSN: 0732-2399
1526-548X
veröffentlicht in: Marketing Science
Sprache: Englisch
Kollektion: sid-55-col-jstoras4
sid-55-col-jstorbusiness1archive
sid-55-col-jstorbusiness
JSTOR Arts & Sciences IV Archive
JSTOR Business I Archive
JSTOR Business & Economics
Inhaltsangabe

<p>Critics have long faulted the wide-spread practice of trade promotions as wasteful. It has been estimated that this practice adds up to $100 billion worth of inventory to the distribution system. Yet, the practice continues. In this paper, we propose a price discrimination model of trade promotions. We show that in a distribution channel characterized by a dominant retailer, a manufacturer has incentives to price discriminate between the dominant retailer and smaller independents. While offering all retailers the same pricing policy, price discrimination can be implemented through trade promotions because they induce different inventoryordering behaviors on the part of retailers. Differences in inventory holding costs have been shown to be an important determinant of consumer promotions. Our analysis suggests that differences in holding costs are also potentially an important driver for the use of trade promotions. The implications from our model explain a number of anecdotal and /or empirically observed puzzles about how trade promotions are practiced. For example, our analysis explains why chain stores welcome trade promotions but independents do not. Our analysis outlines implications for managing trade promotions.</p>