The effect of time-varying factors on promotional activity in the German milk market

Abstract Promotional sales are an essential pricing tool in the marketing mix of food retailers, which induced numerous studies on the topic. However, few studies have considered time-varying factors of promotional activity in retailing. This study analyzes the effect of time-varying factors on promotional activity in German food retailing using an extensive scanner data set of weekly milk prices. I used a zero-truncated negative binomial model to estimate the time that elapsed between promotional sales. The study shows that promotional activity is high in times of peak demand, when recent unit sales are low, and when the regular price has recently been changed. The results provide compelling evidence that time-varying factors influence the retailer's pricing behavior.

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