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Consumer inventory sensitivity and the postpromotion dip

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Abstract

We summarize and critique seven theories that might explain the lack of a postpromotion dip in sales in the weeks following a promotion. We then propose and provide empirical support for a new explanation. We argue that in markets where the consumer category purchase decision is not strongly influenced by inventory levels, the displacement effect of accelerated sales will tend to be distributed fairly uniformly into the future such that clearly defined dips are not observed. We utilize a simulation based on real data to investigate this explanation. The simulation shows that given the degree to which inventory influences the purchase decision, we would not expect to see postpromotion dips, even though promotion influences the purchase decision. However, the simulation shows that if inventory had a greater influence on the purchase decision, we would expect to see postpromotion dips. We conclude with implications for both researchers and managers.

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Authors and Affiliations

  1. Amos Tuck School of Business Administration, Dartmouth College, 03755, Hanover, New Hampshire, USA

    Scott A. Neslin

  2. Department of Marketing and Logistics Management, Curtis L. Carlson School of Management, University of Minnesota, 271 19th Avenue South, 55455, Minneapolis, Minnesota, USA

    Linda G. Schneider Stone

Authors
  1. Scott A. Neslin
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  2. Linda G. Schneider Stone
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Neslin, S.A., Schneider Stone, L.G. Consumer inventory sensitivity and the postpromotion dip. Market Lett 7, 77–94 (1996). https://doi.org/10.1007/BF00557313

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