Journal of Business Research 90 (2018) 286–294

Contents lists available at ScienceDirect

Journal of Business Research

journal homepage: www.elsevier.com/locate/jbusres

Disentangling the effects of promotion mix on new product sales: An T

examination of disaggregated drivers and the moderating effect of product
class
Malika Chaudhuria, , Roger J. Calantoneb, Clay M. Voorheesc, Seth Cockrelld
⁎

a
School of Business Administration, University of Dayton, Department of Management and Marketing, 300 College Park, Dayton, OH 45469, United States
b
The Eli Broad College of Business, Michigan State University, N307 North Business Complex, 632 Bogue Street, East Lansing, MI 48824, United States
c
Culverhouse College of Commerce, The University of Alabama, 361 Stadium Dr, Tuscaloosa, AL 35487, United States
d
W. Frank Barton School of Business, Wichita State University, 1845 Fairmount St., Wichita, KS 67260, United States

ARTICLE INFO ABSTRACT

Keywords: The typical firm invests 20% of its promotional budget on sales promotions in an effort to drive short-term sales,
Sales promotion Limited insight into the differential impacts of various sales promotions as well as the conditions under which
New products they are most effective in lifting the sales of new products remain despite the rich body of research on sales
Financing incentives promotions in the marketing literature. This research seeks to address these gaps by demonstrating the effects of
Cash rebates
two types of sales promotions on high-value consumer durable goods. Specifically, we investigate the effects of
Perceived value
cash rebates and financing incentives on consumer perceptions of value and sales across luxury and mass goods
Product class
in the automobile industry. Our findings suggest that although both categories of promotional strategies are
effective sales booster, cash rebates are more effective in the mass market while financing rates offer significant
new product sales benefits in the luxury market.

1. Introduction promotions may impact consumer demand and firm performance,

Manufacturers often utilize sales promotions to boost sales and in-
fluence consumers' purchase behavior (Neslin, 2002). These promotions
are universally focused on driving purchase behavior, moving con-
sumers out of a holding pattern by offering incentives to take action
before promotional offers expire (Blattberg, Briesch, & Fox, 1995; Nijs,
Dekimpe, Steenkamps, & Hanssens, 2001). Promotional efforts have
proven to be particularly effective in supporting the launch of new
products into competitive markets (Hooley, Greenley, Cadogan, & Fahy,
2005). Given evidence of their effectiveness, firms continue to invest
heavily in sales promotions to the tune of $70 billion annually, which
accounts for nearly 20% of total promotional spending
(ZenithOptimedia, 2013), and they have remained an area of focus in
the marketing literature. For more than 30 years, scholars have in-
vestigated the effect of promotions on various aspects of firm perfor-
mance, which has provided great insights into how and why promo-
tions drive consumer demand. Within these broader investigations, a
relatively small subset have focused on understanding how promotions
drive initial perceptions of quality and sales for newly introduced
products. Additionally, less is known about how simultaneous
which is becoming an increasingly important issue for industries like
automotive, where firms have large promotional budgets and must al-
locate this budget across mass and luxury brands with their annually
refreshed product offerings (Fig. 1).
While the desired outcome of promotional investments is constant
across new and established products and industries, the composition of
the promotion mix can vary significantly across industries. For ex-
ample, in automotive industries, promotions often focus on financing
offers from manufacturers or cash rebates. Considerable research has
been conducted to understand how promotions can be structured to
drive conversion (Silk & Janiszewski, 2008) and leveraged for success
in the presence of price competition and price discrimination (Demirag,
Keskinocak, & Swann, 2011). Throughout these investigations, when
scholars focus on analyzing the impact of the promotional mix on firm
performance, the level of granularity in the data begins to disappear.
With few exceptions, academic investigations often aggregate promo-
tion strategies into a single variable, such as, “promotion incentives”
(Gangwar, Kumar, & Rao, 2013; Leeflang & Parreño-Selva, 2012;
Pauwels, Silva-Risso, Srinivasan, & Hanssens, 2004). This approach
provides some evidence of the impact of promotions in general but

Corresponding author at: Department of Management and Marketing, 300 College Park, Dayton, OH 45469, United States.
⁎

E-mail addresses: mchaudhuri1@udayton.edu (M. Chaudhuri), rogercal@broad.msu.edu (R.J. Calantone), cvoorhees@cba.ua.edu (C.M. Voorhees),
seth.cockrell@wichita.edu (S. Cockrell).

https://doi.org/10.1016/j.jbusres.2018.05.020
Received 17 August 2016; Received in revised form 13 May 2018; Accepted 14 May 2018
0148-2963/ © 2018 Elsevier Inc. All rights reserved.
M. Chaudhuri et al.
MASS BRANDS
+
Cash Rebates ¯
Perceived New
Product Quality
Financing Incentives
-
LUXURYBRANDS
Cash Rebates ¯
Perceived New
Product Quality
Financing Incentives
-
Fig. 1. Tested model: The differential effects of promotions for mass versus luxury brands.
offers little actionable guidance to managers who need to manage a
promotional budget across an array of investment areas. One notable
exception to this tendency to aggregate promotional types into a single
bucket is a study by Lu and Moorthy (2007), which demonstrates the
differential effectiveness of coupons and rebates as promotional stra-
tegies that are conditional on consumers' reservation price and re-
demption costs (Table 1).
Failing to disaggregate sales promotions into their respective tac-
tical investment areas results in considerable information loss, and we
contend that doing so could result in flawed conclusions. For example,
in industries like the automotive industry, the two most common pro-
motions to induce new product purchase are cash rebates and financing
incentives. While both result in cost savings for consumers, they could
have differential effects on initial consumer attitudes (i.e., perceptions
of quality) and sales. As a result, aggregating these investments into a
global “promotion incentives” bucket will, at best, result in a lack of
actionable guidance for managers and, at worst, lead to incorrect
conclusions regarding the effectiveness of promotions in driving atti-
tude change and firm performance. Building on this issue, most prior
research focuses at either the industry level or within a focal product
category with little variance in the brands under investigation. This
narrow lens limits the ability to assess product class contingencies that
could alter the nature of the relationship between promotions and sales.
One notable factor missing in prior research is product class (luxury
versus mass). The very nature of promotions and consumer mix for
these classes of goods could result in substantial swings in the effec-
tiveness of sales promotions in driving new product sales.
The current study seeks to provide advanced research on the impact
of the promotion mix on new product sales by addressing these two
shortcomings of the extant literature. Specifically, our first contribution
focuses on disaggregating promotional strategies at the tactical level by
operationalizing financing incentives and cash rebates in the U.S. au-
tomotive industry. As such, we focus on a single industry to tease out
the effects of the two categories of promotional strategies that are
particularly relevant in a consumer durable industry. In doing so, we
provide new insight into the effectiveness of two unique promotional
investments in driving consumers' perceptions of quality for newly in-
troduced products. Second, we examine the effects of these promotions
across luxury and mass product classes, thus offering an improved un-
derstanding of promotion types that can offer the biggest return for the
various product classes. Finally, when testing these effects, we
287
Journal of Business Research 90 (2018) 286–294
+ New Product Sales
+
+
+ New Product Sales
+
introduce a new method to the marketing literature, which addresses
the data frequency mismatch issue by applying mixed data sampling
regression (MIDAS) as pioneered by Ghysels, Santa-Clara, and Valkanov
(2004).
Our results demonstrate considerable value in disaggregating pro-
motional incentives and modeling their impact separately for luxury
and mass goods. For example, while our findings reveal that both ca-
tegories of sales promotions (i.e., financing incentives and cash rebates)
affect consumers' perceptions of quality, cash rebates deplete con-
sumers' perceived quality, whereas financing incentives strengthen
perceived quality. Additionally, the impact of financing incentives on
perceived quality is more pronounced in the mass market than in the
luxury market. Interestingly, we find no difference in the impact of cash
rebates on perceived quality across mass and luxury markets.
Furthermore, empirical estimates suggest that managers may employ
perceived quality as a strategic asset that can effectively boost sales,
irrespective of product class. However, the strategic asset is more ef-
fective in the luxury market than in the mass market. Our findings
identify critical contingencies regarding the promotions-performance
relationship and in doing so have considerable implications both for
researchers and practitioners. In the following sections, we introduce
the conceptual basis for our model, describe the MIDAS method, and
discuss the results.
2. Drivers of new product performance
2.1. Defining sales promotions
Sales promotions are a critical component of a firm's marketing mix.
These promotional tactics operationalize short-term techniques to
generate almost immediate impact on sales volume and influence
consumers' purchase patterns (Neslin, 2002). In the current study, we
focus on financing incentives and cash rebates—two critical consumer-
oriented promotional strategies frequently employed in high-value
consumer durable goods industries (Attanasio, Koujianou Goldberg, &
Kyriazidou, 2008). This study focuses on the U.S. automobile industry,
a particularly appropriate product category in which both types of
promotional strategies are critical demand boosters because of the re-
latively high price of the purchase. Automobile purchases are one of the
biggest purchase decisions consumers make, often being a purchase
equal to approximately 60% of consumers' annual salaries. In 2015, for

Table 1
Prior research on sales promotions in marketing.
Article
Current paper
Ailawadi, Gedenk, Langer, Ma,
and Neslin (2014)
Buil, De Chernatony, and Martínez
(2013)
Gangwar et al. (2013)
Leeflang and Parreño-Selva (2012)
Busse et al. (2010)
Martín-Herrán, Sigué, and Zaccour
(2010)
Silva-Risso and Ionova (2008)
288
Silk and Janiszewski (2008)
Attanasio et al. (2008)
Barron, Chong, and Staten (2008)
Manning and Sprott (2007)
Lu and Moorthy (2007)
Chen, Moorthy, and Zhang (2005)
Pauwels et al. (2004)
Pauwels, Hanssens, and Siddarth
(2002)
Nijs et al. (2001)
Chandon, Wansink, and Laurent
(2000)
Yoo, Donthu, and Lee (2000)
Zhang, Krishna, and Dhar (2000)
M. Chaudhuri et al.
Assess various promotions independently? Consider contingency effects? Consider attitudinal outcome? Consider behavioral outcome? Address data frequency
mismatch issues?
Cash rebates and financing incentives Moderating effects of product Perceived quality Unit sales Mixed Data Sampling
class Regression (MIDAS)
Conditional rebate versus traditional ✘ Consumers' risk aversion and subjective ✘ ✘
rebate probability of evaluation
Monetary versus non-monetary ✘ Perceived quality ✘ ✘
promotions and brand associations
Shallow versus deep price promotions with ✘ ✘ Consumer stockpiling ✘
varying depth and frequency
✘ ✘ ✘ Cross category demand ✘
✘ ✘ Consumers' perception of price changes Purchase acceleration ✘
Rebates, trade deals Moderating effect of consumer ✘ Unit sales ✘
sensitivity to promotions
Cash discounts, finance rates, and lease ✘ Consumers' sensitivity towards pricing ✘ ✘
payment discounts instruments, transaction type and brand
choice
Mail-in rebates ✘ Consumers' price sensitivity Consumers' buying pattern ✘
Finance rate High versus low income Consumers' sensitivity to maturity of loans ✘ ✘
households and interest rate changes
Finance rate Banks versus captive financing Consumers' likelihood of loan repayment ✘ ✘
institutions
✘ Magnitude of quantity specified Consumers' accessing anchor-consistent ✘ ✘
in the promotion offer knowledge
Coupons, rebates Redemption costs Consumers' risk aversity and redemption ✘ ✘
periods of rebates
Coupons, rebates ✘ Consumers' willingness to pay ✘ ✘
✘ ✘ ✘ Stock market performance, top and ✘
bottom line financial metrics
✘ ✘ ✘ Category-incidence, brand-choice and ✘
purchase-quantity
✘ Marketing intensity and ✘ Category demand ✘
competition
✘ Band equity Hedonic benefits Utilitarian benefits ✘
✘ Frequency of price promotions Brand equity ✘ ✘
Front-loaded versus rear-loaded coupons Variety-seeking, inertia ✘ Sales, profit ✘
Journal of Business Research 90 (2018) 286–294
M. Chaudhuri et al. Journal of Business Research 90 (2018) 286–294

example, the average transaction price for light vehicles was $33,651 lower perceived quality.
(Kelly Blue Book, 1995), and the median household income was As components of sales promotions, cash rebates and financing in-
$56,500 (Appelbaum, 2016). Consumers may lack the liquid assets centives affect perceived quality. Cash rebates have a straightforward
necessary to pay for the purchase because of the high price. They may relationship with price, in which price decreases as cash rebates in-
instead seek loans from banks or other financial institutions to finance crease. However, a drop in price depresses perceived quality because of
their purchase (Stango & Zinman, 2011). Additionally, rebates discount the aforementioned price-perceived quality relationship. Financing in-
the list price, lowering the amount needed for a down payment and to centives affect perceived quality in a similar manner. Financing in-
be financed. Thus, consumer-oriented sales promotions, such as finan- centives decrease the finance rates for loans. As the finance rates de-
cing incentives and rebates, may partially solve consumers' liquidity crease, the price decreases. Although the effect of finance rates on price
problem and make the product more affordable. is not as straightforward as the effect of cash rebates on price, con-
sumers understand that a lower finance rate decreases price and encode
2.2. Financing incentives a lower finance rate as cheaper. Furthermore, cash rebates and finan-
cing incentives may be encoded by consumers as discounts and create a
Financing incentives are sales promotions utilized by firms to sti- discount association with the brand (Keller, 1993). Therefore, cash
mulate the purchase of big-ticket items (i.e., automobiles etc.). rebates and financing incentives influence perceived quality through
Financing incentives stimulate purchases by lowering the finance rates the price-perceived quality relationship, such that cash rebates and fi-
of loans for products, which lowers consumers' monthly loan payments. nancing incentives are inversely related to perceived quality.
Examples of financing incentives are commonly found in the auto-
H1. Cash rebates are negatively related to consumers' perceptions of
mobile industry, where the finance rate is a function of the prevailing
quality.
market interest rates and business environment (Gambacorta, 2008). A
typical example of a financing incentive would be the purchase of an H2. Financing incentives have a negative relationship with consumers'
automobile at a finance rate that is significantly less than the going perceptions of quality to the extent that lower finance rates decrease
market interest rate (e.g., 1.9% annual rate) (Varadarajan & Clark, quality perceptions.
1994). Such promotional incentives make the car more affordable by
lowering consumers' monthly loan payments and enable consumers to
2.5. Perceived quality and firm sales
purchase higher priced products. Financing incentives do not offer any
discount on the product's list price; they simply decrease the present
Several studies note the importance of perceived quality and de-
value of consumers' future stream of loan payments if they choose to
monstrate a positive relationship between perceived quality and firm
finance their purchase.
sales. The consumer-brand identification literature, for example, has
shown perceived quality to increase word-of-mouth and repurchase
2.3. Cash rebates
intentions through its positive relationship with consumer-brand iden-
tification (Lam, Ahearne, Hu, & Schillewaert, 2010). Furthermore,
Cash rebates are monetary inducements to stimulate purchases in
perceived quality drives sales via perceived value. Perceived value,
the form of price subsidies by manufacturers to potential consumers
conceptualized as the tradeoff between perceived quality and perceived
(Neslin, 2002). Traditionally, this category of inducement involves re-
sacrifice, increases firm sales by increasing consumers' willingness to
ducing the list price of the product equal to the dollar amount of the
buy (Dodds et al., 1991). Because perceived quality relates positively to
rebate (Varadarajan & Clark, 1994). Oftentimes with rebates, the price
perceived value, an increase in perceived quality, ceteris paribus, in-
discount is redeemed after purchase. However, during the purchase of
creases consumers' willingness to buy. The increase in willingness to
big ticket items like automobiles, consumers are often given the option
buy then positively impacts firm sales. Thus, we hypothesize that per-
of applying the rebate towards their down payment or receiving cash
ceived quality has a positive impact on sales.
back on the purchase (Ault, Beard, Laband, & Saba, 2000). The re-
duction in the down payment makes the product more affordable, H3. Perceived quality has a positive relationship with sales.
thereby stimulating sales.
2.6. The impact of sales promotions on sales
2.4. Sales promotions and perceived quality
Sales promotions not only affect sales through perceived quality but
Sales promotions can influence perceived quality, which is a con-
also through perceived sacrifice. As we proposed in prior hypotheses,
sumer's assessment of a product's excellence. Perceived quality differs
sales promotions decrease perceived quality by lowering price.
from objective quality, because it is a subjective assessment that varies
Moreover, since perceived quality is positively related to sales, the in-
by consumer. It is a global assessment of the product and “a higher level
direct effect of sales promotions on sales through perceived quality is
abstraction rather than a specific attribute” (Zeithaml, 1988). As a
negative. However, sales promotions positively relate to sales through
subjective assessment, it is influenced by factors external to the pro-
perceived sacrifice. Perceived sacrifice is consumers' perceptions of
duct, such as sales promotions.
what must be given to acquire a product. As sales promotions decrease
Sales promotions influence perceived quality by lowering a pro-
price, they decrease perceived sacrifice by lowering the amount of
duct's price. Previous research has found a price-quality relationship, in
money that must be given to acquire a product. Because perceived sa-
which consumers assume that higher-priced products are higher-quality
crifice is positively related to sales, sales promotions relate positively to
products. This relationship is even stronger when the product's physical
sales through perceived sacrifice.
attributes are more difficult to assess before purchase (Zeithaml, 1988).
As sales promotions, cash rebates and financing incentives increase
Furthermore, Darke and Chung (2005) suggest consumers may perceive
sales by lowering perceived sacrifice and increasing consumers' will-
price reductions through sales promotions as a signal of manufacturers'
ingness to buy (Attanasio et al., 2008). There is ample evidence of this
desperation to rid themselves of products that are not selling well. This
effect in the marketing literature, where price reductions from cash
perception can result in a further reduction in consumers' perceptions of
rebates and financing incentives increase sales (for a review, see
product quality. For these reasons, previous studies have often found
Blattberg et al., 1995). As a result, cash rebates and financing incentives
evidence of a positive relationship between perceived quality and price,
can trigger a positive change in sales (Leeflang & Parreño-Selva, 2012).
such that perceived quality decreases as price decreases (Dodds,
Monroe, & Grewal, 1991). Since sales promotions lower price, they H4. Cash rebates have a positive relationship with sales.

289
M. Chaudhuri et al.
H5. Financing incentives have a positive relationship with sales.
2.7. Moderating role of product class (luxury vs. mass)
Product class is one of many factors that can alter the effectiveness
of various forms of sales promotions (see, e.g., Roehm & Roehm Jr,
2011). We first posit that product class can exacerbate the differential
effects of sales promotions. Second, we argue that product class is an
easily identified factor for managers when developing their promo-
tional strategies. By investigating the differential effects of sales pro-
motions across product classes, we can assist managers with the de-
velopment of more effective promotional strategies with the use of an
easily identifiable moderator. We continue this section with an ex-
planation of the differential effects of sales promotions across the
luxury and mass market product classes.
The marketing of luxury products has become increasingly multi-
faceted, being concomitant not only with cuing an aura of quality,
performance, and legitimacy ‘but also with attempting to sell an ex-
perience by relating it to the lifestyle constructs of consumers’ (Atwal &
Williams, 2009). The extant literature indicates that the inescapable
desire for social prestige influences consumers to pay a premium for
products that confer status and that the consumption of these products
heightens consumers' level of involvement with the product. It also
enhances consumers' brand loyalty. Consequently, consumers become
less price-sensitive when consuming luxury products (Han, Nunes, &
Drèze, 2010). Thus, effective marketing strategies for luxury products
are those that convey high quality and are less explicit about product
pricing structure.
Interestingly, signals emitted by the luxury marketing mix are often
diametrically different from those of classical marketing employed
while promoting mass products. For example, price information is often
provided in advertisements to mass market consumers because they
tend to focus on price while disregarding other dimensions of brand
evaluation (Kapferer & Bastien, 2009). Promotional strategies in the
mass market are often tailored to their consumers' price-sensitivity by
offering explicit price discounts that effectively enhance product de-
mand. In contrast, advertisements in the luxury market often withhold
price information. The role of promotional strategies in the luxury
sector is to create the dream of exclusivity, not to improve sales growth
(Kapferer & Bastien, 2009). Thus, firms whose product offerings target
the luxury market traditionally avoid the extension of sales promotions
like rebates and coupons, which offer price information (Kapferer,
2012). Given these stark differences, we posit the following:
H6a. The negative relationship between financing incentives and
perceived quality is stronger for luxury vis-à-vis mass products.
H6b. The negative relationship between rebates and perceived quality
is stronger for luxury vis-à-vis mass products.
H7a. The positive relationship between financing incentives and sales is
stronger for luxury vis-à-vis mass products.
H7b. The positive relationship between rebates and sales is weaker for
luxury vis-à-vis mass products.
3. Methodology
3.1. MIDAS
Our analysis uses data with different sampling frequencies.
Specifically, information on firms' promotions is available weekly,
whereas sales and inventory information are sampled monthly.
Additionally, information on firm performance, dealership networks,
and perceived quality is available annually. In instances when re-
searchers deal with mixed frequency data, they typically have two al-
ternatives: either aggregate higher frequency data to a lower frequency
290
Journal of Business Research 90 (2018) 286–294
or interpolate lower frequency data to a higher frequency. Both
methods suffer from limitations. Aggregating higher frequency data
causes information loss, which reduces estimation and forecast effi-
ciency (Silvestrini & Veredas, 2008). Interpolation involves data as-
sumptions that may lead to biased estimates. We address the issue by
applying mixed data sampling regression (MIDAS) (Ghysels et al.,
2004). Specifically, MIDAS regression helps project the dependent
variable onto a history of lagged observations of the independent
variables (Qian, 2013).
Suppose the sampling frequency of variable yt between t − 1 and t is
unity (say, yearly), whereas that of another variable, say xt(m), is “m” in
that given period (say, monthly or m = 12), then MIDAS aids in un-
derstanding the dynamic relation between yt and xt(m). In particular,
MIDAS helps to “project yt, the low frequency data, onto a history of
lagged observations of xt−j/m(m), the high frequency data”. Note that the
“superscript on xt−j/m(m) denotes the higher sampling frequency, and its
exact timing lag is expressed as a fraction of the unit interval between
t − 1 and t” (Ghysels, Sinko, & Valkanov, 2007). The MIDAS model may
be illustrated as:
yt = 0 + 1 B (L
1/ m ;
) xt
(m )
+ t
(m )
(1)
for t = 1, . …, T, where yt is the regressand, xt is the regressor, m de-
K
notes the frequency of occurrence of xt, B (L1/ m; ) = B (k; ) Lk / m , L1/
m
k=0
is a lag operator, and εt(m) is the disturbance term. The parameter β1
indicates the aggregate impact of lagged xt(m) on yt and β0 is the in-
tercept. Following Ghysels et al. (2007), we estimate β1 “by normalizing
the function B(L1/m; θ) to sum up to unity.” Also note that the lag
coefficients in B(k; θ) corresponding to Lk/m is a vector of parameter θ
with a small dimension. In a MIDAS framework, the L1/m coefficients
are characterized byB(L1/m; θ). While there are several alternative
parameterizations of B(L1/m; θ), in this study we utilize the “Exponential
Almon Lag” specification of B(k; θ).
1 k + .. …+ Q k
Q
e
B (k ; ) = K
Q
e 1 k + .. …+ Q k
k=1 (2)
3.2. Empirical model
Based on our hypotheses, we model the relationships among sales
promotions, perceived quality, and firm sales as a two-equation model
(Eqs. (3) and (4)). The first equation estimates perceived quality, and
the second equation estimates sales.
In the perceived quality equation (i.e., Eq. (3)), the perceived
quality of the jth brand of firm i in period t (PQijt) is the dependent
variable. The firm's offerings of rebate ratio (operationalized as a ratio
of the cash rebate and the list price) (RRijt) and financing incentives
(FRijt) are the key explanatory variables. We include bankruptcy
(bankruptcyit) and lagged involuntary product recalls (recallijt-1) as
perceived quality shifters, because these events may influence con-
sumers' perceptions of product quality.
In the sales equation, the logarithmic value of firm i′s total sales of
the jth brand in period t is the dependent variable (log(Saleijt)) (i.e., Eq.
(4)). Perceived quality (PQijt), the firm's extension of rebate ratio (RRijt)
and financing incentives (FRijt) are the key explanatory variables. We
include firm size (Firmsizeijt), the log of total advertising expenditures
(log(Adv_Expit)), the log of total R&D expenditures (log(R&D_Expit)),
and the firm's adjusted capital expenditures as supply shifters, because
they are firm-specific factors that help the firm adjust its supply.
We include control variables in the perceived quality and sales
equations. Specifically, we include product-class (Luxuryij) and the log
of list price (log(Priceijt)) to control for product characteristics. We
include a global financial crises variable (GFCt) as a control for eco-
nomic impact, and we include a dealer network variable (Dlrsijt) to
M. Chaudhuri et al.
control for consumers' access to product information. We include brand
and body style information as product level controls, and we classify
vehicles based on body style and degrees of commonality. For the
classification of vehicles, we use the following: sedan, SUV, hatchback,
crossover, coup, convertible, truck, and wagon. Additionally, we in-
clude brand information (Brandij) in the analysis. Since there are in-
stances of brand discontinuity in the U.S. auto industry within the time
period of analysis, we have an unbalanced panel dataset.
Perceived quality equation:
PerceiveQualityi, j, t
= 0 + 1 RebateRatioi, j, t + 2 FinanceIncentivei, j, t
+ 4 Bankruptcyi, t + 5 Recalli, j, t 1 + 6 log (Pricei, j, t )
+ 8 GFCt + 9 Brandi, j + 10 Stylei, j +
PQ
i, j, t
Sales equation:
log (Salei, j, t )
= 0 + 1 PerceivedQualityi, j, t + 2 RebateRatioi,j, t + 3 FinanceIncentivei, j, t + 4 Luxuryi, j
+ 5 log (Pricei, j, t ) + 6 Dealersi, j, t + 7 GFCt + 8 Firm Sizei, j
+ 9 log (Adv Expi, t ) + 10 log (R &D Expi, t ) + 11 CAPXi,t + 12 Brandi, j
+ 13 Stylei,j + iS,j, t
Note that perceived quality shifters appear in the perceived quality
equation (i.e., Eq. (3)) but not in the sales equation (i.e., Eq. (4)),
whereas supply shifters appear in the sales equation (i.e., Eq. (4)) but
not in the perceived quality equation (i.e., Eq. (3)). This makes the
model identifiable “since several exogenous variables are excluded
from each equation” (Verhoef, Neslin, & Vroomen, 2007). The error
terms εijtPQ and εijtS are potentially correlated with each other for a
given firm and across firms. Thus, we estimate the system of equations
using the three stage least square (3SLS) method (Tellis & Johnson,
2007).
4. Data and measurement variables
In this study, we considered 16 major auto manufacturers that were
operating in the U.S. auto industry between 2003 and 2012. These 16
auto manufacturers offered luxury and mass market brands. Perceived
quality information for each brand was obtained from Harris
Interactive. We obtained weekly brand specific promotional informa-
tion (i.e. cash rebates and financing incentives), monthly sales, and
brand specific dealer network information from Automotive News.
Additionally, we collected product recall data from the National
Highway Traffic Safety Administration. We obtained total assets, ad-
vertisement expenditures, research and development expenditures, and
capital expenditures from COMPUSTAT, and we sourced price in-
formation from Kelly Blue Book. Furthermore, we obtained bankruptcy,
country of origin, and product class information from each auto man-
ufacturer's website.
5. Results
Table 2 provides the correlation coefficient estimates of the vari-
ables used in the analysis. Estimates indicate a positive association
between firms' offerings of rebate ratio and financing incentives. Esti-
mates also suggest that both components of sales promotions, rebate
ratio and financing incentives, translate into higher sales.
Table 3 provides the 3SLS estimates of the model. In the first
column, the dependent variable is perceived quality, and the in-
dependent variables are sales promotions (i.e., rebate ratio and finan-
cing incentives) and vehicle characteristics (i.e., product class, price).
Furthermore, we include bankruptcy filings and the lag of product re-
calls as perceived quality shifters. We include dealer network and
global financial crisis as a control for access to information and
Journal of Business Research 90 (2018) 286–294
economic performance respectively.
Findings suggest that a one unit decrease in rebate ratios translates
into a 0.1585 units (p < .01) improvement in perceived quality, sup-
porting hypothesis H1. H2, however, was not supported. Results in-
dicate that for every one unit change in financing incentives (i.e. a 1%
decrease in the finance rate), consumer's perceived quality increases by
0.1450 units (p < .01). Thus, estimates indicate a positive relationship
between financing incentives and perceived quality. Consistent with the
literature, results support H3, with estimates indicating that a one unit
improvement in perceived quality increases the log of sales by
0.0644 units (p < .01). Results also suggest that a one unit increase in
+ 3 Luxuryi, j the rebate ratio boosts the log of sales by 0.0189 units (p < .01). This
+ 7 Dealersi, j, t confirms hypothesis H4. Additionally, findings indicate that a one unit
change in financing incentives (i.e. a one percent decrease in finance
rates) improves the log of sales by 0.0212 units (p < .05). Thus, find-
(3) ings support H5.
Diving deeper into the results, if we extend the discussion from
simply looking at the direct effects to considering the total effects of
rebate ratio and financing incentives, an interesting pattern emerges.
Specifically, while the rebate ratio has a direct and positive effect on log
of sales, its indirect effect via perceived quality is negative, reducing the
total effect of the rebate ratio on sales nearly to zero (i.e. 0.0087). Thus,
the rebate ratio does not have universally positive effects on log of sales
(4)
as its eroding effect on perceived quality mitigates most of the positive
benefits. Alternatively, financing incentives have consistently positive
effects on both perceived quality and log of sales. Thus, the total effect
of financing incentives (0.022) suggests that offering financing in-
centives can have dual benefits by increasing quality perceptions and
directly closing sales.
To further unravel the differential impact of sales promotions on
perceived quality and sales across product classes, we estimate the
model for two subsectors (i.e., luxury and mass market automobiles)
(see Table 4). Empirical findings suggest that a one unit increase in the
rebate ratio depletes perceived quality by 0.2498 units (p < .01) and
0.2588 units (p < .01) in the mass and luxury markets, respectively.
Interestingly, the differential impact of the rebate ratio on perceived
quality across the luxury and mass market is not statistically significant.
Thus, estimates fail to support H6b. Furthermore, estimates suggest that
a one unit change in financing incentives (i.e. a 1% decrease in the
finance rate) improves consumer perceived quality by 0.2922 units
(p < .01) in the mass market and by 0.1982 units (p < .01) in the
luxury market. The differential impact of financing incentives on per-
ceived quality across the mass and luxury markets is 0.0940 units
(p < .01). The difference indicates that perceived quality is more re-
sponsive to changes in financing incentives in the mass market than in
the luxury market (H6a not supported).
Analysis of the sales equation reveals the differential impact of sales
promotions on log of sales. Estimates reveal that a one unit increase in
rebate ratios increases the log of sales by 0.0715 units (p < .01) in the
mass market and by 0.0532 units (p < .01) in the luxury market. The
differential impact of rebate ratios across the two markets is
0.0183 units (p < .01). Thus, findings support H7b. Finally, results
indicate that a one unit change in financing incentives (i.e. a 1% de-
crease in finance rates) improves sales by 0.0069 units (p < .01) in the
mass market and by 0.0138 units (p < .01) in the luxury market. Es-
timates of the differential impact across the two markets is
−0.0069 units (p < .05). Thus, in support of H7a, findings indicate
that financing incentives stimulate sales more effectively in the luxury
market.
5.1. Tests of robustness
In addition to the above analyses, several analyses were performed
to test the robustness of the model and the appropriateness of the 3SLS
analysis. With respect to the former, we ran a separate analysis con-
trolling for the relationships among various product characteristics,
291
M. Chaudhuri et al. Journal of Business Research 90 (2018) 286–294

Table 2
Summary statistics.
N Mean Std Dev 1 2 3 4 5 6 7 8

#
PQ 174,624 6.25 1.73
⁎
1.00
RR^ 138,431 5.63 3.02 0.20⁎⁎⁎ 1.00
FI^^ 144,721 2.95 1.68 0.32⁎⁎⁎ 0.54⁎⁎⁎ 1.00
Log (Sales) 220,096 12.41 1.37 0.45⁎⁎⁎ 0.42⁎⁎⁎ 0.39⁎⁎⁎ 1.00
log(Price) 205,576 10.40 0.29 0.03⁎⁎⁎ −0.39⁎⁎⁎ −0.14⁎⁎⁎ −0.33⁎⁎⁎ 1.00
Dealers 179,358 2318.79 2226.40 0.15⁎⁎⁎ 0.57⁎⁎⁎ 0.32⁎⁎⁎ 0.36⁎⁎⁎ −0.23⁎⁎⁎ 1.00
Firm Size 215,897 11.96 0.84 0.07⁎⁎⁎ 0.07⁎⁎⁎ 0.04⁎⁎⁎ −0.03⁎⁎⁎ 0.00⁎⁎ 0.04⁎⁎⁎ 1.00
log(AdvExp) 188,929 8.40 0.25 0.01⁎⁎⁎ 0.26⁎⁎⁎ 0.47⁎⁎⁎ 0.05⁎⁎⁎ −0.04⁎⁎⁎ 0.15⁎⁎⁎ 0.10⁎⁎⁎ 1.00

#PQ: Perceived Quality; ^RR: Rebate Ratio; ^^FI: Financing Incentives; ##Capital expenditure.
⁎
Indicates 10% level of significance.
⁎⁎
Indicates 5% level of significance
⁎⁎⁎
Indicates 1% level of significance.

Table 3 6. Discussion
Impact of sales promotions on perceived quality and sales.
Variables Perceived quality Log (Sales)
Threats of market share erosion, mass customization, and product
commoditization motivate firms to market their product offerings
Intercept 50.2336 (.479)⁎⁎⁎ 42.2752 (.818)⁎⁎⁎ through various promotional incentives. In the automotive industries,
Perceived quality 0.0644 (.010)⁎⁎⁎ manufacturers frequently extend sales promotions, such as rebates, fi-
Rebate ratio −0.1585 (.004)⁎⁎⁎ 0.0189 (.005)⁎⁎⁎
Financing incentives 0.1450 (.013)⁎⁎⁎ 0.0212 (.011)⁎⁎
nancing incentives, or a combination of the two, to enhance product
Luxury −0.0107 (0.017) 0.0260 (.012)⁎⁎ attractiveness and to increase consumers' willingness to buy (Busse,
Bankruptcy −2.1548 (.030)⁎⁎⁎ Simester, & Zettelmeyer, 2010). The current study suggests that cash
Recall lag −0.9066 (.018)⁎⁎⁎ rebates and financing incentives lift sales, but the impact differs across
log(Price) 3.9278 (.046)⁎⁎⁎ −2.5408 (.062)⁎⁎⁎
mass and luxury products. Furthermore, the lift in sales due to cash
Dealer network −0.0002 (.000)⁎⁎⁎ 0.0002 (.000)⁎⁎⁎
GFC% −1.5139 (.037)⁎⁎⁎ 0.3160 (.035)⁎⁎⁎ rebates is accompanied with an erosion of quality perceptions, but fi-
Firm size −0.4507 (.010)⁎⁎⁎ nancing incentives can directly increase sales without quality erosion.
log(AdvExp)^ 1.1159 (.043)⁎⁎⁎ The managerial implications of the differential effects across product
log(R&Dexp)^^ 1.1582 (.039)⁎⁎⁎ class are discussed next.
CAPX%% 0.0001 (.000)⁎⁎⁎
Brand Yes Yes
Style Yes Yes
System weighted R-square 0.527 6.1. Managerial implications

%GFC: Global Financial Crisis; ^log(AdvExp): log value of total advertising
expenditure; ^^log(R&Dexp): log value of research and expenditure; %%CAPX:
Capital Expenditure.
The effects for financing incentives reflect the impact of decreases in finance
rates. Thus the positive relationship with sales indicates that when manu-
facturers offer financing incentives sales increase.
⁎ Indicates 10% level of significance.
⁎⁎
Indicates 5% and level of significance.
⁎⁎⁎
Indicates 1% level of significance.
perceived quality, and log of sales. Specifically, we controlled for auto
brand and body style information in both the “Perceived Quality” and
“Sales” equations. Additionally, we collected ‘Vehicle Health Index’
data, a measure of objective engineering quality information from
CarMD.com for 2012. We used this subset of data for which objective
engineering quality information and sales are available (year 2012) and
re-ran the model with “observed quality” as an additional control.
Estimates from the re-specified model, which control for these various
characteristics, give further evidence to the relationships between sales
promotions and perceived quality. Furthermore, we conducted
Granger-Causality tests between sales promotions and perceived quality
to test the causal sequencing of our model. Results support the proposed
causal sequencing, in which sales promotions influence perceived
quality. Finally, to test the appropriateness of the 3SLS analysis, we
conducted a Hausman-Wu test to detect the presence of endogeneity
among the predictor variables. Test estimates reveal correlations among
the predictor variables and the error term, indicating the presence of
endogeneity. In order to account for the endogeneity, we analyzed the
data using 3SLS.
Results confirm that cash rebates and financing incentives can boost
sales in the mass and luxury markets. However, the impacts of financing
incentives and cash rebates vary significantly across product class. For
example, financing incentives have a greater impact on sales in the
luxury market than the mass market, indicating that managers of luxury
market brands benefit more from using financing incentives than the
managers of mass market brands. In contrast, cash rebates provide a
bigger boost in sales in the mass market than in the luxury market.
Brands of both markets suffer decreases in perceived quality when cash
rebates are offered and the erosion of perceived quality impacts both
markets equally. Given the complex nature of the effects of these
marketing promotions, managers should be aware that the continual
use of cash rebates can result in continual erosion in quality percep-
tions, which over time could result in an erosion of brand equity. In an
effort to provide more actionable insights, we estimated the models
separately for mass and luxury brands. The implications of these ana-
lyses are discussed next.
Differences in the relationships of sales promotion tactics within the
separate markets are even more revealing. Within the luxury market,
financing incentives yield higher indirect and total effects on sales than
cash rebates, and they do not decrease perceived quality. Stated dif-
ferently, financing incentives can boost sales without eroding perceived
quality, whereas cash rebates boost sales but lower the perceived
quality of the brand. The total effect on sales thus comes out higher for
financing incentives than cash rebates in the luxury market. Hence, a
clear implication of the current study is that managers of luxury pro-
ducts should favor financing incentives over cash rebates, especially
when protecting the perceived quality of the brand is a critical objec-
tive.
In contrast, results suggest that cash rebates give sales a bigger boost
than financing incentives in the mass market. Although the indirect

292
M. Chaudhuri et al. Journal of Business Research 90 (2018) 286–294

Table 4
Impact of sales promotions on perceived quality and sales: Mass vs. luxury product.
Mass product Luxury product Difference in perceived Difference in Log(Sales)
quality (Mass-luxury) (Mass-luxury)
Variables Perceived quality Log (Sales) Perceived quality Log (Sales)

Intercept 28.6976 (1.120) ⁎⁎⁎

1.7574 (.176)⁎⁎⁎
31.8909 (1.237) ⁎⁎⁎
0.2385 (.223) −3.1933 1.5188
Perceived Quality 0.0866 (.002)⁎⁎⁎ 0.0940 (.003)⁎⁎⁎ −0.0074⁎⁎
Rebate ratio −0.2498 (.007)⁎⁎⁎ 0.0715 (.001)⁎⁎⁎ −0.2588 (.008)⁎⁎⁎ 0.0532 (.002)⁎⁎⁎ 0.0090 0.0183⁎⁎⁎
Financing incentives 0.2922 (.013)⁎⁎⁎ 0.0069 (.003)⁎⁎⁎ 0.1982 (.014)⁎⁎⁎ 0.0138 (0.002)⁎⁎⁎ 0.0940⁎⁎⁎ −0.0069⁎⁎
Bankruptcy −1.0318 (.031)⁎⁎⁎ −1.4888 (.040)⁎⁎⁎ 0.4570⁎⁎⁎
Lagged recall −0.6478 (.024)⁎⁎⁎ −0.7135 (.030)⁎⁎⁎ 0.0657⁎⁎
log(Price) 1.9736 (.109)⁎⁎⁎ −0.8328 (.015)⁎⁎⁎ 2.1850 (.121)⁎⁎⁎ −0.8800 (.019)⁎⁎⁎ −.2115⁎⁎⁎ 0.0472⁎⁎
Dealer network −0.0002 (.000)⁎⁎⁎ 0.0001 (.000)⁎⁎⁎ −0.0001 (.000)⁎⁎⁎ 0.0002 (.000)⁎⁎⁎ 0.0000⁎⁎⁎ −0.0001⁎⁎⁎
GFC% −0.6407 (.039)⁎⁎⁎ −0.1224 (.007)⁎⁎⁎ −0.8172 (.053)⁎⁎⁎ −0.2279 (.009)⁎⁎⁎ 0.1765⁎⁎⁎ 0.1055⁎⁎⁎
Firm size −0.1190 (.002)⁎⁎⁎ −0.1164 (.003)⁎⁎⁎ −0.0027
log(AdvExp)^ 0.0405 (.015)⁎⁎⁎ 0.2308 (.019)⁎⁎⁎ −0.1903⁎⁎⁎
log(R&Dexp)^^ 0.4531 (.012)⁎⁎⁎ 0.3785 (.018)⁎⁎⁎ 0.0746
CAPX%% 0.0001 (.000)⁎⁎⁎ 0.0002 (.000)⁎⁎⁎ 0.0000
Brand Yes Yes Yes Yes
Style Yes Yes Yes Yes
System weighted R- 0.9887 0.9894
square

%GFC: Global Financial Crisis; ^log(AdvExp): log value of total advertising expenditure; ^^log(R&Dexp): log value of research and expenditure; %%CAPX: Capital
Expenditure.
The effects for financing incentives reflect the impact of decreases in finance rates, thus the positive relationship with sales indicates that when manufacturers offer
financing incentives sales increase.
⁎ Indicates 10% level of significance.
⁎⁎
Indicates 5% level of significance.
⁎⁎⁎
Indicates 10%, 5% and 1% level of significance.

effects are negative, indicating that cash rebates erode perceived
quality, the direct and total effects are positive and greater for cash
rebates than for financing incentives. The differences in effects suggest
that the loss in sales due to the erosion of perceived quality is out-
weighed by the gain in sales from cash rebate offers. Furthermore, cash
rebates have a bigger impact on sales in the mass market than financing
incentives, as evidenced by the difference in total effects. However, as
with luxury market products, financing incentives do not erode per-
ceived quality, whereas cash rebates do. In summary, the results imply
that managers of mass market brands should use cash rebates when a
bigger lift in sales is desired but should use financing incentives when
the objective is to lift sales without damaging perceived quality.
Limitations. Although the current study yields several managerial
implications, it is not without its limitations. First, we cannot determine
why luxury market consumers respond better to financing incentives
than mass market consumers from the current study. Although we
propose that the difference arises from the subtlety of the financing
incentives vs. cash rebates, the reason is not investigated in this study.
Furthermore, it is not the only plausible explanation. Perhaps the
average consumer in the luxury market has a better understanding of
the impact of the financing incentives on the overall price of the pro-
duct than the average consumer in the mass market, making financing
incentives more of a “hot button” issue for luxury market consumers.
Although this result may seem contradictory to the notion that luxury
market consumers are less price sensitive than mass market consumers,
the difference in reactions to financing incentives indicates a separate
dividing factor between luxury and mass markets. Because there are
multiple factors that determine the monthly (i.e. monthly payment) and
overall price, such as terms, the agreed upon price, money down, cash
rebates, and finance rates, the increased sensitivity to changes in fi-
nancing incentives may indicate that the luxury market consumer has a
better understanding of the impact of finance rates on the total price of
the product.
Another limitation of the current study is that we do not investigate
the reasons behind the difference in responses to cash rebates. The
difference in reaction is likely due to differences in the price sensitivity
of the average mass market consumer vs. the price sensitivity of the
average luxury market consumer. However, the difference in the sales
response may indicate a general difference in what the important pri-
cing cue is for the average mass market consumer. Perhaps consumers
in the mass market are more concerned with reductions in the list price
than in the finance rates for their loans, eliciting a bigger reaction to
cash rebates.
Additional limitations concern the process, through which sales
promotions influence sales. Although we find a mediating effect
through perceived quality and the direction of the effect is as hy-
pothesized for cash rebates, we find that financing incentives have a
positive relationship with perceived quality instead of a negative re-
lationship. In the current study, we neither probe nor test why perceived
quality increases as financing incentives increase (i.e. as finance rates
decrease). Finally, we do not measure and test perceived sacrifice.
Although previous studies indicate that sales promotions impact sales
through perceived sacrifice, and we assume the relationship here, we do
not measure perceived sacrifice and estimate its impact on sales in the
current study.
The limitations of this study provide several opportunities for future
research. Perhaps the most intriguing opportunity is investigating the
antecedents of the differential effects of financing incentives within
luxury markets and cash rebates within mass markets. Various factors,
such as education, price sensitivity, etc., could be driving these differ-
ences and provide ample future research opportunities. Furthermore,
these antecedents could be mediators of the relationship between sales
and sales promotions. For example, sales promotions can increase the
complexity of the product offer, especially in the case of durable goods.
The consumer has to consider the effects of finance rates, terms, fees,
list price, and a variety of optional product features. Adding sales
promotions, such as financing incentives and cash rebates, to the list of
considerations in a transaction with several adjustable options (e.g.,
terms, finance rates, etc.), may overwhelm some consumers and elicit
various responses. Future research could investigate these possibilities.
References
Ailawadi, K. L., Gedenk, K., Langer, T., Ma, Y., & Neslin, S. A. (2014). Consumer response
to uncertain promotions: An empirical analysis of conditional rebates. International
Journal of Research in Marketing, 31(1), 94–106.

293
M. Chaudhuri et al.
Appelbaum, B. (2016, September 13). U.S. household income grew 5.2 percent in 2015,
breaking pattern of stagnation. The New York Times. Retrieved from http://www.
nytimes.com.
Attanasio, O. P., Koujianou Goldberg, P., & Kyriazidou, E. (2008). Credit constraints in
the market for consumer durables: Evidence from micro data on car loans.
International Economic Review, 49(2), 401–436.
Atwal, G., & Williams, A. (2009). Luxury brand marketing–the experience is everything!.
Journal of Brand Management, 16(5), 338–346.
Ault, R. W., Beard, T. R., Laband, D. N., & Saba, R. P. (2000). Rebates, inventories, and
intertemporal price discrimination. Economic Inquiry, 38(4), 570–578.
Barron, J. M., Chong, B. U., & Staten, M. E. (2008). Emergence of captive finance com-
panies and risk segmentation in loan markets: Theory and evidence. Journal of Money,
Credit and Banking, 40(1), 173–192.
Blattberg, R. C., Briesch, R., & Fox, E. J. (1995). How promotions work. Marketing Science,
14(3_supplement), G122–G132.
Buil, I., De Chernatony, L., & Martínez, E. (2013). Examining the role of advertising and
sales promotions in brand equity creation. Journal of Business Research, 66(1),
115–122.
Busse, M. R., Simester, D. I., & Zettelmeyer, F. (2010). “The best price you'll ever get”: The
2005 employee discount pricing promotions in the US automobile industry. Marketing
Science, 29(2), 268–290.
Chandon, P., Wansink, B., & Laurent, G. (2000). A benefit congruency framework of sales
promotion effectiveness. Journal of Marketing, 64(4), 65–81.
Chen, Y., Moorthy, S., & Zhang, Z. J. (2005). Research note—Price discrimination after
the purchase: Rebates as state-dependent discounts. Management Science, 51(7),
1131–1140.
Darke, P. R., & Chung, C. M. (2005). Effects of pricing and promotion on consumer
perceptions: It depends on how you frame it. Journal of Retailing, 81(1), 35–47.
Demirag, O. C., Keskinocak, P., & Swann, J. (2011). Customer rebates and retailer in-
centives in the presence of competition and price discrimination. European Journal of
Operational Research, 215(1), 268–280.
Dodds, W. B., Monroe, K. B., & Grewal, D. (1991). Effects of price, brand, and store
information on buyers' product evaluations. Journal of Marketing Research, 28(3),
307–319.
Gambacorta, L. (2008). How do banks set interest rates? European Economic Review, 52(5),
792–819.
Gangwar, M., Kumar, N., & Rao, R. C. (2013). Consumer stockpiling and competitive
promotional strategies. Marketing Science, 33(1), 94–113.
Ghysels, E., Santa-Clara, P., & Valkanov, R. (2004). The MIDAS touch: Mixed data sampling
regression models. UCLA: Finance.
Ghysels, E., Sinko, A., & Valkanov, R. (2007). MIDAS regressions: Further results and new
directions. Econometric Reviews, 26(1), 53–90.
Han, Y. J., Nunes, J. C., & Drèze, X. (2010). Signaling status with luxury goods: The role of
brand prominence. Journal of Marketing, 74(4), 15–30.
Hooley, G. J., Greenley, G. E., Cadogan, J. W., & Fahy, J. (2005). The performance impact
of marketing resources. Journal of Business Research, 58(1), 18–27.
Kapferer, J. N. (2012). The luxury strategy: Break the rules of marketing to build luxury
brands. London: Kogan Page Publishers.
Kapferer, J. N., & Bastien, V. (2009). The specificity of luxury management: Turning
marketing upside down. The Journal of Brand Management, 16(5–6), 311–322.
Keller, K. L. (1993). Conceptualizing, measuring, and managing customer-based brand
equity. Journal of Marketing, 57(1), 1–22.
Kelley Blue Book (1995). New and used car price values, expert car reviews. http://kbb.
com/, Accessed date: 23 March 2016.
Lam, Ahearne, Hu, & Schillewaert (2010). Resistance to brand switching when a radically
new brand is introduced: A social identity theory perspective. Journal of Marketing,
74(6), 128–146.
Leeflang, P. S., & Parreño-Selva, J. (2012). Cross-category demand effects of price pro-
motions. Journal of the Academy of Marketing Science, 40(4), 572–586.
Lu, Q., & Moorthy, S. (2007). Coupons versus rebates. Marketing Science, 26(1), 67–82.
Manning, K. C., & Sprott, D. E. (2007). Multiple unit price promotions and their effects on
quantity purchase intentions. Journal of Retailing, 83(4), 411–421.
Martín-Herrán, G., Sigué, S. P., & Zaccour, G. (2010). The dilemma of pull and push-price
promotions. Journal of Retailing, 86(1), 51–68.
Neslin, S. A. (2002). Sales promotion. In B. A. Weitz, & R. Wensley (Eds.). Handbook of
marketing (pp. 311–338). London: Sage Publications.
294
Journal of Business Research 90 (2018) 286–294
Nijs, V. R., Dekimpe, M. G., Steenkamps, J. B. E., & Hanssens, D. M. (2001). The category-
demand effects of price promotions. Marketing Science, 20(1), 1–22.
Pauwels, K., Hanssens, D. M., & Siddarth, S. (2002). The long-term effects of price pro-
motions on category incidence, brand choice, and purchase quantity. Journal of
Marketing Research, 39(4), 421–439.
Pauwels, K., Silva-Risso, J., Srinivasan, S., & Hanssens, D. M. (2004). New products, sales
promotions, and firm value: The case of the automobile industry. Journal of
Marketing, 68(4), 142–156.
Qian, H. (2013). Vector autoregression with mixed frequency data. MPRA Paper. 47856.
Roehm, M. L., & Roehm, H. A., Jr. (2011). The influence of redemption time frame on
responses to incentives. Journal of the Academy of Marketing Science, 39(3), 363–375.
Silk, T., & Janiszewski, C. (2008). Managing mail-in rebate promotions. (Working paper).
Silva-Risso, J., & Ionova, I. (2008). Practice prize winner: A nested logit model of product
and transaction-type choice for planning automakers' pricing and promotions.
Marketing Science, 27(4), 545–566.
Silvestrini, A., & Veredas, D. (2008). Temporal aggregation of univariate and multivariate
time series models: A survey. Journal of Economic Surveys, 22(3), 458–497.
Stango, V., & Zinman, J. (2011). Fuzzy math, disclosure regulation, and market outcomes:
Evidence from truth-in-lending reform. Review of Financial Studies, 24(2), 506–534.
Tellis, G. J., & Johnson, J. (2007). The value of quality. Marketing Science, 26(6),
758–773.
Varadarajan, P. R., & Clark, T. (1994). Delineating the scope of corporate, business, and
marketing strategy. Journal of Business Research, 31(2), 93–105.
Verhoef, P. C., Neslin, S. A., & Vroomen, B. (2007). Multichannel customer management:
Understanding the research-shopper phenomenon. International Journal of Research in
Marketing, 24(2), 129–148.
Yoo, B., Donthu, N., & Lee, S. (2000). An examination of selected marketing mix elements
and brand equity. Journal of the Academy of Marketing Science, 28(2), 195–211.
Zeithaml, V. A. (1988). Consumer perceptions of price, quality, and value: A means-end
model and synthesis of evidence. Journal of Marketing, 52(3), 2–22.
ZenithOptimedia (2013). Advertising Expenditure Forecasts June 2013. 1–250.
Zhang, Z. J., Krishna, A., & Dhar, S. K. (2000). The optimal choice of promotional ve-
hicles: Front-loaded or rear-loaded incentives? Management Science, 46(3), 348–362.
Malika Chaudhuri is an Assistant Professor of Marketing in the Department of
Management and Marketing at University of Dayton. She earned her Ph.D. from Michigan
State University in Marketing. Dr. Chauhuri's research interests are broadly defined by
innovations and new product development, strategic marketing relationships, and mar-
keting-finance interface. She teaches undergraduate courses in new product development
and B2B relationships.
Roger J. Calantone is the Eli Broad Chaired University Professor of Business and
Distinguished University Professor at the Eli Broad Graduate School of Management at
Michigan State University. Dr. Calantone's publications have appeared in leading jour-
nals. His publications and research are mostly in product design, innovation processes,
decision support tools for new product development, and organization process metrics.
He has received numerous research grants and awards, and in 2016 his H-Index was 74.
Clay M. Voorhees is an Associate Professor of Marketing at the Eli Broad College of
Business at Michigan State University. He received his Ph.D. in business administration
from Florida State University. His research interests primarily include customer experi-
ence management, customer loyalty, and new product development and innovation. Dr.
Voorhees’ research has been published in Journal of Marketing, Journal of the Academy of
Marketing Science, Journal of Retailing, JPIM, Journal of Service Research, Strategic
Management Journal, and Journal of Services Marketing. His research has been funded by
the National Science Foundation, the United States Air Force Research Laboratories'
Human Effectiveness Directorate, and the Marketing Science Institute. He teaches un-
dergraduate and graduate courses on marketing strategy and product development.
Seth Cockrell is an Assistant Professor of Marketing in the W. Frank Barton School of
Business at Wichita State University. He earned her Ph.D. from Michigan State University
in Marketing. Dr. Cockrell's research interests are broadly defined by salesforce man-
agement and product-harm crises. He teaches undergraduate courses in marketing
strategy.