Limitations of the Study

Analyzing promotional tactics in the retail sector requires access to detailed and accurate

data, such as sales figures, pricing information, customer behavior, and competitor analysis.

However, obtaining this data can be challenging due to limited data availability or restrictions

imposed by retailers. Analyzing promotional tactics often involves studying a subset of

customers or stores, which can introduce sample bias. The findings may not represent the entire

customer base or retail market accurately, potentially leading to skewed conclusions and

ineffective strategies. Promotional tactics often generate short-term results, such as immediate

sales spikes. However, understanding their long-term impact on customer loyalty, brand

perception, and profitability can be challenging. Analyzing only immediate outcomes may fail to

capture the complete picture and overlook potential drawbacks or unintended consequences.

The price perception based studies are unable to explain consumer response to a wide

range of non-price promotions such as free gift offers and extra product offers. Attribution theory

is not useful in explaining consumer response to promotion in an environment where all brands

promote on a regular basis. Prospect theory based prediction that consumers will prefer non price

promotions perceived as ‘gains’ to price promotions perceived as ‘reduced losses’ is not

supported by research and is also not based on a precise application of the theory. Although

attitude models provide information on the consumer decision process, their application is

limited by the fact that several studies have found a weak correlation between attitude and

behavior. The ELM model bases the explanation of consumer response to promotion on an

individual difference variable (need for cognition). There is little information about the

relationship between this variable and other managerially actionable variables e.g. demographics.
There is need for a theoretical framework, which is more adequately able to explain consumer

response to different types of promotion.

Most of the theoretical research on promotions has concentrated on aspects of price and

its impact on consumer judgments. Studies based on adaptation level theory have focused on

examining the impact of lower promotional price on consumer’s internal reference price. The

concept of transaction utility has been used to assess the psychological pleasure associated with

obtaining a price discount. Assimilation contrast theory has been used to examine the optimum

size and presentation format of price decreases in promotional advertisements. The focus on

price has probably been due to the fact that majority of the promotion research has focused on

price promotions namely price offs and coupons. These approaches are limited in that they

restrict analysis of factors affecting promotion choice to mainly price.

Analyzing promotional tactics in isolation may neglect the influence of external factors,

such as economic conditions, seasonality, or industry trends. Failing to account for these factors

can limit the accuracy and relevance of the analysis, as promotions may have different impacts

under varying circumstances. Consumer behavior is intricate and influenced by numerous

factors, including personal preferences, demographics, and psychographics. Analyzing

promotional tactics requires understanding how different customer segments respond to various

offers, discounts, or incentives. However, predicting consumer behavior accurately can be

challenging due to its complexity and the constantly evolving market dynamics.

Conducting controlled experiments or having control groups is crucial to evaluate the

effectiveness of promotional tactics accurately. However, in real-world retail settings, it may be

difficult to establish control groups or isolate the impact of promotions from other factors that

influence consumer behavior. This limitation can hinder the ability to attribute specific outcomes
solely to promotional efforts. The retail sector is highly competitive, with multiple players vying

for the same customer base. Analyzing promotional tactics requires considering the strategies

and actions of competitors, as they can significantly impact the effectiveness of a retailer's

promotions. However, gaining access to accurate and timely competitor data may be challenging,

limiting the comprehensive analysis of promotional tactics. Analyzing promotional tactics in the

retail sector often involves examining historical data. However, market conditions, consumer

preferences, and industry dynamics change over time. The relevance and applicability of past

data to current or future promotional strategies may be limited, necessitating frequent updates

and continuous analysis.

Difficulty in measuring intangible factors: Promotional tactics not only aim to increase

sales but also influence intangible factors such as brand perception, customer satisfaction, and

long-term customer loyalty. Quantifying these intangible aspects accurately can be challenging,

making it difficult to assess the overall impact of promotional activities on the retail business.

Promotional tactics may yield different results across different product categories, customer

segments, or geographic locations. Generalizing the effectiveness of promotions based on limited

data or specific contexts may not provide a comprehensive understanding of their impact in

diverse retail settings.

Psychological approaches used, so far, to explain consumer response to promotion have

had a single product focus. The theoretical approaches used so far – adaptation level theory,

transaction utility theory, assimilation contrast theory, attribution theory, attitude models – have

all had a single product orientation. These studies have examined the impact of promotions on

price perceptions, quality perceptions and savings. Although studies on retail price promotions
have suggested positive cross product impact of promotion, psychologically based studies have

not systematically examined this aspect of promotional response.

Overall, analyzing promotional tactics in the retail sector requires considering various

limitations, ranging from data availability and sample biases to the complex nature of consumer

behavior and the influence of external factors. A thoughtful and holistic approach that

incorporates multiple data sources, accounts for contextual factors, and acknowledges the

dynamic nature of the retail landscape is crucial for meaningful analysis.

Theoretical Mix

When analyzing promotional tactics in the retail sector, several theoretical perspectives

can provide valuable insights.

Marketing Mix Theory: The marketing mix theory, often referred to as the 4Ps (product,

price, place, promotion), provides a framework for analyzing promotional tactics. This

perspective emphasizes the role of promotion as one of the key elements in a retailer's marketing

strategy. It explores how retailers can effectively communicate their value proposition,

differentiate themselves from competitors, and influence customer behavior through promotional

activities. The marketing mix theory helps retailers examine the interplay between promotional

tactics and other marketing elements to create a cohesive and impactful strategy.

Consumer Behavior Theory: Consumer behavior theory focuses on understanding how

consumers make purchasing decisions and respond to various marketing stimuli, including

promotional tactics. This perspective explores the psychological, social, and cultural factors that

influence consumer behavior. Analyzing promotional tactics from a consumer behavior

perspective involves studying consumer motivations, perceptions, attitudes, and decision-making

processes. It helps retailers identify the most effective promotional strategies for different

customer segments and tailor their messaging, offers, and incentives to align with consumer

needs and preferences.

Competitive Strategy Theory: Competitive strategy theory examines how retailers can

gain a competitive advantage in the market. It emphasizes the importance of understanding the

competitive landscape, analyzing competitors' strategies, and identifying opportunities to

differentiate and position oneself effectively. Analyzing promotional tactics through a

competitive strategy lens involves assessing how promotions can create a unique value

proposition, attract and retain customers, and counter competitors' actions. This perspective helps

retailers identify their strengths and weaknesses, assess the potential impact of promotional

tactics on market positioning, and make strategic decisions to achieve sustainable competitive

advantage.

Attribution Theory: Attribution theory describes how consumers explain the causes of

events (Mizerski, Golden and Kernan, 1979) Different types of attribution can be distinguished

based on the object about which the attribution is being made. Attributions made about self (the

‘why-did-I-buy’ question) come under self-perception theory while attributions made about an

object/ brand (the ‘why-is-brand-X-on-promotion’) come under object perception theory. Each is

analyzed in the context of promotions.

Self-perception theory: Researchers who have applied self-perception theory to price

promotions have stated that a purchase in the presence of a strong promotion is expected to lead

the consumer to attribute purchase to an external cause (i.e. the promotion) rather than an

internal cause (i.e. liking for the product). This will lead to discounting of a favorable brand
attitude and repeat purchase probability will diminish. Basically, self-perception theory suggests

a negative long term effect of price promotions on consumer attitudes and behavior.

Dodson, Tybout and Sternthal (1978) examined different types of price promotions -

media distributed coupons, cents off marked packages and on/in-package coupons - and used

self-perception theory to explain the results. The media distributed coupons had highest

economic value and were expected to induce more switching than cents off and package

coupons. They hypothesized that since media coupons had high economic value, consumers

would attribute their purchase to the presence of the media coupon and this would lead to lower

repeat purchase probability. Since cents off deal and package coupon offered lower economic

value, purchase here was likely to be attributed to internal factors and this would lead to higher

repeat purchase probability. Attribution to internal (liking for the brand) versus external

(presence of a promotion) factors would determine the repeat purchase probability for the brand.

The results of the study were in accordance with the hypotheses. Media distributed coupons

undermined repeat purchasing to the greatest extent followed by cents off deals. Package

coupons had the highest repeat purchase rate. Although Dodson et al., (1978) applied self-

perception theory to interpret the results of their study, the panel data used did not match

requirements for causality to infer the conclusions. There are competing explanations for the

results found by the authors. The study did not measure brand evaluations directly and it is not

evident that consumers really made the attributions suggested by the authors.

By combining these theoretical perspectives, retailers can gain a comprehensive

understanding of promotional tactics in the retail sector. This integrated approach enables them

to consider marketing mix elements, consumer behavior factors, and competitive dynamics when

analyzing and formulating effective promotional strategies.