Short answer
When planning promotions, ensure adequate stock to avoid the negative consequences of stock-outs, especially since consumers are more likely to switch stores for regular-priced items that are unavailable.
- Field
- Innovation & Markets
- Source
- Lund University Publications Student Papers (Lund University) (2016)
- Method
- Experimental survey design
- Evidence
- Moderate effect
Consumers exhibit stronger brand loyalty and are more likely to switch stores when a regularly priced item is out-of-stock compared to a price-promoted item. This innovation & markets research insight is drawn from a 2016 study published in Lund University Publications Student Papers (Lund University). Using Experimental survey design, researchers explored how this design variable affects real-world outcomes. The key design takeaway: When planning promotions, ensure adequate stock to avoid the negative consequences of stock-outs, especially since consumers are more likely to switch stores for regular-priced items that are unavailable.
Price Promotions Amplify Out-of-Stock Frustration, Driving Brand Loyalty and Store Switching
Consumers exhibit stronger brand loyalty and are more likely to switch stores when a regularly priced item is out-of-stock compared to a price-promoted item.
Lund University Publications Student Papers (Lund University) · 2016
Key Findings
- 01Consumers are most likely to switch to another product of the same brand or postpone the purchase when an item is out-of-stock, regardless of price promotion.
- 02Switching to another store to purchase the intended product is significantly more common when a regular-priced item is out-of-stock compared to a price-promoted item.
- 03Overall response patterns suggest that consumers react only slightly differently to out-of-stock price-promoted products compared to regular-priced products, indicating a strong brand loyalty in both scenarios.
Application
Design takeaway
When planning promotions, ensure adequate stock to avoid the negative consequences of stock-outs, especially since consumers are more likely to switch stores for regular-priced items that are unavailable.
How to apply
When designing promotional campaigns, conduct thorough demand forecasting and ensure sufficient stock levels for the promoted items. For regular-priced items, consider strategies to retain customers who might switch stores due to unavailability.
Project actions
- 01When designing a survey, clearly differentiate between scenarios involving sale items and regular-priced items.
- 02Consider using a Likert scale to measure the strength of consumer intentions to switch brands, postpone purchase, or switch stores.
Method & Evidence
Variables
Strengths & Limitations
Strengths
- +Direct comparison between price-promoted and regular-priced items.
- +Development of a response model tailored to price-promoted OOS situations.
Limitations
The study's findings might be specific to the surveyed product category and may not apply universally. The use of hypothetical scenarios might not fully capture real-world consumer behavior.
Reliability & validity
The study's reliability could be enhanced by replicating the experiment with a larger and more diverse sample. Validity is supported by the experimental design that isolates the variable of price promotion, but ecological validity might be limited by the survey format.
Think critically
To what extent does the perceived value of a promotional discount influence a consumer's willingness to switch stores for an out-of-stock item?
Design Principles
"Promotional strategies should be supported by robust inventory management to prevent customer dissatisfaction and potential loss of sales to competitors."
Understanding how consumers react to product unavailability, especially concerning promotional items, is crucial for effective inventory management and marketing strategies. This insight helps businesses optimize stock levels for promotions and anticipate customer behavior to minimize lost sales and maintain customer satisfaction.
What This Means for Your Design
When a product you want isn't on the shelf, you might go to another brand or wait. But if it's a regular-priced item that's gone, you're more likely to go to a different shop to find it than if it was a sale item that's gone. People really like their favorite brands, though!
How to use in your project
- 1.Reference this study when discussing consumer behavior in response to product unavailability, particularly when analyzing the impact of price promotions on purchasing decisions.
Add to My Project
Quick Cite
Paragraph starter
Research indicates that consumers exhibit nuanced responses to out-of-stock situations, with price promotions influencing their behavior. While brand loyalty and purchase postponement are common reactions regardless of price, consumers are more inclined to switch stores when a regularly priced item is unavailable compared to a price-promoted item (Timmerman & Hajszan, 2016). This suggests that while promotions can alter immediate behavioral choices, underlying brand allegiance remains a significant factor.
Source
Lund University Publications Student Papers (Lund University)
Towards Understanding Consumer Reactions in Out-of-Stock Situations: A comparison of price promoted versus regular-priced items in grocery retail
journal · 2016
View sourceQuestions About This Research
- What does the research say about price promotions amplify out-of-stock frustration, driving brand loyalty and store switching?
- When planning promotions, ensure adequate stock to avoid the negative consequences of stock-outs, especially since consumers are more likely to switch stores for regular-priced items that are unavailable. Evidence: Lund University Publications Student Papers (Lund University) (2016).
- Why does "Price Promotions Amplify Out-of-Stock Frustration, Driving Brand Loyalty and Store Switching" matter for design?
- Understanding how consumers react to product unavailability, especially concerning promotional items, is crucial for effective inventory management and marketing strategies. This insight helps businesses optimize stock levels for promotions and anticipate customer behavior to minimize lost sales and maintain customer satisfaction.
- How can designers apply this research?
- When planning promotions, ensure adequate stock to avoid the negative consequences of stock-outs, especially since consumers are more likely to switch stores for regular-priced items that are unavailable.
- What were the main findings?
- Consumers are most likely to switch to another product of the same brand or postpone the purchase when an item is out-of-stock, regardless of price promotion.. Switching to another store to purchase the intended product is significantly more common when a regular-priced item is out-of-stock compared to a price-promoted item.. Overall response patterns suggest that consumers react only slightly differently to out-of-stock price-promoted products compared to regular-priced products, indicating a strong brand loyalty in both scenarios.
- What research method was used?
- Experimental survey design.
- How strong is the evidence?
- Evidence strength is rated Moderate effect, based on a 2016 journal from Lund University Publications Student Papers (Lund University).
- What should I do differently in my next project?
- When designing promotional campaigns, conduct thorough demand forecasting and ensure sufficient stock levels for the promoted items. For regular-priced items, consider strategies to retain customers who might switch stores due to unavailability.
- What are the limitations?
- The study focused on a single product category (coffee) and may not generalize to all grocery items. The experimental survey design relies on self-reported intentions, which may not perfectly reflect actual behavior.