Price and in-store promotions in an emerging market

The purpose of this paper is to evaluate the influence of price and products on the promotion (through in-store temporary displays) on consumer sales in an emerging market context (i.e. Brazil) in different regions with contrasts in the market and store formats analyzed.

The data originate from retail market audits conducted over three years and are broken down by a region and a channel for a product category that has experienced increased competition and growth and is highly distributed throughout the analyzed regions and channel formats (i.e. the ready-to-drink juice category). This study uses a panel vector autoregression framework and an impulse-response function to determine the effects on sales over time.

The results suggest that price sensitivity and the effects of promotions on sales vary with the type of store format rather than through structural differences between regions with lower vs higher levels of economic development in an emerging market.

Managers should consider differences in store format more than the heterogeneity among regions when making price and promotion decisions. Additionally, this paper highlights the importance of in-store product visibility through temporary displays of promoted products, especially in smaller stores in an emerging market.

By considering the challenges of managing a consumer brand for which market heterogeneity is key, this paper extends the current research by contrasting consumer price and in-store promotion decisions across two heterogeneous regions and store formats within an emerging market.