论文部分内容阅读
Point-based frequency reward programs are widely used by retailers as a sales promotion strategy. To promote a specific product category, retailers offer more favorable reward ratios so that members can earn extra points. This paper examines the impact of reward ratio variations on sales in a multi-category setting, and compares the effectiveness of the reward and price promotion strategies. The authors estimate a market basket model using scanner data of member purchases from a large retailer in four categories, grouped into two pairs. They find that increasing the reward ratio in a category positively affected its choice probability for three of four categories, but that the elasticity is smaller than price elasticity. Rewards promotions also impact the choice probability of non-promoted but closely related categories, and even of categories that are only loosely related. As forms of sales promotion, price discounts and reward promotions can substitute for each other. The authors construct and compute two measures, the rate of substitution and the retailer value of promotion points, to quantify the effects of substitution.