Measuring and Mitigating the Costs of Stockouts
Management Science
Marketing Models of Service and Relationships
Marketing Science
Customer Metrics and Their Impact on Financial Performance
Marketing Science
Brands and Branding: Research Findings and Future Priorities
Marketing Science
How to Compute Optimal Catalog Mailing Decisions
Marketing Science
How Does Popularity Information Affect Choices? A Field Experiment
Management Science
When Acquisition Spoils Retention: Direct Selling vs. Delegation Under CRM
Management Science
How value and trust influence loyalty in wireless telecommunications industry
Telecommunications Policy
The Benefit of Uniform Price for Branded Variants
Marketing Science
Incorporating Direct Marketing Activity into Latent Attrition Models
Marketing Science
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We use the results of three large-scale field experiments to investigate how the depth of a current price promotion affects future purchasing of first-time and established customers. While most previous studies have focused on packaged goods sold in grocery stores, we consider durable goods sold through a direct mail catalog. The findings reveal different effects for first-time and established customers. Deeper price discounts in the current period increased future purchases by first-time customers (a positive long-run effect) but reduced future purchases by established customers (a negative long-run effect). Overall, the results show evidence of several long-run effects: forward buying, selection, customer learning, and increased deal sensitivity. Short-run metrics that ignore these effects overstate the overall change in demand for established customers. The implication is that if prices are set based on short-run elasticity, then they will be too low. Among first-time customers, the short-run metrics underestimate the total increase in demand. If prices are set based on short-run elasticity, then they will be too high.