Research

SPORTS MARKETING

Major sports events draw unsurpassed media attention. Companies are motivated to increase their advertising investments around these events to reach large audiences in a short period. Is such an advertising surge actually beneficial though, or should companies avoid advertising in these periods because of negative effects of competitive interference? Should consumer packaged goods companies invest in advertising to increase sales? There are short term and long term ways to do this. Although considerable heterogeneity exists across brands(Rice 1), own-advertising effectiveness diminishes especially before and during major sports events(Rice 1), in both the short and the long run. In addition, brands benefit less from category-demand effects through competitors' advertising. Conversely, greater increases in advertising spending resulting in significant growth in share of voice around focused, single-sport events are a successful strategy to overcome this overall general negative trend.

USING PROBABILISTIC SELLING

Markdown selling is the use of price reductions over the course of selling something. Markdown selling is a strategy to implement price discrimination and to manage market uncertainty that has been widely used by retailers.The potential advantage of introducing an additional tool to retailers could be huge. Probabilistic selling on the other hand is a method of offering consumers a choice to buy a product that can turn out to be any item from a predetermined set of distinct items (Gijsenberg) Both probabilistic and markdown selling strategies serve as price discrimination tools by offering buyers an option to purchase a good wich is deemed an uncertain product under the former and delayed consumption of a product under the latter. (Gijsenberg) However, the two strategies segment markets based on different types of buyers or buyer preference strength under probabilistic selling and buyer patience under markdown selling. Probabilistic selling can improve margin management by increasing revenue from full-price sales and reducing the magnitude of discounts and also improve inventory utilization by reducing stockouts and the amount of excess inventory (Jin). We identify the conditions required for probabilistic selling to be more profitable than markdown selling.

 

References

Dan Hamilton Rice, (1999) Scott A. Fay, Jinhong Xie, Probabilistic selling vs. markdown selling, Price discrimination and management of demand uncertainty in retailing

 

Gijsenberg, Maarten J. (2001) Going for Gold, International Journal of Research in Marketing.

 

  • Liyin, Jin (2013)When giving money does not work, International Journal of Research in Marketing.