Timothy Norvell and Alisha Horky publish paper in Journal of Revenue and Pricing Management
The assistant professors of marketing present a framework and model to evaluate the impact of promotions on company revenue and profit.
Timothy Norvell and Alisha Horky, both assistant professors of marketing in the Martha and Love School of Business, co-authored the paper titled, “A Framework and Model to Evaluate Promotions: A Restaurant Cross-Promotion In-Market Study,” which was published in the Journal of Revenue and Pricing Management.
The article presents a framework and a model to evaluate the impact of promotions on company revenue and profit based on the examination of empirical findings from a restaurant cross-promotion in-market study.
The paper’s abstract reads:
“This article presents a framework and a model to evaluate the impact of promotions on company revenue and profit based on the examination of empirical findings from a restaurant cross-promotion in-market study. Promotions are difficult to evaluate because firms do not know to what extent the promotion creates incremental transactions or to what extent it simply provides discounts to existing customers who would have paid full price. To properly measure the impact, a firm must be able to determine the following: (i) the percentage incremental versus replacement transactions, (ii) the percentage incremental transactions from new versus existing customers, and (iii) the extent to which the promotion affected their overall spending behavior. This information can be combined with the discount amount of the promotion and the firm’s profit margin to arrive at the financial impact of the promotion. To maximize this effect, the company must first market the promotion to a similar but different customer base to minimize cannibalization. Second, they can institute an aggressive upselling program to counteract the consequence of discounting existing customers.”