Spending on the Fly: Mental Budgets, Promotions, and Spending Behavior
Published 1/20/2010
Author: Karen M. Stilley, J. Jeffrey Inman, and Kirk L. Wakefield
Karen M. Stilley is a doctoral student and J. Jeffrey Inman is the Albert Wesley Frey Professor of Marketing, both at the Katz Graduate School of Business, University of Pittsburgh. Kirk L. Wakefield is Professor and Chair of the Marketing Department at Hankamer School of Business, Baylor University.
Summary
Although a significant body of research indicates that promotions provide a substantial short-term lift for the promoted item, less attention has been given to the basket-level impact and the role of mental budgets. Recent research suggests that consumers allow room (in-store “slack”) in their mental budgets for unplanned purchases on grocery-shopping trips.
Here, Stilley, Inman, and Wakefield examine the effectiveness of promotional savings in increasing spending while incorporating consumers’ mental budgets. They evaluate how promotional savings’ effect on spending varies depending on whether the item is planned or unplanned and whether the item is purchased before or after the shopper’s in-store slack is depleted. Additionally, they study how these relationships vary depending on income and payment method.
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