The impact of promotions on consumer choices and preferences in out-of-stock situations

• Customers' substitution patterns in out-of-stock situations are context-dependent.
• Promotions are essential drivers of out-of-stock induced substitution patterns.
• Out-of-stock induced preferences shift according to a reversed similarity effect.
• The reversed similarity effect is reduced for stock-outs of promoted items.
• The effect's strength varies contingent on the similarity of promoted substitutes.

Out-of-stock is a prevalent problem in retailing, particularly for promoted products. This research analyzes customers' substitution decisions in out-of-stock situations by accounting for the specific impact of promotions. The results of two studies demonstrate that substitution patterns are context-dependent and change contingent on the relative positions of the promoted and the respective unavailable product. Specifically, preferences shift according to a reversed similarity effect, which is, however, reduced for stock-outs of promoted items. If a similar substitute is on sale, the effect is increased. For promoted dissimilar substitutes, the effect is offset by the simultaneous occurrence of an attraction effect. The results lead to important theoretical and managerial implications.