Innovations in Retail Pricing and Promotions

Retailers confront a seemingly impossible dual competitive challenge: grow the top line while also preserving their bottom line. Innovations in pricing and promotion provide considerable opportunities to target customers effectively both offline and online. Retailers also have gained enhanced abilities to measure and improve the effectiveness of their promotions. This article synthesizes recent advances in pricing and promotions findings as they pertain to enhanced targeting, new price and promotion models, and improved effectiveness. It also highlights the role of new enabling technologies and suggests important avenues for further research.

Graphical abstractFigure optionsDownload full-size imageDownload as PowerPoint slideHighlights► Innovations in price promotions have improved targeting activities using loyalty program data and online history. ► Technology enablers aiding targeting activities include mobile applications, online personal shopping assistants and kiosks. ► A number of successful new models of price and promotions have been introduced, such as dynamic pricing models, promotions based on exclusivity, i.e., limited time and limited merchandise (e.g., Gilt), and promotions based on volume discounts (e.g., GroupOn). ► Technology enablers aiding these retail models include electronic price tags and radio frequency identification (RFID). ► Retailers have increased their effectiveness of online and offline promotions through design elements. ► Technology enablers such as in-store digital messaging and eye-tracking equipment have allowed retailers to more effectively assess consumer responses.