Feature Advertising - Price Interaction Effects in the Retail Environment

To examine the interaction between retail price and newspaper feature advertising, a sample of 5 grocery stores' sales of a particular low-priced food product was examined over 94 weeks. The stores represented 2 distinct types of retail environments: 1. one in which the product enjoyed a share of unit sales greater than 50% in the product category and private-label share was less than 20%, and 2. one in which the product's market share was less than 30% and private-label share was greater than 30%. Results indicate that, in both environments, temporary price reductions coupled with newspaper advertising announcing the reductions increased sales more than would be expected from the employment of either variable alone. Sales increases were uniformly large in all samples. These findings are encouraging to strategists, particularly where newspaper advertising is available at reasonable cost.