Topic: Effects of Channel Power on Trade Promotion Budget and Allocation: A Market Experimental Analysis

Speaker: Vithala R. Rao, (website: http://www.johnson.cornell.edu/faculty/profiles/Rao/)

Deane W. Malott ,Professor of Management and Professor of Marketing and Quantitative Methods

Johnson Graduate School of Management ,Cornell University

Time: 1:30 -3:00 pm. May 20, 2009

Location: Room 111, New Building of GSM,Peking University

Abstract:

We design a market experiment to examine the impact of channel power on trade promotion

budget and its allocation. Our experimental results show that a manufacturer with higher channel

power offers a smaller percentage trade promotion budget and decreases allocation to discount-based

promotions such as off-invoices. Conversely, a retailer with higher channel power tends to

receive larger trade promotion budgets and to increase allocation to discount-based promotions.

We validate these findings with econometric analysis of industry data. Overall, results suggest

that market experiments can shed light on complex negotiations in the distribution channel for

which industry data are often hard to obtain. We discuss implications of our results for managers

and policy makers.

Welcome to attend!