International Journal of Retail & Distribution Management

Emerald Article: An exploratory study of sales promotions for multichannel

holiday shopping
Hyunjoo Oh, Kyoung-Nan Kwon

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Journal of Retail & Distribution Management, Vol. 37 Iss: 10 pp. 867 - 887
http://dx.doi.org/10.1108/09590550910988048
Hyunjoo Oh, Kyoung-Nan Kwon, (2009),"An exploratory study of sales promotions for multichannel holiday shopping", International
Journal of Retail & Distribution Management, Vol. 37 Iss: 10 pp. 867 - 887
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An exploratory study
of sales promotions
for multichannel
holiday shopping
Hyunjoo Oh

David F. Miller Center for Retailing Education and Research,

Warrington College of Business Administration,
University of Florida, Gainesville, Florida, USA,
and

Kyoung-Nan Kwon

Sales promotions
for multichannel
holiday shopping
867
Received 20 November 2007
Revised 6 November 2008
Accepted 18 December 2008

Department of Advertising, Public Relations, and

Retailing, Michigan State University, East Lansing,
Michigan, USA
Abstract
Purpose The purpose of this paper is to explore how consumers respond to price promotions
in stores and on internet channels during a holiday season. Since holiday shopping has long
been considered promotion intensive and multichannel shopping is increasing, it is important to
understand whether consumers respond differently to price promotions from these two different
channels. The paper aims to examine whether the extent of price promotions that consumers
perceive in online and offline channels and their sensitivity to such price promotions influences
their holiday spending in each channel.
Design/methodology/approach A public telephone survey was conducted to collect data
during the month of December 2006. Using random sampling in Florida, a total of 501
responses were collected.
Findings Overall, the findings support the effectiveness of price promotions during
holiday periods. Such awareness of the extensive practice of price promotions at stores can
encourage holiday spending offline; additionally, sensitivity to price promotions on the internet
can be transferred into increased holiday spending online.
Practical implications The results of this paper extend knowledge of how holiday
price promotions affect consumer spending and provide important insights into how retailers
should develop price promotion programs that are well tailored to consumer behaviors in
different channels. Originality/value This paper addresses an untapped issue on how price
promotions are perceived in multichannel holiday shopping contexts.
Keywords Advertising, Promotional methods, Prices, Consumer behaviour, Internet,
United States of America
Paper type Research paper

Introduction
Multichannel shoppers have become a significant segment of consumers in the US
market, and retailers now place a strategic focus on this segment because of their
purchase volumes and delivery of profits that can be higher than single channel
The authors would like to thank the Bureau of Economic and Business Research at the
University of Florida for collecting data on Christmas shopping as a part of its consumer
confidence survey.

International Journal of Retail &

Distribution Management
Vol. 37 No. 10, 2009
pp. 867-887
q Emerald Group Publishing Limited
0959-0552
DOI 10.1108/09590550910988048

IJRDM
37,10

868

shoppers (74 percent of retailers, 2002; Kumar and Venkatesan, 2005; Rangaswarmy
and van Bruggen, 2005; Shop.org, 2006; Venkatesan et al., 2007a; Weinberg et al.,
2007). Multichannel shoppers display complex shopping behaviors when choosing
and using channels for information search and purchases (Balsubramanian et al.,
2005; Degeratu et al. 2000). For instance, these shoppers heavily engage in research
shopping, using the Internet for researching products and then making purchases in
brick-and-mortar stores (Verhoef et al. 2007). In addition, they exhibit different
choice behaviors in response to store and online price promotions for the same
products (Degeratu et al., 2000). Of all the marketing programs, price promotions are
most effective as evidenced by their major share of the marketing budget (Han et
al., 2001; Lim et al., 2005; Srinivasan et al., 2002). Still, few empirical studies
have investigated how shoppers perceive price promotions in store and Internet
channels and how their perceptions influence channel choice and actual spending.
Such a lack of understanding of exactly how shoppers respond to price promotions
differently in store and internet channels poses significant challenges for retailers,
as they work to create cross-channel synergies.
Therefore, the study is intended to fill a gap in understanding shoppers responses
to price promotions in store and internet channels. First, we investigate two consumer
factors (i.e. the perceived extent of price promotion and promotion[1] sensitivity)
related to price promotion in these channels. Second, we compare the two channels
(i.e. store and internet channels) for how the two consumer factors are reflected in
spending. The goal is to gain insight into the complementary nature of the
multichannel shopping. Lastly, we examine three consumer characteristics
(i.e. promotion proneness, promotion knowledge, and shopping enjoyment) as
antecedents of shopper sensitivity to price promotions in each channel.
We chose holiday shopping for research context for two reasons. First,
multichannel shopping is prominent during holiday seasons, and secondly, price
promotions are extensively used in both store and internet channels to increase
sales during holiday periods. Sun Microsystems (2004) Survey of holiday
shopping habits reported that 84 percent of respondents conduct their holiday
shopping both in stores and on web sites. In addition, it has been acknowledged as
well that multichannel shopping during holiday seasons has continuously increased
in recent years (DoubleClick, 2004; Rangaswamy and van Bruggen, 2005). During
holiday seasons, the intensity of price promotions increases in both store and
internet channels because of the strategic significance of these sales. They
account for a major share of the annual sales of retailers (NRF, 2006). In addition,
Warner and Barsky (1995) demonstrated that price promotions are offered more
often during peak demand periods, (e.g. Christmas, Thanksgiving) than during
non-peak demand periods. By exploring how holiday price promotions affect
consumer spending in these two major shopping channels, we intend to offer retail
practitioners strategic insights into how to best plan their holiday price promotions
and coordinate multichannel operations.
Hypothesis development
Many studies have investigated the different factors that drive consumer channel
choices (Choudhury and Karahanna, 2008; Dholakia et al., 2005; McGoldrick and
Collins, 2007; Reardon and McCorkle, 2002; Schoenbachler and Gordon, 2002;
Swinyard and Smith, 2003, 2006; Van den Poel and Leunis, 1999; Venkatesan
et al., 2007a).

Some researchers provide insights in multichannel shopping, such as from the

perspective of information search where consumer information search in one channel
leads to purchase in other channels (Verhoef et al., 2007). Others, from the economic
utility perspective, have proposed the integrated framework, which includes
opportunity costs of time, costs of goods, pleasure from shopping experiences, and
the transaction risk of each channel, to explain consumer decision-making between
channels (McGoldrick and Collins, 2007; Reardon and McCorkle, 2002;
Schoenbachler and Gordon, 2002) and further extend the economic utility perspective
by differentiating product and process utilities that have different impacts on
channel choice (Balasubramanian et al., 2005). On the other hand, researchers have
indicated that the
presence of promotional offers is an important determinant in channel choice (So et
al.,
2005). Although heavy price promotion practice is observed across various shopping
channels today, there has been little research on how consumers respond to these
promotion offers in different channels and how consumer responses affect channel
choice.
We propose that holiday consumer spending in stores[2] and on the internet is
affected by two consumer-related factors:
(1) the perceived extent of price promotions; and
(2) promotion sensitivity.
The perceived extent of price promotions is defined as the extent to which a shopper
perceives price promotions in each channel, which represents consumers perception
of external market conditions. On the other hand, promotion sensitivity is an
inherent consumer characteristic, that is, self-perception of how their purchases are
actually influenced by price promotions. These effects of perceived price
promotions and promotion sensitivity in channel spending are shown in Figure 1.
Our model examines the reciprocal influences between the two channels of shopping
to capture the complementary nature of cross-shopping. Further, we also test three
consumer characteristics as antecedents of promotion sensitivity, namely, promotion
proneness, promotion knowledge, and shopping enjoyment.
The perceived extent of price promotions: their impact on spending in stores and the
internet
Although many researchers have suggested that price promotions have negative
long-term consequences, such as erosion of brand equity and market-share loss
(Keller, 1998), a considerable amount of research also demonstrates that promotions
lead to incremental sales and profits as well as post-promotion preferences via brand
trial or switching, increased purchases, and purchase reinforcement (Ailawadi et al.,
2006; Shen et al., 2007; DelVecchio et al., 2006; Dhar and Hoch, 1996;
Krishnamurthi and Raj, 1991; Neslin et al., 1985; Pauwels et al., 2002; Zeelenberg
and Putten, 2005). The rising percentage of price promotions in the marketing budget
(Ailawadi et al., 2006; Lim et al., 2005; Srinivasan et al., 2002) and the ubiquitous
use of price promotions during holiday seasons (Greenspan, 2003; Mu ller et al.,
2006) indicate that price promotions in fact do work in winning over consumers
choice and thus do increase sales.
Especially, price promotion is a critical tactical tool for retailers to use to increase
sales and profits during holiday seasons. The holiday season generally accounts for

Sales promotions
for multichannel
holiday shopping
869

IJRDM
37,10

Shopper psychographics Promotion proneness Promotion knowledge Shopping enjoyment

870

H4

Promot
ion
sensiti
vity
for
store
b
H2

Promot
ion
sensitiv
ity for
internet
shoppin
H b
4
2
Perceived extent of promotions on theinternet

Figure 1.
The proposed model for
price promotion for
multichannel holiday
shopping

Perceiv
ed
extent
of
promoti

Store
shopping spending
Internet shopping spending
H
H1
H3
1
b2
1

Notes: A solid arrow represents a stronger effect than does a dotted arrow for the same numbered
hypothesis; "b -b " compares path strengths in Table II
1

a major share of, or about 25-40 percent, of a retailers annual sales (NRF, 2006).
Moreover, since todays consumers are conditioned to expect deals (Han et al., 2001),
it is important to understand how they actually perceive price promotions in different
channels. Researchers have shown that the mere posting of a sale sign without
changing the price can induce purchases (Anderson and Simester, 1998; Inman et al.,
1990). Further, researchers have shown that consumer purchases are motivated by
their perceptions of price promotions rather than by an actual value assessment of
money savings (Alvarez and Casielles, 2005; Darke and Chung, 2005; Dhar and
Hoch, 1996; Han et al., 2001; Krishna et al., 1991; Rajish, 2004; Zeelenberg and
Putten, 2005). Therefore, we propose that consumers perceptions of deals do
influence channel choice and subsequent spending in the chosen channel.
Consumers different perceptions of deals in a specific channel may have been
formulated by the practices of pricing and price promotions used in each channel. It
is important to note also that pricing and price promotion practices in store and
internet channels are somewhat controversial. Many studies have reported that price
dispersion is greater online than it is offline (Degeratu et al., 2000; Pan et al., 2003,
2004; Venkatesan et al., 2007a). These findings are contradictory to initial predictions
that prices will be uniformly lower on the internet than at traditional brick-andmortar stores because the efficacy of searching, retrieving, and comparing prices
to find a bargain on the internet makes the consumer more likely to seek and notice
deals and thus increases price sensitivity and competition in this channel.
Furthermore, empirical research actually has revealed that markdowns and discounts
on the internet are more sporadic and less intense than on the store channel
(Ancarani and Shankar, 2004; Bock et al., 2007). An industry report of

online holiday shopping in 2006 also indicated that markdown implementation was
rather reactive and sporadic despite competition that forced online retailers to offer
more markdowns (Shop.org, 2006).
In contrast, price promotions at stores are pervasive during holiday seasons.
Whereas the exposure to price promotions online is somewhat selective because of
shopper control of access to and retrieval of price information, the ubiquitous use of
price promotions at stores, along with visible store sale signs and heavy mass media
advertising during holiday seasons, widely influences shoppers perceptions on deals
available at stores. Consumers believe that the best holiday season deals are more
likely to be at brick-and-mortar stores (Greenspan, 2003). The consumer internet
barometer reported similarly on 2006 online holiday purchases, concluding that
consumers were saving their bigger purchases for in-store shopping to receive better
deals and more special offers (Wireless News, 2006). Balasubramanian et al. (2005)
suggest that although the objective value of savings is greater online, the perception
of savings is greater for purchases at brick-and-mortar stores.
Based on the discussions above on consumer perceptions of deals from actual
pricing practices and price promotions between store and internet channels, we
suggest that the difference regarding deals perceived in the two channels may
influence channel choice and thus influence holiday shopping spending in each
channel. We, therefore, propose to test that:
H1. The influence of the perceived extent of price promotions on spending will
be greater on store shopping than on internet shopping.
Price promotion sensitivity: its impact on spending in stores and the internet
The desirable outcome of promotion practices for retailers is to encourage promotion
sensitive shoppers to increase their spending in response to these deals. Past literature,
however, does not clearly address the relationship between promotion sensitivity and
spending. According to Bucklin and Gupta (1992), the promotion sensitivity of
households does not correlate with the amount of their category purchases. On the
other hand, a recent study by Fox and Hoch (2005) report that promotion-sensitive
shoppers do take advantage of discounts by paying less and buying more overall.
Unlike previous studies that examined everyday shopping items purchased for fixed
amounts, we investigate holiday shopping when non-necessities are typically
purchased, often for gift-giving purposes. We argue that the relationship between
promotion sensitivity and spending is positive during holiday shopping when holiday
merchandise is purchased.
We expect that the degree of the positive influence of promotion sensitivity on
spending is different between store shopping and internet shopping because of
different shopping characteristics. As discussed, there is a perception that more
discount deals are available offline than online during holiday seasons (Greenspan,
2003), and H1 predicts the degree to which that perception is transferred to spending,
namely greater for offline shopping than for online shopping. However, we propose
the opposite direction for the effect of promotion sensitivity on spending: the
correlation between promotion sensitivity and spending will be greater on the
internet than at stores. The rationale for this seemingly contradictory prediction is as
follows. A 2006 holiday season survey showed that saving time and money were
major reasons for consumers to shop online (Freedman, 2007). The internet then
could be a channel for

Sales promotions
for multichannel
holiday shopping
871

IJRDM
37,10

872

more goal-oriented shopping, such as money, saving time, and convenience. Degeratu
et al. (2000) state that price sensitivity is higher online than offline. Salient price
information gathered through price quotes, low information search costs for price
comparisons, and readily available price comparison engines does attract dealoriented consumers (Bakos, 1997; Venkatesan et al., 2007b; Pan et al., 2004). The
internet is an effective shopping channel for promotion-sensitive shoppers whose
goals are to take advantage of deals. Price promotions on the internet may make
these shoppers more sensitive to losses from not taking advantage of deals (Han et
al., 2001). Importantly, the strong signal of price promotions at the time of purchase
by deal-oriented shoppers may prompt more transactions and thus increase spending
on the internet. Therefore, we hypothesize that the degree to which promotion
sensitivity is transferred to holiday shopping spending will be greater on the internet
than in brick-and-mortar stores, and we test that:
H2. The effect of promotion sensitivity on spending is greater for internet
shopping than for store shopping.
Holiday cross-channel shopping
Consumers are increasingly shopping online for and purchasing holiday gifts. Internet
shopping provides ease in shopping, especially during a busy holiday season.
Consumers also research products online before going to stores to purchase, thus
avoiding the crowds and hassles of brick-and-mortar shopping. Shop.org (2006)
reports that consumers who shop online do so earlier in the season, use multiple
channels, and spend more (Shor.org and BizRate Research, 2007). Verhoef et al.
(2007) show that consumers use the internet to search for good deals, but then make
purchases at stores. We expect that earlier exposure to holiday merchandise online
will increase actual purchases in stores for multichannel shoppers. However, the
reverse will not hold true, as shoppers consider brick-and-mortar stores as their
final shopping destinations. We expect that such cross-channel shopping activities
during a holiday season can be captured by analyzing the reciprocal relationship
between consumer spending at stores and spending on the internet. Thus, we
hypothesize:
H3. The degree to which internet shopping spending affects store shopping
spending is greater than the reverse scenario.
Consumer characteristics that influence price promotion sensitivity
Finally, we test three consumer characteristics as antecedents of promotion sensitivity:
shopper promotion proneness, promotion knowledge, and shopping enjoyment.
Promotion proneness is defined as a tendency to use price promotion information as a
basis for making a purchase. Promotion-prone consumers have a psychological
disposition to respond favorably to promotional offers (DelVecchio, 2005;
Lichtenstein et al., 1997). Thus, it is predicated that higher promotion-prone
consumers will exhibit stronger sensitivity to price promotions in both store and
internet holiday shopping sites (H4a). Shopping is a domain where consumers
accumulate their expertise and skills (Kwon and Kwon, 2007), including deal
knowledge a resource they use to take advantage of available deals. Previous
studies have reported that deal knowledge determines the response to promotions
(Krishna et al., 1991; Kwon and Kwon, 2007;

Vanhuele and Dre`ze, 2002). Thus, we consider shopper knowledge of promotions as

an antecedent of promotion sensitivity (H4b).
Hirschman and Holbrook (1982) propose a hedonic consumption perspective
where the true value of all shopping activities and purchasing is viewed as
experiential and affective. Christmas holiday shopping is stressed as a ritual where
holiday spirit is expressed through consumption and enjoyment of goods. The
emotional worth and pleasure realized from this shopping are central to justifying
why consumers do devote much time and money to holiday shopping. One might
argue that shopping enjoyment can be negatively associated with promotion
sensitivity if shopping enjoyment were simply understood as pleasure associated
only with the non-price aspects of shopping. However, we take the opposite stance.
The value literature suggests that sales promotions generate transaction value in
addition to acquisition value (i.e. acquiring product quality at a discounted
price). Transaction value is more related to the psychological pleasure or
displeasure associated with the merits of the deal (Grewal et al., 1998). Researchers
suggest that sales promotions provide consumers with
hedonic benefits associated with fun and pleasure (Chandon et al., 2000; Kwok and
Uncles, 2005). For instance, Chandon et al. (2000) propose hedonic benefits of sales
promotions (i.e. opportunities for value expression, entertainment, and exploration) in
addition to utilitarian benefits (money saving, higher product quality, and improved
shopping convenience). Rajagopal (2007) demonstrates increased decisionsatisfaction
levels and store loyalty after an exposure to a clearance sale. We propose that those
who have a tendency to enjoy shopping may also have a tendency to seek the thrill of
deal shopping, especially during holiday shopping when more discounts and deals are
offered (H4c). We expect the effects of these three consumer characteristics to be
present in both store shopping and internet shopping. Thus, we propose the following
three hypotheses:
H4a. Promotion proneness positively influences promotion sensitivity in both
store shopping and internet shopping.
H4b. Promotion knowledge positively influences promotion sensitivity in both
store shopping and internet shopping.
H4c. Shopping enjoyment positively influences promotion sensitivity in both store
shopping and internet shopping.
Methodology
Sample
To test the proposed hypotheses, we collected data, using a public survey on shopping
during Christmas one of the major holiday shopping seasons. The data collection
procedure for the study was a telephone survey that used a random-digit dialing
method. Respondents were required to be 18 years or older and live in households in
Florida in order to participate in the survey. The survey was conducted in December
2006 as a part of a Florida consumer confidence survey, conducted monthly by the
Bureau of Economic and Business Research at the University of Florida to monitor
the business climate in Florida. In total, 5,750 telephone numbers were called; 3,991
were ineligible, and 1,274 yielded no response to the screening phase (refusals, no
answer, or constantly busy). A total of 501 respondents completed the survey. These
individuals responded to questions on personal expectations for the local economy
and

Sales promotions
for multichannel
holiday shopping
873

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874

their Christmas shopping. Based on a response rate calculation designed for the
random-digit dialing method (Smith, 2004), this telephone survey yielded a 17.2
percent response rate.
Measures
All measures used in this study were single-item measures because of the limitations
associated with public telephone surveys. Construct validity of the measures was
sacrificed to avoid repeating questions for the public survey since non-repeating
questions are critical in retaining participants, especially during a holiday season.
After the demographic information was collected, respondents answered questions
about their Christmas holiday shopping. All measures had a response option of dont
know, and respondents were also allowed to refuse to answer.
Store and internet shopping spending. Respondents revealed the specific amounts
spent at stores in response to the question How much have you spent at stores so far,
not including web sites, for holiday merchandise? The same question was asked for
dollars spent in internet shopping.
Perceived extent of promotions in stores and on the internet. Respondents indicated
their perceptions regarding the extent of price promotions, answering the question
Do you think that there are more, the same, or less sales and price discounts at stores
this year compared to last year? A three-point response scale of:
(1) as greater than last year;
(2) as equal to last year; and
(3) as less than last year was used.
The same question was asked regarding price promotions on the internet except for
the additional response category of dont shop on web sites.
Price promotion sensitivity in store shopping and internet shopping. Respondents
indicated the perceived influence of sales on their purchases by answering the
question, How much are this years holiday sales affecting your purchases at stores?
on a five-point response scale of:
(1) a great deal;
(2) much;
(3) somewhat;
(4) a little; and
(5) none.
Responses were reverse coded. The same question was then asked regarding
respondents purchases on the internet. Responses were also reverse coded.
Promotion proneness. Respondents indicated their proneness to holiday price
promotions by answering the question, How much more likely are you to buy items
if they are on sale during this holiday season? on the same five-point response
scale.
Promotion knowledge. Respondents indicated their knowledge of holiday price
promotions by answering the question, How much do you know about holiday
promotional offers (sales, discounts, and markdowns)? on the same five-point
response scale.

Shopping enjoyment. Respondents indicated their degree of holiday shopping

enjoyment by answering the question, Do you feel this years holiday shopping is
exciting? on the same five-point response scale.
Income. Total household income was measured in ten categories that ranged from
less than $10,000 (1) to over $150,000 (10).

Sales promotions
for multichannel
holiday shopping

Results
Descriptive data
This section offers a short review of descriptive information about sample:
demographics and overall holiday spending. Although the total usable sample size
was 495 responses after eliminating six incomplete responses, we selected a subset
of sample to use to examine multichannel shopper holiday shopping behaviors.
We selected 265 responses by eliminating those who expressed a do not shop online
(125 responses) and those who responded with dont know (108 responses) or
refused to answer (four responses) to the question on the extent of price
promotions on the internet. Respondents profiles are presented in Table I.
Our total sample appears to be similar to the US population and the state
population in demographic characteristics except for age (Washington Post, 2006)
because the administration of a telephone survey attracts people of older age. The
average age of our sample was older than the national and state averages. The
findings of our paper should thus be interpreted with due caution for the
demographic profile. Our subsample shows higher income and married households
compared to the total sample, representing characteristics of multichannel shoppers
found in previous studies (Kumar and Venkatesan, 2005; McGoldrick and Collins,
2007). Going forward, all data analyses were based on this subset of multichannel
shoppers.
Descriptive statistics and correlations among the variables for the model are
presented in Table I. Survey participants responded that they planned on spending an
average of $929 over the 2006 Christmas season. Survey respondents indicated they
spent an average of $485 at stores and an average of $103 on the internet at the time
the survey was conducted during December, 2006. A follow-up survey, conducted
between January 1 and 31, 2007, revealed that Florida residents had spent an average
of $1,201 (Median $600, Mode $1,000). Of these respondents, about 30
percent made holiday purchases on the internet. A total amount of holiday spending
was distributed among 68 percent at stores, 12 percent on the internet, and 20
percent on other channels.

875

Hypothesis testing
The proposed hypotheses were tested by path analysis, using the software analysis of
moment structures (AMOS). Path analysis was chosen because it allows a single
measure of each construct, yet investigates the reciprocal relationship that reveals
cross-channel shopping behaviors. Again we acknowledge that our use of single
measures of constructs limits construct validity. Since promotion sensitivity and
spending, key variables to test, are closely related to income, we tested the proposed
model with and without income being controlled. The income effect was controlled
by using residuals of spending regressed based on income. Table II includes the
results from testing the proposed model (Model A) and also the model that controls
the effect of income (Model B). The two models were not tested as competing
models, however.

Table
I.
Responde
nt profiles,
descriptiv
e
statistics,
and
correlation
s of

8
7

Respondent profile
Gender
Female (%)
Male (%)
Age (mean)
Education (mean in years)
Income category (median)
Marital status
Currently married (%)
Currently widowed (%)
Never married (%)
Divorced or separated (%)
1. Promotion proneness3.41
2. Promotion knowledge
3. Shopping excitement
4. Perceived extent of price promotion in
stores
5. Perceived extent of price promotion on
the internet
6. Promotion sensitivity for store
shopping
7. Promotion sensitivity for internet
shopping
8. Store shopping spending ($)
9. Internet shopping spending ($)
Notes: *p , 0.05; **p ,
0.01

Total sample

Subsample (multichannel
shoppers)

58.2
41.8
53.4
14
$30,000-$39,000

57.4
42.6
48.0
14.27
$50,000-$59,000

58.3
11.7
15.2
13.2
SD

61.5
7.5
19.2
10.9
Correlations

Mean
1.51
2.83
2.32

1.33
1.39

2.11

0.71

20.04

2.24

0.66

2.49
1.9
562.4
175.1
6

0.40**
0.25**

IJRD
M
37,10

0.35**
0.13*

0.09

0.00

-0.02

0.06

1.40

0.30**

0.22** 0.27** 0.04

0.09

1.29
1431.14
333.56

0.28**
0.01
0.17

0.1
0.1
0.0
3

0
0
0
.
0
2

0.1
0.0
0.1
9**

0.32**

0.
0.0
8

0.34**
0.08
0.12*
0.08* 0.27**
0.26**

Perceived
! Store
extent
of
shopping
promotions
spending
Perceived extent
! Internet
of promotions on
shopping
the internet
spending (I)
Promotion
! Store shopping
sensitivity to store
spending (S)
shopping
Promotion
! Internet
sensitivity to
shopping
internet shopping
spending (I)
Store shopping
! Internet

b1
b2
b3
b4
b5

H
1

Model A
StandUnstandardize
ardized
d
estimate
estimate B
0.19
336.41 (84.85)

b1 . b2 25.68 (25.05)
H2

44.90 (42.38)

b3 , b4 82.37 (12.21)
H3

20.01

20.03 (0.03)

0.05

0.34
20.15

Unstandardize
d
estimate B
0.27 (0.07)

Model Ba
Standardize
d
estimate
0.20

Testing
results
Suppor
ted in
A and

20.004 (0.07)

20.004

0.04 (0.03)

0.05

0.20 (0.04)
20.13 (0.12)

0.30
20.17

Supported
in B

Supported

spending (S)
Internet
shopping
spendin
g (I)
Promoti
proneness

!
!
!

Promotion
knowledge

Table II.
Path
coefficients
of
the
proposed
model
and
the results of
the
hypothesis
testing

shopping
spending (I)
Store shopping
spending
(S)
Promotio to
sensitivity
store
shopping
Promotion to
sensitivity
internet
shoppi
ng
Promot
sensitivity to
store shopping

b5 ,
H4a

H4b

1.81 (0.62) * * *

0.38

0.53 (0.20) ** *

0.40

0.18 (0.04)

0.20

0.18 (0.04)

0.20

0.12 (0.03)

0.18

0.13 (0.03)

0.18

0.11 (0.05) **

0.11 **

0.11 (0.05) **

0.11

** *

in A
and
B

** *

**

8
7

Support
in
ed A
and
B

Support
in
ed A
and
B
(continu
ed)

Sales
promot
ions for
multich
annel
holiday
shoppi

8
7

T
a
b
l

Model A
Unstandardized
Stand-ardized
estimate B
estimate (b)
(SE)

Shopping
enjoyment

Model fit
index
2
x (df 19)
p-value
x 2/df
NFI
CFI
RMSEA
Tests of
constrained
models

! Promotion
sensitivity to
internet
shopping
! Promotion
sensitivity to
store shopping
! Promotion
sensitivity to
internet
shopping

H4c

H1
H2
H3

b1 b2
b3 b4
b5 b6

Unstandardized
estimate B
(SE)

Model B
Standardized
estimate (b)

0.07 (0.04) *

0.08

0.07 (0.04) *

0.08 *

0.19 (0.05)

0.18

0.19 (0.05)

0.18

0.105 (0.04) **

0.12 **

0.09 (0.04) **

0.12 **

32.38
0.03
1.70
0.92
0.96
0.04
x2
38.2
33.1
39.9

x2D (df 1)
5.8 **
0.7
7.5

IJRD
M
37,10

29.073
0.065
1.530
0.926
0.971
2
x0.032

34.1
41.2
33.8

2xD

Testing
results

Supported
in A and
B

(df 1)

5.03
12.13
4.73
**

***
Notes: *p , 0.10; * *p , 0.05; ** *p , 0.01; p , 0.001; aThe income effect is controlled by using residuals of store and Internet shopping
spending regressed on income

The fits of both models (Table II) were satisfactory according to goodness-of-fit
2
indices recommended by Bentler (1990): a x statistics to the degree of freedom (x
2
/df) being less than 3; comparative fit index (CFI) being greater than 0.90, and a root
mean square error of approximation (RMSEA) up to 0.08.
We tested the hypotheses (H1-3) by comparing the fit between the model that
assumed different coefficients between store shopping and internet shopping
(Model A/B) and the model that imposed equality constraints between them. If the
overall fit of the model that constrains the parameters to be equal becomes
significantly worse than the fit of the model without the equality constraint, the model
without the constraint was accepted. In other words, a hypothesis was supported if the
2
difference in the model fits (i.e. the difference in x ) is significant when compared to
the difference in degrees of freedom (Bentler, 1990). The results of the hypothesis
testing along with path coefficients are summarized in Table II.
H1 was supported because constraining b1 and b2 to be equal made the model fit
significantly deteriorate, indicating these coefficients were not equal. The model fit of
2
the proposed model (x 32.38, df 19) was significantly better than the model
2
fit
2
of the constrained model (x 38.2, df 20), xD 5.8, df 1, p , 0.05. As
predicted, the perceived extent of holiday price promotion at stores led to an
increased dollar
amount spent at stores (B 336.41, SE 84.85, p , 0.001). The overall
perception of the extent of price promotion on the internet did not, however,
generate more spending dollars, suggesting that the extensiveness of price
promotions perceived on the internet does not necessarily increase purchases. The
result was replicated in Model B, which controlled the effect of income on
spending.
H2 tested whether the effect of promotion sensitivity on actual spending differs
between store shopping and internet shopping. Actually, consumers admitted that
their holiday purchases were influenced by price promotions at stores (M
2.50, SD 1.41) more than by price promotions on the internet channel (M
1.91, SD 1.28, paired-t 6.06, df 255, p 0.000). However, as expected,
promotion sensitivity influenced spending on the internet, but not spending at stores.
In Model A without the control of income, the relationship between consumer
promotion sensitivity and spending was significant for internet shopping (B 82.37,
SE 12.21, p , 0.001), but not for store shopping. Although the difference was
not statistically
significant ( p . 0.05), there was directional evidence. After controlling the
income
effect in Model
B, the difference between store shopping and internet shopping
2
was significant,
xD 12.13, df 1, p , 0.001, supporting H2. The result
suggests that price promotions on web sites lead price-sensitive consumers to
prompt transactions
and make more purchase transactions online.
H3 was also supported, as the model
fit of the proposed model was
2
significantly better than that of the constrained
model (xD 7.5, df 1, p ,
0.01). Spending on internet shopping influenced spending
for store shopping
(B 1.81, SE 0.62,
p , 0.01). The reverse relationship, i.e. the influence of spending at stores on
spending on the internet, was not significant. The same result was found in
Model B, which controlled the effect of income on spending. Our finding
suggests that the earlier
experience of cross-channel shoppers on the internet in the holiday season could
increase their holiday purchases in stores.
H4 was supported. As was expected, promotion proneness influenced consumer
sensitivity to price promotion both with store shopping (B 0.18, SE
0.04,

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p , 0.001) and with internet shopping (B 0.12, SE 0.03, p , 0.001).

Promotion knowledge also influenced promotion sensitivity for store shopping
(B 0.11, SE 0.05, p , 0.05), but did so only marginally for web sites (B
0.07, SE 0.04, p 0.078). Shopping enjoyment positively influenced
promotion sensitivity, both in store shopping (B 0.19, SE 0.05, p , 0.001)
and in internet shopping (B 0.11, SE 0.04, p , 0.05).
Discussion
Overall, our findings support the effectiveness of price promotions in stimulating
spending during promotion-intensive holiday periods. First, the study findings
indicate that an awareness of the practice of extensive price promotions at stores
could increase spending. Second, it is suggested that promotion sensitivity on the
internet can prompt transactions, leading to increased spending online. Third, the
study demonstrates the importance of internet holiday shopping that increases
spending at stores. Lastly, the findings show that holiday shopper promotion
sensitivity increases as promotion proneness, promotion knowledge, and shopping
enjoyment increase. The finding on the positive effect of shopping enjoyment on
price promotion sensitivity suggests that the hedonic benefits of transaction value
(i.e. getting great deals) are important during holiday periods, a time when the fun
and enjoyment of shopping and consumption are important to consumers lives.
Consumers who enjoy holiday shopping are more likely to be influenced by price
promotions at stores (b 0.18, p , 0.001) and on the internet (b 0.12, p ,
0.05). Rajagopal (2007) reports the powerful effect of a clearance sale on positive
shopping experience and revisit intentions during the next shopping trip. Further
research is needed to examine whether the hedonic transaction value of getting the
deal differs in times of holiday shopping versus times of non-holiday shopping.
Overall, price promotions during a holiday season seem to impact actual spending,
suggesting heavy promotion practices do have vital tactical significance for retailers
especially during holiday periods. However, our study does not address their final
effectiveness on retailer profits.
Although the study was exploratory in nature, the findings do suggest interesting
differences between store and internet channels. The first difference reflects on how
the perceived extent of price promotions influences consumer spending. Whereas
consumer awareness of price promotions in brick-and-mortar stores increased
spending at stores, that same awareness of price promotions on retail web sites did not
increase spending on the internet in the study. The weaker link to internet shopping
suggests that price promotion practices on retail web sites have not created consumer
perceptions of getting deals. This finding may also reflect that consumers are indeed
aware of a wider range of prices on current internet channels (Brynjolfsson and
Simith, 2000; Lee and Gosain, 2000; Pan et al., 2004; Venkatesan et al., 2007b).
With such price perceptions on the internet channel, shoppers might not have
considered that the internet channel offers advantageous prices for purchasing
multiple items. In line with this reasoning, it has been reported that consumer
perceptions of getting deals are greater at stores than on the internet (Balasubramanian
et al., 2005 Consumer internet Barometer, 2006; Greenspan, 2003). As Warner and
Barsky (1995) address, overall perception of price advantage for deals becomes an
important factor for a channel choice decision during holiday periods because of the
high intensity of shopping activity. This perceived price advantage as being higher for

the store channel than for the internet channel might have influenced channel choice
for holiday shopping.
The second difference between these channels addresses the relationship that exists
between promotion sensitivity and consumer spending. A positive relationship was
found in internet shopping, but not in store shopping. Although this finding appears to
contradict the finding discussed above, it does not. As defined earlier, promotion
sensitivity measures shopper perception on whether their purchases are directly
influenced by price promotions in each channel. In our study, shopper promotion
sensitivity led to increased spending for internet shopping, but not for store shopping.
According to Multichannel Shopper Holiday 2006, in a survey of 1,300 consumers
conducted by The E-tailing group, online shoppers characterized their holiday
shopping behaviors as deal-seeking (54 percent), followed by convenience-driven
(34 percent) (Megna, 2007). Internet shoppers tend to be goal-driven shoppers for
convenience and financial savings at the same time. Promotion sensitive online
shoppers may not only try to save money, but also achieve shopping efficiency by
maximizing purchases by taking advantage of online deals. On the other hand, brickand mortar promotion-prone shoppers might cherry-pick deals, when their primary
shopping goal is only monetary saving. Thus, promotion sensitivity on the internet
increases spending, but that was not the case with stores. Krishnamurthi and Raj
(1991) suggest that price promotions can influence either switching or increased
purchases. It is suspected that price promotions at stores might have induced
switching behaviors, so overall spending at stores does not change whereas price
promotions on the internet might have encouraged spending by the purchase of more
items.
The third difference between store and internet channels deals with the impact of
cross-shopping activities on consumer holiday spending. The study indicates that
spending on the internet increases spending at stores during a holiday period, but not
vice versa. This finding is consistent with Verhoef et al.s (2007) study that shows the
significant effects of internet search and purchase on store purchase, but not vice
versa. Biyalogorsky and Naik (2003) also report no cannibalization of online sales on
offline sales with their data at a firm level. However, considering that consumer
online spending did increase at an accelerated pace every year, an effect could
potentially take out part of the store sales. Retailers do need to coordinate price
promotions between their web sites and their stores to increase their overall sales as
well as profits because their web sites can act as a touch point to acquire customers
and funnel them to the store.
Theoretical implications
The study contributes to the body of research that supports the positive effects of
price promotions, suggesting that price promotions increase consumer spending.
Previous studies were inconclusive on the effect of price promotions and whether
these promotions facilitate or hamper brand/retailer preference and sales. Our
findings suggest positive effects of promotions during holiday shopping as reflected
in greater spending. These positive effects may be attributed to the characteristics
of holiday shopping, including non-necessity purchases, gift giving, and high volume
purchases. We believe that the emotional nature of holiday shopping may be also
related to our finding of the positive link between promotions and spending. The
relationships

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882

between hedonic nature and promotion responsiveness in holiday shopping will

definitely be an important avenue for future research. Our findings demonstrate an
interesting dynamics of multichannel shopping between Stores and the internet
channels. The reciprocal influences between these two channels and the differences in
how promotions affect spending online and offline reveal the complementary nature
of multichannel shopping and channel specific characteristics as well. The study
contributes to the perspective on channel research that shopping behaviors can be
better understood by examining behaviors connected to multiple retail channels.
Managerial implications
Consumers have quickly embraced the practice of using a variety of channels, today
accounting for 65-70 percent of shoppers (Weinberg et al., 2007). Increasing usage of
the internet channel and extensive price promotions during a holiday season are
posing a major managerial challenge for multichannel retailers to increase sales
and be profitable. Our finding that holiday spending in internet shopping channels
influences store spending emphasizes the importance of the retailer web site-store
coordination. In light of this finding, retailers competing for a share of consumer
wallets during holiday periods should also recognize the importance of price
promotion on their web sites since sales on those web sites can drive further sales in
stores. A retailers web site has now become a front door to physical stores, playing
a key driver in burgeoning shopping demands. The finding demonstrates that
promotion-sensitive shoppers are an attractive target market for internet channels
over store channels, suggesting a tenable opportunity for retailers to maximize
their profits by utilizing a better understanding of consumer responses to price
promotions on the internet channel. Considering that online shoppers shop across
multiple channels with high purchase frequency (Kumar and Venkatesan, 2005),
marketers should pay close attention to price promotion strategies on the internet
channel and the spill-over effects of those
strategies onto other channels.
Pricing strategies on the internet have to be different obviously from practices in
stores. Ubiquitous discounting, implemented with fixed schedules at stores, has made
shoppers more price-sensitive and content to wait for deeper discounts. Thus, retailer
profit erosion is aggravated by inventory holding costs that will mount up until final
purchases are made by consumers. Instead of using markdowns and price discounts to
liquidate unwanted products, retailers should consider using pricing strategies to drive
purchases earlier in the selling season and even during peak demand periods.
Extensive price promotion practices have made consumers feel reluctant to
purchase a product at the regular price because consumers perceive doing so as a loss
(Zeelenberg and Putten, 2005). Price promotions on the internet should be
strategically implemented to increase the amount of products bought by loyal
customers and thus increase the share of the wallets of these customers
(Zeelenberg and Putten, 2005). While the smaller dollar amount of discounts on
web sites motivates purchases from promotion-sensitive shoppers, earlier exposure to
products with such price promotions may lead this group to purchase later in stores.
It is important to consider that price promotions on retailers web sites provide not
only monetary savings for consumers, but also important information about new
products and merchandise assortments. Also, new price optimization tools, such as
price and promotion optimization software (Levy et al., 2004) and marketing tactics,
such as probabilistic-selling strategies that

offer earlier discounting (Fay and Xie, 2008), are also avenues that retailers should
explore to increase their profits.
Limitations and future research
The study is exploratory in nature, and we acknowledge its limitations. First, the use
of single-item measures is subject to the vulnerability to construct validity. Because
the data of the study were collected through a public telephone survey during a
holiday season, we avoided multiple-item measures of repeating questions, which
negatively affected the retention of interviewees to complete the telephone survey.
The construct validity in our study was, therefore, sacrificed in exchange for higher
survey completion rate. Second, because the data were collected in a specific
geographic area, Florida, generalizability was limited. Third, there was a limitation
regarding our data collection method, namely, a consumer telephone survey within
which interviewees reported recall and perception outside of the field. We thus
acknowledge two related, inherent methodological shortcomings in the study:
(1) there could be a discrepancy between perception and behavior; and
(2) respondents recalls might not have been accurate.
Other factors not investigated in our study, such as internet usage, could also
influence our findings and warrant future studies.
Finally, because the perceptions of price promotions were collected only
throughout the holiday season, the implications of the study and its findings can be
made only to holiday seasons. However, our study does underscore the importance
of studying the effectiveness of price promotions during holiday periods, as there can
be some difference between holiday periods and non-holiday periods. For instance,
Mu ller et al. (2006) demonstrate that prices of private label products are more rigid
during holiday periods compared to those of national brands. Further research is
needed to test the interacting effect of promotion intensity and pricing practices on
consumer spending separately for holiday and non-holiday shopping contexts. The
study suggests that price promotions during holiday periods should be examined
separately from an economic point of view and beyond simply utilitarian
benefits. In future studies, holiday periods would be a natural field laboratory to
reveal further important practical implications for retailers who wish to implement
various discounts and price promotion programs.
Notes
1. Throughout this paper, the use of promotions refers to price promotions, such as discounts and
markdowns targeted toward consumers.
2. The use of stores refers to brick-and-mortar stores, unless otherwise specified.
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Corresponding author
Hyunjoo Oh can be contacted at: Hyunjoo.oh@cba.ufl.edu

Sales promotions
for multichannel
holiday shopping
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