POCKETING THE TRADE DEAL

Retailers frequently pocketed trade deals but magnified them when they passed ?nything through. Nothing other than anecdotal evidence has been published in intervening two decades since Chevalier and Curhan's study to document changes occurring in trade promotion offers and retail response. Filling this void, the paper begins with an empirical analysis of all trade promotion offers over a recent two year Period to one retail chain and its response. The paper concludes with a simple model that identifies the forces that break down channel coordination when trade promotions are relied upon. These include consumer difference in willingness to pay and retailer differences in the importance of store traffic draw from the promoted brand