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Promotions are mixed strategies June 12, 2007

Posted by jyu in Qualifying.


  1. Competitive promotions are mixed strategies
  2. Depth of promotion has a bimodal distribution (on more limited data)

Competitive promotions are mixed strategies:

  • First an empirical regularity is established that promotions are independent across competitors.
  • This regularity is then elaborated on in the context of a promotion game
  • The promotion game is linked to observable outcomes, and a classification of possible situations is developed.  In particular, the classification includes the prisoners’ dilemma, battle of the sexes, and marketing models of promotion competition
  • The evidence for the generalization comes from a variety of product markets, spanning trade promotions, retail price reductions and retail promotions such as advertised specials.  The product markets include coffee, baby diapers, toilet tissue, saltines, dishwashing fluid, ketchup and detergents among others


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