Abstract:

The determinants of the counter-cyclical price changes during peak demand periods have been extensively discussed and investigated in both marketing and economics. Most debates focus on the price elasticity during the peak demand periods. Applying the shopping basket model to the scanner data on women’s fashion products collected from frequency reward program, this paper investigates the pattern of changes in product price and consumer’s purchasing behavior during peak demand periods. Our empirical results show that price elasticities fall during the Golden Holidays but rise in the Anniversary Promotion; meanwhile, consumers are significantly sensitive to the reward point promotion. These results suggest that extant theory cannot explain the price changes in holidays in China market. Firms are not able to extend overall sales by using ‘loss-leader’ strategy.

Key words:  Peak demand, purchasing behavior, shopping basket model, elasticity