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Despite retailers’ intense use of both price cuts and store flyer advertising, it is still unclear whether and when it is beneficial for retailers to combine the two promotion tools at the same time as opposed to using them separately. We systematically investigate synergies between price cuts and store flyers for a broad set of 488 brands from 44 consumer packaged goods categories across six leading German retailers. We find that a clear majority of the brands benefit from positive synergies and hence, combining price cuts and store flyer advertising is recommended, especially at supermarkets. This synergy can be strong. For instance, a 15% price cut without store flyer support at a supermarket, on average, increases sales by 11%, and medium spending on store flyers for the brand at its regular (non-promoted) price results in a sales lift of 8%. The combined use of both tools, however, increases sales by 52%, much more than the sum of their separate effects (11% + 8% = 19%). Yet, there is also substantial variance in the synergy, which we explain with retailer format (supermarkets versus discounters) as well as various brand and category characteristics. Our findings have important implications for the coordination of promotion activities by retailers.

This paper studies promotion-induced competition between supermarkets and drugstores, resulting from increased channel blurring and category overlap. It documents the relative impact of price cuts and feature ads at the two channels, and establishes substantive factors underlying their differences in promotion effectiveness. Estimates from a household-level model of category purchase incidence, store choice, and quantity, in five large health and beauty-care categories, show that the promotion effects are much larger for supermarket than drugstore chains. Though this partly follows from asymmetries in the channels' drawing power and from differences in in-store response, a key driver is the accessibility of promotional price information: because they are visited more frequently than drugstores and their store flyers are read more often, supermarkets gain relatively more from price cuts and feature ads than drug chains. Managerial implications are discussed.