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The Africa Commerce Convergence Summit keynote address identified four elements that must converge if the continent is to achieve a meaningful economic reset.
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By our News Team | 2023
Placing goods that are not on promotion next to ones that are being discounted can have both positive and negative effects.
Researchers from four US universities – Connecticut, Texas A&M, Colorado at Boulder and Florida – have published a new Journal of Marketing article that examines whether price promotions on some products differentially impact demand for other products, depending on their relative locations within a display.
The study, forthcoming in the American Marketing Association’s peer-reviewed publication, is titled ‘The Negative and Positive Consequences of Placing Products Next to Promoted Products’.
Photo by Needpix.com
Consumers select from a variety of competing products in multi-product displays. Some products are discounted, while others in close proximity are regularly priced.
The key question is: Do price promotions on some products differentially impact demand for other products, depending on their relative locations within a display? This new study concludes that the answer is ‘yes’.
The researchers say that when the proximal items (i.e., those placed nearby) and distal items (i.e., those placed farther) are strong substitutes for the promoted item, we find that a price promotion decreases the sales of proximal products relative to distal products. This is known as a ‘negative proximity effect’.
However, when the proximal and distal items are weak substitutes for the promoted item, the promoted product increases the sales of proximal products relative to distal products. This is known as a ‘positive proximity effect’.
“In this case, the proximal product benefits from the increased attention by virtue of being close to the promoted product,” the researchers explain.
The research team found evidence for these sales patterns across eight studies.
Opportunities for marketing managers
Understanding how attention spills over to proximal products creates several opportunities for marketing managers.
Managers can take advantage of this to direct attention to full-priced higher margin brands. Taking this further, positive proximity effects may also occur for non-substitutes (e.g., refrigerated yogurt and refrigerated desserts).
You can read more about the study here.

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