Consumers' Responsiveness to Alcohol Multi-buy Sales Promotions
RAND Europe was asked by Her Majesty's Revenue and Customs (HMRC) to use stated preference choice experiments to gain a better understanding of how the presence of multi-buy sales promotions affects consumers' purchasing behaviour of alcohol products.
A key challenge for the analysis was taking account of the impact of pricing and promotions on both decisions to purchase a specific alcohol product as well as decisions about the amount purchased. To address this challenge we developed a specific set of models. We then used these models to produce alcohol price elasticities and measures of the impact of multi-buy promotions on consumers' stated alcohol purchases.
The online survey included a virtual supermarket (see image at right) with pictures of different types of alcohol products that were presented under a range of different price promotions.
We found that multi-buy promotions have a large impact on which alcohol products consumers purchase, but the overall impact on all alcohol purchasing is somewhat smaller, although it is still substantial. Moreover, the models tend to predict higher price elasticities and relative impacts for moderate drinkers compared to hazardous and harmful drinkers. However, because hazardous and harmful drinkers purchase much higher volumes of alcohol, the absolute impact on these groups is higher.