What Is Special About Marketing
Organic Products? How Organic
Assortment, Price, and Promotions
Drive Retailer Performance
Higher sales and margins are key goals for retailers promoting emerging products, such as organics, but little is
known about their marketing effectiveness and their cross-effects on conventional product sales. Extant research
reports conflicting results about price and promotional sensitivity for organic products and does not address the
impact of organic assortment. This article calculates long-term own- and cross-elasticities of organic and
conventional product sales in response to changes in assortment, price, and promotions. Using a rich data set of
56 categories, the authors test hypotheses on how different costs and benefits of organic products affect these
elasticities. They find that enduring actions, such as assortment and regular price changes, have a higher elasticity
for organics than for conventional products. In contrast with common wisdom, even "core" organic consumers are
sensitive to these actions. Increasing organic assortment and promotion breadth yields higher profits for the total
category, as do more frequent promotions on conventional products. The category comparison yields specific
advice with regard to where larger assortment and lower prices versus more and deeper promotions are most
effective.
Keywords: organic products, food mari