Our model complements various prior findings for promotion
frequency and depth. In terms of promotion frequency,
in general, P1 results follow the work of Narasimhan (1988)
and Raju, Srinivasan, and Lal (1990) in that they predict
that a strong retailer (one with greater loyalty) promotes
less frequently. However, our model also predicts that a
strong retailer can promote more frequently if it has relatively
more interest in the switchers than the weaker retailers
have (e.g., Firm 1 promotes more often than Firm 3
under P2). Narasimhan notes that a strong brand may be
promoted more frequently (with shallower discounts) if
switchers prefer that brand, whereas our results pertain to
the switcher segment sizes rather than brand or retailer preference.
Rajiv, Dutta, and Dhar (2002) conclude that a highservice
(i.e., strong) store offers advertised sales more frequently,
albeit to build traffic. The results of P2 concur with
the predictions of Rajiv, Dutta, and Dhar, even in the
absence of traffic considerations, suggesting that a relatively
larger size of switchers targeted by high-service
stores can explain a higher frequency of advertised sales.