September 12, 2002

UCLA Professor Receives Coveted J.D.C. Little Award for Best Marketing Paper

Dr. Dominique Hanssens, professor of marketing at UCLA Anderson, has been selected as the winner of the prestigious John D.C. Little Award for his marketing paper, “The Category-Demand Effects of Price Promotions,” published in Marketing Science in 2001. Dr. Hanssens is also holder of the Bud Knapp Chair in Management at UCLA.

This marks Dr. Hanssens’ second Best Paper award in Marketing Science; he received his first in 1995 for “The Persistence of Marketing Effects on Sales.” His recent winning paper, co-written with professors at Northwestern University, the Catholic University of Leuven in Belgium and Tilburg University in The Netherlands, was the lead article in the winter 2001 issue of Marketing Science.

The award is given annually by the College on Marketing of the Institute for Operations Research and the Management Sciences (INFORMS) and is the organization’s highest honor, reserved for the best paper published either in Marketing Science or Management Science. The award’s namesake, Dr. John D.C. Little, is considered a founder of marketing science theory and is a professor at MIT’s Sloan School of Management.

 Dr. Hanssens’ award-winning paper studies one of marketing’s three primary sources of revenue and profitability in consumer and industrial sectors—category demand. Specifically, the paper analyzes to what extent marketers’ actions—in particular consumer price promotions—are related to short-term and long-term changes in the consumer demand of a product category.

“Price promotions have increased in both commercial use and quantity of academic research over the last decade, and most of the attention has focused on their effects on brand choice and brand sales,” Dr. Hanssens said.

However, he said that little is known about the conditions under which price promotions expand short-run and long-run category demand, even though the benefits of category expansion can be substantial to manufacturers and retailers alike.

Dr. Hanssens asserts that achieving growth in category demand can be attractive for four reasons:

1. The base for growth is large because it involves all industry participants.

2. Harmful competitive reaction may be limited because competitive share losses are hidden in sales gains and therefore may attract less retaliatory action.

3. Growing category demand signals that consumer preferences and willingness to pay may be rising, which can create price and profit margin increases.

4. Retailer revenues are more closely related to category demand than to the sales of any one brand.

To achieve their objectives, the researchers use modern multivariate time-series analysis, which disentangles short-run and long-run effects. They analyze the category-demand effects of consumer price promotions across 560 product categories over a four-year period. One of the principal findings is that category demand is predominantly stationary, and thus not affected in the long run by promotional strategies. The authors also provide precise measures of the over-time effects of promotions and the conditions that make these effects stronger or weaker.

A member of UCLA Anderson faculty since 1977, Dr. Hanssens has served as the school’s faculty chair, associate dean and marketing area chair. In addition, he has served as an area editor for Marketing Science and an associate editor for Management Science. He most recently completed the second edition of his book with Leonard Parsons and Randall Schultz, titled Market Response Models, published in 2001.

Download “The Category-Demand Effects of Price Promotions,” here.

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