Advertising, incentives, and the upsell: how advertising differentially moderates customer- vs. retailer-directed price incentives' impact on consumers' preferences for premium products.

Many durable goods firms use price promotion strategies and advertising simultaneously to impact consumer preferences among vertically differentiated product offerings. In this research, we use a large secondary dataset of automotive purchases ( = 323,959) to investigate how advertising spending differentially moderates the positive impact of both customer- and retailer-directed price incentives on consumers' premium level of purchase for vertically differentiated products. We find that higher advertising spending magnifies the positive impact of customer-directed price incentives on consumers' preference for more premium purchases.