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The Demand for Pork Products in Canada: Discount Promotions and Cannibalization

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ABSTRACT

We estimate the effectiveness of offering discounts on the demand for featured pork products using Ipsos-Reid's Consumer Panel of Canada data for a 1-year period from April 2007 to March 2008, and explore whether there are any positive or negative spillover effects on non-featured products because of these discounts. We find strong evidence that, as expected, discounts increase the purchases of the featured products. However, we find that offering discounts may have cannibalistic effects – negative cross-discount effects – on non-featured products, and that these effects vary considerably among pork products. From the retailers’ perspective, as profit margins have become smaller, our results indicate the need to develop a promotion strategy that minimizes the cannibalistic effects from discounts.

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