Carry-over effects

Carry-over effects describe the effects of current sales on future sales. A distinction must be made between the following causes and effects:

Intrapersonal carry-over effects

Intrapersonal carry-over effects arise, for example, from customer repurchase behavior. The higher the sales of consumer goods in a period, the more repurchases there will be in the future if the customers are satisfied. If customers are predominantly dissatisfied with the products, then high sales in the present will result in a decline in future sales.

Interpersonal carry-over effects

Interpersonelle Carry-over-Effekte gibt es besonders bei Gebrauchsgütern. Solche Güter verbreiten sich vor allem über Word-of-mouth advertising und Nachahmung. Der imitative Konsum spielt eine bedeutende Rolle bei sozial auffälligen Produkten wie beispielsweise Inlineskates und modische Bekleidung, deren Gebrauch von anderen Personen beobachtet wird (Bandwagon effect).

High sales volumes in the present can also cause sales to decline in the future. This is the case when consumers turn to other products in order to satisfy their needs for variety and individuality.

The analysis of the carry-over effects answers the question of how a product spreads on the market with a given sales potential. This results in the following recommendations for choosing the pricing strategy:

A positive carry-over effect is exploited by a comparatively low introductory price (penetration strategy). The low starting price results in a high sales volume in the introductory phase of the product. This will increase the sales volume in the future. If the positive carry-over effect is strong enough, the profit margins lost in the introductory phase (opportunity costs) are more than compensated for by additional profit margins in the product's growth phase.

A negative carry-over effect states that high sales volumes in the introductory phase reduce future demand. In this case it is advisable to ask for a comparatively high introductory price (skimming strategy) so that the product reaches profitability as quickly as possible.