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Associate Professor of Marketing Jonne Guyt (Amsterdam Business School Marketing section) published a paper on soda taxes in the 'Journal of Marketing Research'. The findings in the paper show that soda taxes do more than raise prices; they also transform marketing strategies.

The paper, written together with researchers Kristopher Keller and Rajdeep Grewal (both from the University of North Carolina at Chapel Hill) was based on data obtained from 5 different introductions of the soda tax, covering more than 200 stores. Prior studies on the effect of soda taxes focused on price increases, but neglected the impact on marketing conduct.

Some of the changes in marketing strategy that were revealed include:

  • A drop in the promotional discount depth (-12%), or the relative size of the discount for the consumer;
  • A reduced frequency of promotions (-2%), but a more pronounced reduction in appearing in store flyers (-14%);

These results suggest managers reduce the usage of marketing tools to increase sales for sodas.

Public health challenges

Inadvertently, managers make the soda tax more effective in reducing the consumption of sugary drinks. Jointly, the changes in marketing decisions account for 20% of the observed sales drop after a soda tax is implemented. What's more, consumers responded differently: they became less sensitive to price changes but more responsive to promotions. These insights are crucial for policymakers as they work on innovative ways to address public health challenges.