Price Promotions in Space and Time

German consumers indicate a strong affection for locally produced beer brands and demand varies significantly throughout the year. In particular, nationwide distributed brands need to respond to consumer loyalty towards local brands (spatial pricing) and the seasonality of demand (temporal pricing) through their pricing strategy. Some theoretical models derive hypotheses for optimal spatial and temporal pricing strategies under these circumstances. Contrary to neoclassical intuition, brands promote more aggressively in their home markets and in periods of peak demand. Employing a detailed data set of weekly promotional prices for German beer during the period from 2000 to 2012, we find evidence to support these hypotheses. The results indicate that brand loyalty has dynamic effects and consumer search is more intensive in periods of peak demand.