When less is better than more: Just-below discount in tensile price promotions

Retailers often use Tensile Price Claims (TPC) such as “upto 40% off” or “from 10% to 40% off” to promote a line of merchandize. This enables them to have a salient communication while allowing specific level of discount on particular items. Recently, retailers have started using just-below TPC frames such as “upto 39% off”. This research explores the influence of TPC framed with “just-below” numbers on consumers’ perceived benefits through three studies. The results indicate that just-below temporal frames have a more favorable impact on consumer perceptions than round frames; this is contrary to left digit salience heuristic but is in line with anchoring and adjustment theory. The effect of just-below framing disappears both for deep discount levels and with sequential TPC discounts. This study has important managerial implications for the use of TPC as a promotional tool. The study also contributes to theory in multiple ways.     

Deal is on! Why people buy from daily deal websites

We present two studies examining daily deal websites. In the first, we see whether revealing deal size influences choice, and consider the effect of desire for conformity/uniqueness. In the second, we determine the impact discounting levels have on quality perceptions and purchase likelihood, while considering the influence of brand familiarity and offer type. We find the bandwagon/snob effect can influence purchase likelihood. The results also suggest that heavy discounts have a negative impact on quality perceptions, and that brand familiarity and offer type may affect quality perceptions and purchase likelihood. Retailers seeking brand exposure should act cautiously regarding discount levels, and exclusive brands may not be suitable.     

Promoting promotions: Does showcasing free gifts backfire?

Two experiments examine the effect of the visual size of a gift in a free gift promotion on consumer judgments. Results show that promotional offers that highlight the free gift (rather than the product) are less effective than those that highlight the product to be purchased. Increasing the visual size of the free gift leads to perceptions of poorer product quality and has unfavorable consequences for purchase intentions of the offer. We propose that the larger the size of the gift in a promotional ad, the higher the perceived component of gift value in the total promotional offer, and accordingly the lower the value of the promoted product. Therefore, visually larger gifts can backfire and hurt the overall promotional offer. The presence of price information about the product moderates these effects. Implications for the use of visual cues to draw inferences, and managerial implications for advertising free gift offers are discussed.     

Effects of sales promotion type and promotion depth on consumer perceptions: the moderating role of retailer reputation

This study uses a between-subjects experimental design to test the effect of two sales promotion formats (coupon versus markdown) with either high and low face values on consumer attitudes toward the deal, perceived product quality, and purchase intentions. The reputation of the retailer offering the deal is predicted to moderate the relationship between the promotional offer and consumer responses. Consumers perceive product quality to be higher when offered a high value coupon vs. markdown but there is no significant difference in perceived quality across promotion types when the promotion face value is low. When a deep price discount is offered by a retailer with a negative reputation, however, consumers have more favorable attitudes toward the deal and higher purchase intentions when provided with a markdown vs. coupon. Conversely, a high value coupon elicits more favorable evaluations than a markdown when the retailer has a positive reputation. When the value of the promotion is low and the retailer has a positive reputation, consumers have more positive deal attitudes and purchase intentions when offered a markdown vs. coupon. There is no significant difference in the effects of promotion type when the retailer has a negative reputation. The findings therefore establish retailer reputation as an important moderator of sales promotions effectiveness. This research is limited by the use of a single product category and a student sample. Process measures are also needed to validate the proposed theoretical conceptualization. The results provide managers insight into the type and value of the sales promotion to offer based on consumer perceptions of the retailer's reputation in the market.     

Virtual Bundling with Quantity Discounts: When Low Purchase Price Does Not Lead to Smart‐Shopper Feelings

Previous research has shown that promotional techniques influence both the smart‐shopper feeling and the consumption level at home through a direct mechanism (lower perceived cost) and an indirect consequence of promotions (larger supply). The development in France of virtual bundles with quantity discounts raises questions regarding a consumer's cognitive and affective appreciation of the deal, and therefore promotional efficiency. Four experiments on French consumers confirm the effect of price and supply on declared consumption, but only for “vice” products. In Experiment 2, virtual bundles with quantity discounts lead to the lowest perceived unit price and consequently to the highest level of consumption. Additionally, when compared with more traditional promotional techniques (e.g., physical bundles), virtual bundles with quantity discounts reduce the evaluation of a “good deal” and the smart‐shopper feeling (Experiments 3 and 4). To summarize, such promotional techniques, which might have seemed appealing at first (“buy more to save more”), are preferred less by consumers than more traditional promotional techniques. These preliminary results could be enriched by field studies that go beyond declared consumption and observe consumers evolving in their natural environment across time.     

Using daily store-level data to understand price promotion effects in a semiparametric regression model

Though it has been widely reported in the marketing literature that temporary price discounts generate substantial short-term sales increase, the shape of the deal effect curve constitutes a key research topic, for which there are still limited empirical results. To address this issue, a semiparametric regression approach is used to model the complex nature of this phenomenon. Our model is developed at the brand level using daily store-level scanner-data, which allows the study of several nonreported promotional effects, such as the influence of the day of the week both in promotional and nonpromotional periods. The results show that the weekend is the most effective in increasing promotional sales and that asymmetric and neighborhood effects hold. However, 9-ending promotional prices are not impactful.     

Should firms display the sale price using larger font?

Prior work has shown that evaluations may be lower when retail price discounts are either small or large (vs. moderate), due to concerns about discount depth perceptions and/or product quality. Building from work on perceptual salience, we show that displaying the sale price in larger (vs. similar) font vis-à-vis the regular price makes the sale price more “salient”. In turn, when retail price discounts are either small or large (but, not moderate), such salience impacts how consumers process price discount information, mitigating concerns relating to discount depth perceptions and/or product quality, and so increasing evaluations. In effect, displaying the sale price using a relatively larger font increases consumers’ evaluations, somewhat mitigating the negative aspects of using small or large price discounts. We propose theory contributions towards research on display effects and pricing. Further, the proposed mechanism in this research note is easy-to-implement, and is expected to increase sales.     

Effectiveness of price discounts and premium promotions

Although price discounts are by far the most common form of sales promotions employed by firms, the increasing use of premiums as a promotional strategy may imply that they are occupying a more important place in the promotional strategy. Since price discounts are quite costly and can reduce consumers' reference prices, undermine perception of quality, and hurt brand equity, it is crucial to know what type of promotion is the most preferred and valued by consumers. As the most recent works in the field have argued that the promotional benefit level is an important determinant of promotional effectiveness, this research reports the results of two experimental studies that investigated the interaction effect between promotional benefit level and promotion type across three levels of benefit (low, moderate, high). The results obtained suggest that at high benefit levels price discounts are more effective than premiums, while the opposite occurs at low levels. However, a similar evaluation of promotional tools was found at moderate benefit levels. The findings offer guidance to managers who might benefit from knowing what is the best strategy to promote their products and services. Our work also extends prior related research because, to this date, the effectiveness of price discounts and premiums across promotional benefit levels is an under‐researched issue. © 2009 Wiley Periodicals, Inc.     

Cross-cultural examination of the effects of promotional framing on consumers’ responses: A comparison of China and Pakistan

Although extensive studies have focused on the impact of different types of sales promotions on consumers’ responses, few studies examined the effects of online sales promotional framing on consumers’ responses from cross-cultural perspective. Therefore, this study explored how cross-cultural differences moderated the effects of buy one get one free and buy two get fifty percent off promotion on consumer responses across China (lower uncertainty avoidance) and Pakistan (higher uncertainty avoidance). Based on the promotional framing effect theory, an empirical investigation across these two countries revealed that people with higher uncertainty avoidance (vs. lower uncertainty avoidance) prefer buy one get one free to buy two get fifty percent off promotion. Buy one get one free will lead to higher consumer perceived quality and purchase intention than buy two get fifty percent off promotion in both Pakistan and China, while the impact of buy one get one free and buy two get fifty percent off on perceived risk, perceived quality, perceived value and purchase intention are significantly larger in Pakistan than in China. In addition, the study verified the negative perceived risk-perceived value link, positive perceived quality-perceived value link and positive perceived value-purchase intention link from cross-cultural investigated data. The study provides new insights into the effects of online sales promotions on consumers’ responses considering cultural differences. Our findings have implications for multinational corporate managers to design appropriate online sales promotions strategies.     

Consumers' perceptions of promotional framing of price

This article focuses on consumer perceptions of transaction value when presented with deals that are equivalent on a unit‐cost basis but worded differently. Through an experimental design setting, it examines the effect of three such frames: one, stated in terms of a straight price promotion (“50% off”), the second, as an extra‐product or volume promotion (“buy one, get one free”), and a third as a “mixed” promotion (“buy two, get 50% off”). Four typical supermarket categories are considered which permit the investigation of the effect of two category‐based moderating factors: stock‐up characteristic and price level. Results show that the nature of framing appears to differentially affect consumer perceptions of value from “equivalent” deals. Also, perceptions of deal value from price versus extra‐product promotions are moderated by the stock‐up characteristic of the category. However, consumers' internal reference prices remain unaffected across one‐time price and extra‐product promotions. These findings provide some understanding of the role of deal framing on consumers' responses, and offer implications for industry practitioners interested in communicating the maximum value in their deals. © 2000 John Wiley & Sons, Inc.     

The expected benefit as determinant of deal-prone consumers' response to sales promotions

This study proposes that the responses of more and less deal-prone consumers to price discounts and premiums depend on the promotional benefit level. At low and moderate benefit levels, low deal-prone consumers show a higher evaluation for price discounts than for premiums but if the benefit is high, deal proneness does not bias the higher evaluation of price discounts. An experimental study shows that low deal-prone consumers are concerned with obtaining price discounts. Taken together, these findings suggest that consumers more concerned with obtaining promotions do not always prefer price discounts.     

Regular Price $299; Pre-order Price $199: Price Promotion for a Pre-ordered Product and the Moderating Role of Temporal Orientation

Retailers typically use the strategy of providing a discount to induce the sale of a new product at a pre-order stage. Despite the prevalence of this strategy, providing discounts might not be effective for all consumers. The present research shows that the positive effect of a discount depends on consumer temporal orientation. Results from four experimental studies reveal that a large discount positively affects present-oriented, but not future-oriented, consumers. The findings suggest that perceived financial risk and perceived product quality sequentially mediate the effect of discount size on value toward the deal and purchase intention. A third-party product quality rating boosts quality perceptions, which in turn reduces perceived financial risk and positively enhances value toward the deal along with purchase intention. Our findings demonstrate that when the brand itself acts as a reliable signal of quality, a discount has its intended effect for both present- and future-oriented consumers. Overall, the findings of this research suggest that a retailer can use quality cues along with a discount, especially for a new brand, to appeal to the broadest group, as it will attract both future- and present-oriented consumers.     

Consumer evaluations of different promotion types and price presentations: the moderating role of promotional benefit level

The effects of promotion type (i.e., price discounts and bonus packs) and price presentation (i.e., dollars and percentages) across promotional benefit levels were investigated in three experimental studies. The results suggest, for the products considered, that price discounts and bonus packs were valued similarly for both low and moderate promotional benefit levels, while price discounts were preferred when high promotional benefit levels were employed. Additionally, promotions presented in percentage terms were preferred when the benefit level was high. The implications of these results for retailers and manufacturers are that percentage price presentations should be used when large discounts are being offered. Furthermore, it appears that bonus packs are a viable alternative to price discounts when promotion levels are small or moderate since they have less of a deleterious effect on the brand.     

A good deal online: The Impacts of acquisition and transaction value on E-satisfaction and E-loyalty

Relying on Thaler's exchange theory, this research examines the unique effects of perceived transaction and acquisition values on consumer e-satisfaction and e-loyalty in an e-commerce setting, along with the moderating role of product/ service category. Overall, consumers' perceptions of transaction value lead to their e-dissatisfaction. Hence, obtaining a good deal does not have the same meaning and influence depending on the type of buying trip (exploratory or goal-directed). These results confirm Thaler's exchange theory's usefulness to analyzing the impact of perceived value on e-satisfaction and e-loyalty. Additionally, in a managerial perspective, this research underlines the importance of adapting promotional strategies to online contexts, since online purchase experience improves when there is an alignment between the customer's goals and the e-tailer’s online offering.     

The influence of sharing versus self-use on the preference for different types of promotional offers

Sharing, which refers to giving something you have to someone else, is one of the most ubiquitous forms of human behavior in the world. Everyone experiences it in various situations, including buying food. Nonetheless, although buying something to share with others is quite common in our daily lives, most consumer research on buying focuses on the condition of “self-use” rather than “sharing.” The main purpose of this study is to investigate the influence of promotional offers on consumers' purchase decisions when buying food for self-use/sharing with others. The authors conducted four experiments to answer the main research questions. The results indicated that consumers prefer “price discounts” over “bonus packs” when the shopping task relates to self-use due to their concern about “loss reduction.” In contrast, they prefer bonus packs over price discounts when the shopping task relates to sharing with others because of their focus on “extra gains.” In addition, consumers’ perceived responsibility is a moderator. When perceived responsibility is low and the purchase is for self-use (sharing with others), price discounts (bonus pack) are favored over bonus packs (price discounts). However, when perceived responsibility is high, consumer preference to promotional offers are not significant different either in self-use or sharing with others condition. It seems that role of responsibility is influential when the shopping task relates to self-use. This study not only contributes to a deeper understanding of consumer psychology but will also be beneficial to practitioners in designing effective promotional strategies that consider motives for food shopping.     

Promotional Competitions: A Taxonomy of Campaign Framing Choices Integrating Economic,Informational, and Affective Objectives

Promotional competitions remain underresearched with only limited conceptualization of campaign design (framing) options evident. Our research addresses the following questions: What are the specific framing options available to campaign planners? What framing strategies should decision-makers apply to optimize campaign performance against promotional aims and objectives? We analyze a sample of promotional competition campaigns in the Australian market to identify the range of specific framing options. We present a taxonomy of Action, Entry, and Prize choices, integrating the key promotional aims of economic, informational, and affective influence. Academic and practitioner implications are discussed and a future research agenda is proposed.     

When do amount-off discounts result in more positive consumer responses? Meta-analytic evidence

Extant research has examined the effects of amount-off discounts on consumer responses, but the empirical findings are inconsistent. This study presents a meta-analysis of 19 studies and 86 effect sizes (N = 12,003) calibrating the effects of discount frames on consumer responses. Amount-off discounts are found to lead to positive consumer responses through positive changes in attitudes. Analyzing various moderators’ impacts shows that amount-off discounts have different effects depending on the product price level, the product type, and the price promotion mode. For instance, amount-off discounts tend to be more effective than percentage-off discounts when the price is high, when the product type is material, and when the price promotion mode is a discount.     

The effect of product touch information and sale proneness on consumers' responses to price discounts

Since price discounts are costly and can negatively affect consumers' perceptions of quality, it is crucial to identify the factors that make them effective in stimulating purchase behavior. Drawing on cue utilization theory, we examine price discount effectiveness in affecting consumers' reliance on the sale cue based on the provided product touch information as an intrinsic cue and individual consumer differences in sale proneness. Two experimental studies indicate that price discount information, product touch information, and sale proneness interact to determine consumers' responses. Perceived quality is the underlying mechanism behind the observed effects. For nonsale-prone consumers, product touch information favorably influences responses to large price discounts by addressing product quality concerns and enhancing purchase confidence, but has no effect for regularly priced or low discounted products. For sale-prone consumers, product touch information is not effective in increasing their responses regardless of the discount size. A qualitative study provides support for these results and highlights the role of perceived quality and purchase confidence. The research contributes to behavioral pricing, cue utilization theory, and sensory marketing and suggests that marketing managers should provide consumers with product touch information when implementing high discounts for products for which prepurchase touch is important.     

The interaction effect of mobile phone screen and product orientation on perceived product size

Perceived product size is a key concern in online retail, particularly in fashion and grocery. The screen on which consumers view a product (e.g., desktop or mobile) might constitute a frame that biases size perception, on the basis of assimilation and contrast effects (pool and store theory). The rise of mobile commerce exacerbates this issue, as framing effects might be stronger versus desktop settings as screens are smaller. Further, as mobile phone's screen orientation varies situationally (vertical vs. horizontal), the perceived product size might vary, depending on the interaction of screen and product orientation. By introducing the framing ratio as a means to predict extent, dimensionality and symmetry of size biases, we generalize specific findings from extant research. Empirically, four experimental studies demonstrate that contextual frames (i.e., vertical vs. horizontal screens) and product orientation (e.g., jeans vs. shoes) interact to bias the size perception, in that sizes are overestimated on the dimension that approaches the frame (high framing ratio), compared with conditions where the frame is distant (low framing ratio). If product size is misperceived, willingness to pay might be affected (e.g., for groceries). Thus, size perceptions have a direct impact on managerially relevant variables.     

How buyers frame problems: Revisited

This article investigates the following propositions: a useful approach for building an organizational‐buying–behavior taxonomy might begin with classifying how buyers frame purchasing problems followed by how such frames affect subsequent perceptions and actions in the decision process. Unlike previous taxonomies of buying situations, direct questioning of organizational buyers is used to learn: (1) whether or not they identify different categories of buying problems; (2) if they do, what dimensions they use when framing buying problems; and (3) how do such frames influence their choices of value‐added service alternatives offered by suppliers. To test the propositions empirically, supplier choices are modeled with the use of buying‐decision exercises. A key result of this study is that the buyers’ framing of problems affects their preferences for vendor designs of value‐added customer services. Most likely, the framing of buying problems by organizational buyers is layered and more complex than related taxonomies found in the marketing literature. © 2001 John Wiley & Sons, Inc.