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The windfall gain effect: Using a surprise discount to stimulate add-on purchases
Institution:1. Feliciano School of Business, Montclair State University, 1 Normal Ave, Montclair, NJ, 07043, United States;2. William F. Harrah College of Hospitality, University of Nevada Las Vegas, 4505 S. Maryland Parkway, Box 456021, Las Vegas, NV, 89154-6021, United States;1. Tourism & Hospitality Management Department, School of Management, Xiamen University, Xiamen, Fujian Province, 361005, China;2. Department of Business Administration, School of Management, Xiamen University, Xiamen, Fujian Province, 361005, China;3. School of Business, The University of Queensland, Brisbane, Queensland, 4072, Australia;1. Varna University of Management, 13 A Oborishte Str., 9000 Varna, Bulgaria;2. Department of Economics and Business (DiSEA), University of Sassari, Italy;3. School of Tourism & Hospitality, University of Johannesburg, South Africa;4. NHL STENDEN University of Applied Sciences, Rengerslaan 8, 8917 DD Leeuwarden, The Netherlands;1. School of Business and Tourism Management, Yunnan University, Kunming, 650091, China;2. Tourism and Social Administration College, Nanjing Xiaozhuang University, Nanjing, 211171, China;3. School of Hospitality Business Management, Carson College of Business, Washington State University, Pullman, WA 99164-4742, USA;4. Department of Apparel, Events, and Hospitality Management, College of Human Sciences, Iowa State University, Ames, IA 50011-1078, USA;5. School of Hospitality Business Management, Carson College of Business, Washington State University, Vancouver, WA 98686, USA;1. Department of Marketing, Events and Tourism, University of Greenwich, London SE10 9LS, United Kingdom;2. School of Hospitality and Tourism, Auckland University of Technology, WH Building, 49 Wellesley Street East, Auckland 1010, New Zealand;1. Department of Economics (Ca’ Foscari University of Venice), Italy;2. Department of Applied Economics (University of the Balearic Islands), Spain;1. School of Tourism Management, Sun Yat-sen University, Guangzhou 510275, China;2. School of Business, Guizhou University of Finance and Economics, Guiyang 550025, China;3. School of Hotel, Restaurant and Tourism Management, College of Hospitality, Retail and Sport Management, University of South Carolina, Columbia, SC, 29208, USA
Abstract:How can the business maximize revenue while providing discounts? This research suggests that hospitality operators may stimulate add-on purchases with the adoption of surprise discounts. Two experiments investigated factors that influence hospitality consumers’ ancillary spending. Study 1 tested the discount and product type effects on additional spending intentions for a cruise booking. Study 2 identified how the depth of surprise discount and add-on product type influence consumers' add-on purchase decisions for an online hotel booking. The findings indicate that a surprise discount and hedonic items induce consumers' unplanned purchases. A hedonic add-on item is preferred over a utilitarian item when a low discount is offered. Impulse buying mediates the effect of surprise discount and product type on unplanned purchase intentions. This research extends the traditional discount role, by demonstrating that a discount promotion can induce consumers' additional purchases. The findings provide guidance for effective pricing strategies and add-on marketing mix.
Keywords:Windfall gain  Surprise discount  Unplanned purchase  Utilitarian value  Hedonic value  Impulse buying
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