The effects of promotional package frames and price strategies on inaction inertia

Inaction inertia is the phenomenon in which people are less likely to accept a less attractive opportunity after having missed a relatively more attractive one. Previous studies have mainly explored the inaction inertia effect on single products or services, whereas this study explored how the promotional frames of sales packages influence inaction inertia toward the individual items within the sales packages and the inaction inertia effect of the target product under different price strategies. On the basis of the cost assignments of mental accounting and comparisons of the current inferior promotion with missed superior promotion, this study found evidence that when consumers encounter a freebie (bundle) condition, they assign a higher cost to the focal (supplementary) product and a lower cost to the supplementary (focal) product. Therefore, consumers who have missed a freebie (bundle) promotion exhibit lower (higher) inaction inertia toward the focal product, but higher (lower) inaction inertia toward the supplementary product. Applying a similar internal mechanism to pricing strategies, the findings also show that when consumers encounter a two‐component sales package with a surcharge promotion using a partitioned price (vs. a price discount promotion using an all‐inclusive price), they assign a higher cost to the base product and a lower cost to the surcharge. So, consumers who have missed the surcharge (vs. price discount) promotion show higher inaction inertia when the surcharge of the current inferior opportunity is salient, but show less inaction inertia when it is not salient. Moreover, the percent of a surcharge as a part of the total package value moderates the impact of promotional price strategy frames on inaction inertia. These findings have significant implications for both theoreticians and practitioners interested in inaction inertia, promotional frames, and price strategies.     

Measurement of Incidents of Quantity Surcharge Among Selected Grocery Products

It has been reported that the “large economy” size is not always really the best buy. Prices per unit in large size packages frequently are greater than those for smaller sized ones. These differences have been labeled quantity surcharges. The purpose of this research was to determine how frequently quantity surcharges exist in grocery stores. It was found that 33.8 percent of the brands examined were priced at a quantity surcharge.     

THE FREQUENCY OF QUANTITY SURCHARGES: REPLICATION AND EXTENSION

Widrick's research has established that larger sizes of grocery products are not always less expensive per unit than smaller sizes, or that quantity surcharges exist. The purpose of this research was to validate and extend Widrick's work. In this research, the overall incidence of quantity surcharges was 18.6%. Surcharges were found to occur more often when numerous brand sizes were offered and non-integer package size comparisons were required. Additionally, personal care products, not previously included in quantity surcharge research, were found to have a lower incidence of surcharges than food and laundry products. The research indicates there may be possible payoffs to consumers who make unit price comparisons rather than employing the economy size rule.     

The Effects of Cognitive Style,Shopping Experience and Consumer Demographics on Consumer Reactions to Quantity Surcharges

Quantity surcharges occur when large quantities of a product are sold at a higher unit price compared to smaller quantities. As such, quantity surcharges violate consumer beliefs that one should receive a discount for having purchased larger amounts of a product. Much of the existing research in this area has focused on the incidence of quantity surcharges, and less focus has been given to consumer reactions to quantity surcharge offers. Utilizing a national survey of 318 consumers, this paper explores the effects of quantity surcharges on consumer perceptions of sellers, and examines how these perceptions are affected by consumers' cognitive style, shopping experience and demographics.     

Antecedents of rural and urban consumers' propensity to outshop and product specific outshopping behaviour

Retail sector survives in the face of severe competition caused especially by outshopping activity. Outshopping involves residents—urban or rural—of one area travelling to another area, usually larger retail developments, to buy goods. This practice is of special concern to retailers particularly when consumers outshop even if the product is available locally. This study aims to understand how psychographics influence the propensity to outshop among urban and rural consumers, and more specifically to find out which products they purchase. It analyzes a quota sample of 298 usable responses from urban and rural areas of northern Gujarat. A structured questionnaire was administered through survey approach. From an exploratory analysis, six factors were extracted and regressed with a propensity to outshop among consumers, followed by the analysis of variance to determine which products were outshopped by consumers. The study demonstrates that rural consumers’ propensity to outshop is influenced by factors such as outlet prone, local involvement, and time saving opinions, urban consumers’ propensity to outshop is influenced by travelling oriented, outshopping interests, and time saving opinions. Additionally, rural consumers outshop for sports goods and flooring materials, while urban consumers outshop for children's clothing and fancy items for women’s use. This study can help retailers to tailor-make their communication strategies for rural and urban consumers. In addition, it can contribute significantly in understanding the retail flow for specific product categories, which in turn, can help retailers in designing marketing mix strategies for expanding their customer base.     

Using the Pack‐and‐a‐Half Rule to Eliminate Backroom Inventories in Retail Operations

In the retail industry, backroom inventories are typically associated with higher labor costs and greater operational complexity. Thus, retailers look for ways to eliminate backroom inventories. A heuristic used for this purpose is the pack‐and‐a‐half rule which suggests that the shelf space allocated for a product should be at least 50% larger than the case pack quantity in which the product is delivered. Despite its popularity among retailers, the pack‐and‐a‐half rule has been ignored in the academic literature. We introduce the pack‐and‐a‐half rule, assess its impact on a retailer's profits, identify cost, demand, and product characteristics driving this impact, and propose a modification. Based on an analysis of data obtained from a retailer on 1,986 SKUs in 20 categories, we find that the pack‐and‐a‐half rule decreases a retailer's profits, on average, by 10% when applied uniformly across all SKUs. Further, this decrease is significantly affected by product depth, product width, demand elasticity, case pack quantity, and inventory carrying cost. Finally, we develop a set of modifications based on these variables where the pack‐and‐a‐half rule is applied selectively and in a stepwise fashion. These modifications limit the decrease in a retailer's profits to a range between 6% and 7%.     

The effect of consumer's psychographic variables upon deal-proneness

Companies are increasingly attaching more importance to sales promotion within their communication programs. The main reason for the increase in the use of promotions is their immediate effect on the consumers. However, there are some consumers that do not respond to promotions. This study analyses the psychographic traits associated with deal-proneness. A personal survey has been conducted with a sample of 425 individuals who regularly buy package food and cleaning products. In the study, three kinds of deal-proneness are differentiated: proneness towards store flyers, proneness towards coupons and proneness towards in-store promotions. The results prove that there are relationships between some psychographic characteristics of consumers and deal-proneness. In general, price-conscious consumers are deal-prone. However, savings are not the only reason to buy a product on promotion. Deal-proneness is influenced by other aspects as impulsiveness, innovativeness or shopping enjoyment.     

An investigation on the effectiveness of hedonic versus utilitarian message appeals in luxury product communication

This research studies the role of hedonic versus utilitarian message appeals in luxury goods communication, investigating how using one or the other type of message appeal affects product perceived luxuriousness and, in turn, product attitude, and consumers' willingness to buy. This research presents three experiments in which message appeal and brand prominence have been manipulated, while perception of luxuriousness, attitude toward luxury products, willingness to buy them and consumers' conspicuous consumption orientation have been measured. Hedonic, compared with utilitarian, message appeals increase perceived luxuriousness, thereby increasing product attitude and consumers' willingness to buy the product promoted. This effect is particularly likely to occur for consumers with lower levels of conspicuous consumption orientation and for products carrying lowly prominent logos. We extend the literature on luxury communication by studying the effect of hedonic versus utilitarian message appeals on consumers' responses, and the literature on hedonism versus utilitarianism by studying this dichotomy in the context of luxury goods communication. This research suggests that different message appeals used in luxury goods communication produce different effects on consumers' responses and that this differential effectiveness is particularly likely to manifest for certain types of consumers and certain types of luxury products.     

Thanks COVID-19, I'll reconsider my purchase: Can fear appeal reduce online shopping cart abandonment?

Despite the widespread prevalence of online shopping cart abandonment (OSCA) and allusions to this behavior in popular press, scholars have yet to examine the key determinants of OSCA. This study used the stimulus-organism-response (S–O-R) model to explore the factors influencing consumers' OSCA and decision to buy from a land-based retailer. Two studies were carried out to test the proposed hypotheses among Mainland China's Generation Y consumers. Data was collected based on two product categories (i.e., apparel and electrical appliances) at two different time scenarios (i.e., pre- and post-pandemic). The findings reveal that hesitation at checkout increases OSCA, while consumers' decision to buy from a land-based retailer is influenced by their emotional ambivalence and OSCA. Furthermore, fear appeals appear to weaken the relationship between OSCA and the decision to buy from a land-based retailer. This study has implications for researchers and practitioners who seek to effectively reduce the rate of OSCA.     

Partitioning or bundling? Perceived fairness of the surcharge makes a difference

Partitioned pricing charges a base price and a surcharge instead of an equivalent all‐inclusive price. In contrast, a bundling strategy offers a bundled price instead of separate prices for products in one package. Which pricing practice is more profitable? Previous research has shown conflicting results. This research identifies the boundary conditions which circumscribe the profitability of partitioned and bundled pricing. Results of three experiments indicate that the relative significance of the surcharge to the base price influences consumers' perception of the fairness of the surcharge, which in turn influences consumer purchase intentions. Furthermore, given the same level of surcharge, consumers' perceptions of the fairness of the surcharge moderates the effect of the pricing strategies. Thus, perceived fairness of the surcharge appears to be the key in determining whether or not the partitioning strategy is more profitable than the bundling strategy. © 2007 Wiley Periodicals, Inc.     

Measuring Consumer Sensitivity to Corporate Social Performance Across Cultures

ABSTRACT

In the context of a severe economic crisis, the objective of this research is to examine to what extent the economic crisis and austerity's measures have generated new marketing strategies in food companies. We develop a comparative analysis though multivariate analysis of variance, consisting of 10 food product categories across eight European countries, distinguishing between countries that needed financial support—the so-called rescued countries—and the countries with better economic development. Our findings show an increasingly trend toward increasing product prices and price per quantity in the rescued countries, along with an increase in the package content. Our findings suggest that food companies have been raising prices through the recession, as consumers continue to pare their spending and demand.     

Quantity Surcharges: Are They Important in Choosing a Shopping Strategy?

Instead of making value-price comparisons for all members of a product set, consumers may decide to adopt simple purchase decision rules such as larger sizes are better buys. When the unit price of a larger size is greater than the unit price of a smaller size, a quantity surcharge exists. Previous research has established that consumers do frequently encounter quantity surcharges in purchasing grocery products. However, estimates of the amount of the surcharge, the goal of this research, have not previously been reported. In this study the expected return from using the larger-size rule was estimated. The estimation procedure made use of price and size information gathered for all available packages of 23 products sold in 15 grocery stores in one rural Illinois community in October 1981. Nineteen of the 23 grocery products were found to have surcharges, with the mean amount ranging from less than one cent to 65 cents. Tuna fish was the only product for which the expected value of the return from buying a larger size rather than a smaller size was negative. Implications for consumers' choice of shopping strategies are discussed.     

The effects of store brand loyalty on store loyalty: evidence from the Spanish market

This article studies the impact of retailers' store brands on store performance. Specifically, we analyze the extent to which store brands contribute to store loyalty. On the one hand, a positive relationship between customers' familiarity with and loyalty to the retailer's own brand and customers' loyalty to the retailer should result from the potential of the store brand to differentiate the retailer. On the other hand, an negative relationship between customers' familiarity with and loyalty to the retailer's own brand and customers' loyalty to the retailer may result from store brands' association with more price-sensitive customers, who have a higher propensity to buy at different stores that offer the best bargain. The empirical analysis, conducted with a sample of customers of leading retailers in the Spanish detergent market, shows no relationship between store brand loyalty and loyalty to the retailer. Although the purchase of store brands relates positively to higher loyalty to the retailer, this relationship deteriorates with the degree of exclusivity of store brands within the customer's shopping basket.     

Antecedents and consequences of chronic impulsive buying: Can impulsive buying be understood as dysfunctional self‐regulation?

Researchers reach different conclusions about the functional or dysfunctional nature of impulsive buying behavior. While many note the use of impulsive buying as a form of mood regulation, there is disagreement about whether this is functional or dysfunctional and the extent to which it causes financial harm. This paper draws on data from a U.K. national survey sample (N = 109,472) to contribute to these debates. Study results suggest that impulsive buying is more common for those who have most need to regulate mood and who have the least effective emotion regulation strategies. This suggests that impulsive buying may be understood as a failure of self‐regulation in relation to long‐term goals and as a strategy for mood regulation. Contrary to some prior claims in the retail management and marketing research literature, the study shows higher levels of impulsive buying to be associated with more adverse financial outcomes (which are not confined to the most extreme manifestations of the trait). While ineffective emotion regulation is associated with higher propensity to buy impulsively, the findings also suggest that effective emotion regulation may to some extent mitigate the adverse consequences of the propensity to buy impulsively. The implications for ethical management, research, and policy are considered.     

Individual differences in price responsiveness within and across food brands

Various researchers have reported that in routine grocery shopping the quantity consumers buy varies little across shopping occasions. Even in the presence of promotions, the largest part of promotional sales peaks has been attributed to brand switching. Recent investigations, however, indicated that the quantity consumers buy may include complex intra- and inter-consumer and intra- and inter-brand choice patterns. Using panel data from more than 1500 British consumers purchasing four food products during 52 weeks, the present study examined whether such complex patterns occur and assessed their relative contribution to overall quantity elasticity. Results showed that consumers buy larger quantities when paying lower prices, both within and across brands, and that consumers who buy larger quantities tend to pay lower prices, both within and across brands. The results also indicated that intra-brand price variations, especially those associated with consumers switching across package sizes, account for the largest portion of changes in quantity. Methodological differences might explain discrepancies among previous findings such as the duration of the sample used, the number of brands examined, and the conceptualization of a brand as including or excluding different package sizes.     

A Relationship Governance Perspective of Organizational Buyers' Supplier Choice Decisions

Although the transaction cost analysis (TCA) has long been used by marketing and management scholars to study organizational buyers' make-or-buy decisions, it sheds limited light on their choice behavior beyond the make-or-buy trade-off. In the meantime, many organizational purchase decisions are structured around which independent supplier to buy from, rather than a typical make-or-buy decision. This study extends existing research on TCA by applying this theoretical framework to explore why organizational buyers make purchases from among independent suppliers. The article posits that (1) two forms of relationship governance—buyer trust and market (i.e., the relative dependence between the buyer and supplier)—help explain the differences in buyer decision-making uncertainty involving independent suppliers, which further influences the buyers' propensity to purchase; and that (2) trust further influences the buyers' propensity to purchase due to its effect on customer perceived value. The empirical study based on organizational purchasing decisions lends support to the predictions of the relationship governance theory.     

中国反倾销的贸易保护效应:基于产品进口倾向性的比较研究

反倾销所引发的贸易保护效应是学者们重点关注的贸易问题,本文则从进口倾向性角度研究反倾销所引发的不同的贸易保护效应。本文首先对中国所发起的47起反倾销案例依据进口倾向指数区分为高进口倾向产品和低进口倾向产品;通过对高进口倾向和低进口倾向产品的描述性分析可以看出高进口倾向产品反倾销的贸易限制效应低于低进口倾向产品反倾销的贸易限制效应,而两类产品均存在贸易转移效应,但是两类产品的贸易转移效应没有非常显著的差异;实证模型的检验结果进一步验证了不同进口倾向产品的反倾销所引发的贸易效应存在一定差异。     

Consumers’ response to weak unique selling propositions: Implications for optimal product recommendation strategy

We use a multi-method approach (analytical model and behavioral experiment) to investigate product recommendations based on less-important attributes (weak unique selling proposition, USP). We consider multiple scenarios in which a recommender’s level of expertise (knowledge about product attributes and their importance) and bias (preference for the firm as opposed to consumers) operate as cues for consumers to evaluate the recommender’s message.Results show that optimal messaging behavior is a function of an interactive process involving recommender characteristics and the relative importance of product attributes to consumers. The results identify conditions that determine when weak USPs are likely to increase or decrease a consumer’s propensity to buy the recommended product and when a recommender might optimally communicate weak USPs or avoid sending such a recommendation.     

Culture, product type, and price influences on consumer purchase intention to buy personalized products online

With personalization, consumers can choose from various product attributes and a customized product is assembled based on their preferences. Marketers often offer personalization on websites. This paper investigates consumer purchase intentions toward personalized products in an online selling situation.The research builds and tests three hypotheses: (1) intention to purchase personalized products will be affected by individualism, uncertainty avoidance, power distance, and masculinity dimensions of a national culture; (2) consumers will be more likely to buy personalized search products than experience products; and (3) intention to buy a personalized product will not be influenced by price premiums up to some level. Results indicate that individualism is the only culture dimension to have a significant effect on purchase intention. Product type and individualism by price interaction also have a significant effect, whereas price does not. Major findings and implications are discussed.     

When consumers become project backers: The psychological consequences of participation in crowdfunding

Crowdfunding involves financing new ventures by relying on a large number of individual project backers who typically receive the venture's new product as a reward for their financial support. In three experimental studies, it is revealed that crowdfunding participation increases the extent to which consumers can personally connect to and identify with the focal venture compared to customers who merely buy the product in a classic market exchange setting (the baseline in our analysis). This identification process, which is rooted in the insight that one's financial contribution is perceived to be more meaningful to the focal venture, is also shown to trigger behavioral effects on important outcome variables such as increased subsequent consumption of the venture's products and more positive word-of-mouth behavior. The studies thus validate the idea that crowdfunding may be an effective tool to build strong(er) relationships with the venture's initial customer base. Hence, crowdfunding might not only answer the question “Where could I get funding from?” but also another: “Where can I effectively connect with my future customers?” The findings further point to interesting consequences for participating consumers: because the venture is more strongly perceived as theirs, this means that also the associations linked to it may rub off more strongly on their sense of self compared to customers who merely buy the same venture's product in a classic market exchange setting. Crowdfunding participation may thus more strongly effect a qualitative change in the consumer's self-concept.