Discounting and Its Impact on Durables Buying Decisions

The phenomenon of discounting is well established in the economics literature. However, this research has traditionally assumed that households have a single discount rate and make all intertemporal tradeoffs based on that rate. More current research in decision making and marketing has challenged the economics approach to intertemporal choice behavior. In this article, we propose two aspects of discounting research that are particularly relevant to consumer behavior toward durable goods. We propose first that consumers have individual discount rates for product categories. The second proposition is that, in a multiattribute modeling context, consumers have different discount rates for different attributes. We also discuss the strategic implications of these discount phenomena for marketing managers.