Promote the price promotion: The effects of price promotions on customer evaluations in coffee chain stores

Abstract

Purpose

The authors empirically evaluated the effect of price promotions on customer quality evaluations and repeat-purchase intentions in coffee chain stores. The moderating role of customer characteristics in this process was also investigated.

Design/methodology/approach

Consumers in 12 coffee chain stores were surveyed and 488 usable questionnaires were obtained. Relationships in the test model were examined using structural equation modeling techniques. A multiple-group solution was used to test the moderating effects of consumer characteristics.

Findings

The results of structural equation modeling analyses suggested that price-promotion activities at Starbucks in Taiwan had a favorable effect on customer quality evaluations and positively influenced repeat-purchase intentions. The moderating effects of consumer characteristics were partially supported. Whereas sex showed no significant moderating effect, consumption frequency did demonstrate a moderating effect.

Practical implications

The results indicate that existing customers may see price promotions at Starbucks in Taiwan as a reward or incentive, and thus lead to an increase in favorable evaluations. The findings provide a new perspective that may encourage those involved in the marketing of coffee chain stores to manage price promotions in a more strategic manner by considering customer characteristics.

Originality/value

The effects of price promotions on brand evaluation remain controversial and may vary among product categories. Additionally, most studies regarding price promotions have used an experimental approach, and few studies of price promotions in the coffee industry have been reported. The study is among the first to empirically examine the effects of price promotions and the moderating role of consumer characteristics in the process at coffee chain stores.

Citation

Huang, H.-C., Chang, Y.-T., Yeh, C.-Y. and Liao, C.-W. (2014), "Promote the price promotion: The effects of price promotions on customer evaluations in coffee chain stores", International Journal of Contemporary Hospitality Management, Vol. 26 No. 7, pp. 1065-1082. https://doi.org/10.1108/IJCHM-05-2013-0204