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Article
Publication date: 9 November 2012

Sally McKechnie, James Devlin, Christine Ennew and Andrew Smith

The objective of this paper is to examine the framing effects of discount presentation format in comparative price advertising in a low‐price and a high‐price product…

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5668

Abstract

Purpose

The objective of this paper is to examine the framing effects of discount presentation format in comparative price advertising in a low‐price and a high‐price product context. In particular, the authors study whether identical discounts presented in percentage and absolute terms result in different consumer perceptions of transaction value and purchase intention. Although price promotions have been the subject of previous research, a closer examination of the potential moderating influence of discount size in both contexts is warranted.

Design/methodology/approach

Two separate experiments were designed to isolate the effects of the manner in which discounts are numerically expressed and the size of the discount on consumers' perceptions of a retail price promotion in a low‐price and a high‐price product context.

Findings

The effects of discount framing in comparative price promotions are found to be influenced by discount size in the case of the low‐product context but not the high‐price one.

Research limitations/implications

It is recommended that the study be replicated for other types of low‐price and high‐price products to confirm the generalisability of the results for each product context.

Practical implications

Retail managers' choice of discount presentation format for both low‐ and high‐price product contexts, and in the case of the former the additional manipulation of discount size, have an impact on the ability of comparative price promotions to accelerate purchases. Meanwhile policy makers should continue to assign significant time and resources to investigating concerns about misleading price comparison based promotions.

Originality/value

The paper provides original insights into the importance of considering the joint effects of discount presentation format and discount size on consumers' perceptual and behavioural responses to retail price promotions, unlike previous research, which has examined these framing effects separately.

Details

European Journal of Marketing, vol. 46 no. 11/12
Type: Research Article
ISSN: 0309-0566

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Article
Publication date: 4 September 2019

Gordhan K. Saini, Arvind Sahay and Gurumurthy Kalyanaram

This paper aims to examine three important questions: What would be the effects of pricing at the lower end of a wide vs narrow latitude of price acceptance (LPA) on…

Abstract

Purpose

This paper aims to examine three important questions: What would be the effects of pricing at the lower end of a wide vs narrow latitude of price acceptance (LPA) on consumer choice of the bundle? How would the nature of a bundle frame (i.e. discount on bundle vs discount on components) and discount frame (i.e. discount as absolute off vs discount as percentage off) influence the preference given to a price level that is at the wide or narrow end of the LPA? Would the effect be significantly different if the bundle components were complementary vs if they were non-complementary?

Design/methodology/approach

The authors carried out two studies using between-subject experimental design. In Study 1, the authors used 2 (LPA: wide/narrow) × 2 (complementarity: yes/no) × 2 (bundle frame: together/separate) design, and in Study 2, the authors replaced bundle frame with discount frame (i.e. absolute off/percentage off).

Findings

The authors find that the LPA effect is likely to outweigh the complementarity effect; however, a combined effect of complementarity and bundle frame is stronger than the LPA effect. Also, for a wide (narrow) LPA product bundle, absolute off (percentage off) discount frame is more attractive.

Practical implications

Managers should use bundling strategy with complementary products having wider LPA. In case of wide LPA and complementary products, both together and separate frame could be the best bundling strategy while in case of narrow LPA and complementary products, together frame could be the best bundling strategy.

Originality/value

The main contribution relates to the role LPA plays in consumer evaluation of a bundle offer and its interaction with complementarity and discount frame. The authors apply the range hypothesis principles (i.e. price-attractiveness judgments are based on a comparison of market prices to the endpoints of a range of evoked prices) in the bundling context and extend the earlier work in the area of complementarity and discount frame.

Details

Journal of Consumer Marketing, vol. 36 no. 7
Type: Research Article
ISSN: 0736-3761

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Article
Publication date: 19 July 2021

Misun Won and Stephen L. Shapiro

The purpose of this study is to examine consumer behaviors toward a bundle of tickets and lodging using two different message framing: (1) scarcity framing for a high…

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125

Abstract

Purpose

The purpose of this study is to examine consumer behaviors toward a bundle of tickets and lodging using two different message framing: (1) scarcity framing for a high demand event, the All-Star Game, and (2) discount framing for a lower demand event, an MLB mid-week game.

Design/methodology/approach

Data were collected through two online surveys of 836 sport consumers in total on Amazon Mechanical Turk (MTurk) and were analyzed using a mix of analysis of variances (ANOVAs) and analysis of covariance (ANCOVA).

Findings

Consumers are likely to buy products separately in a scarce situation. When discounts are offered as benefits of choosing a bundle, consumers with high willingness to pay (WTP) have higher purchase intentions (PI) and perceived value toward cumulative discounts.

Originality/value

This is the one of few studies that investigate (1) price bundling of products from two disparate industries where consumer demands fluctuate, (2) the effects of scarcity in a bundle, and (3) all possible discount messaging in a bundle.

Details

Sport, Business and Management: An International Journal, vol. 11 no. 5
Type: Research Article
ISSN: 2042-678X

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Article
Publication date: 1 December 2006

Philip Gendall, Janet Hoek, Tracy Pope and Karen Young

The purpose of this paper is to report the results of two experiments designed to examine the effect on consumers of the way in which price discount messages are…

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4504

Abstract

Purpose

The purpose of this paper is to report the results of two experiments designed to examine the effect on consumers of the way in which price discount messages are expressed, or “framed”.

Design/methodology/approach

Both studies involved stated‐preference choice modelling experiments. The aim of the first experiment was to test the hypothesis that a price reduction framed in dollar terms is more effective for high‐priced items, whereas a price reduction framed as a percent discount is more effective for lower‐priced items. The aim of the second experiment was to determine which of four alternative ways of expressing the same 33 per cent price discount – cents off, percent discount, or one of two volume discounts – is most effective.

Findings

For two “low‐priced” items, potato chips and cola drinks, the framing of a price discount had little or no effect. However, for two ”high‐priced” items, stereos and computers, framing a discount in dollar terms was significantly more effective than expressing it as a percent off discount. For three fast moving consumer goods the most effective framing of the same price discount depended on whether the product concerned was amenable to stockpiling. For tinned spaghetti, which is relatively cheap and easy to store, volume discounting was more attractive than a monetary discount, whereas for bottled water and semi‐soft butter, which are more expensive and bulkier, the opposite was true.

Originality/value

For high‐priced products, it is better to express price discounts as dollars or cents off than as a percentage off; the opposite may be true for low‐priced products, but this is much less certain. However, if using a volume promotion, “buy x get one free” is likely to be more effective than “y for the price of x”.

Details

Journal of Product & Brand Management, vol. 15 no. 7
Type: Research Article
ISSN: 1061-0421

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Article
Publication date: 24 August 2010

Khaldoon Nusair, Hae Jin Yoon, Sandra Naipaul and H.G. Parsa

The purpose of this study is to investigate the effects of price discount frames and price discount levels on consumer perceptions about the quality of the service…

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6290

Abstract

Purpose

The purpose of this study is to investigate the effects of price discount frames and price discount levels on consumer perceptions about the quality of the service product, the value of the discount, their purchase intentions and their willingness to spread the word of mouth about the discount savings across different types of services.

Design/methodology/approach

The study uses an experiment design method using three interesting variables: discount format, discount level and service industry type. The experiment included four different types of low‐end price service levels: restaurants, hotels, mailing services, and retail services.

Findings

The findings indicate that price discount frames and discount levels do affect consumers' perceptions on the value of the discount, the quality of the service, their intention to purchase and their willingness to engage in WOM advertising.

Practical implications

The practical implication for service firms that want to use price discount promotions to encourage sales and increase revenue is that they should carefully consider the price range and the value or quality of image they intend to signal when using these different price discount frames and the service they are selling to determine the discount level to use.

Originality/value

This paper is valuable to low‐end service marketers that seek to use price discount promotions to encourage sales and increase revenue.

Details

International Journal of Contemporary Hospitality Management, vol. 22 no. 6
Type: Research Article
ISSN: 0959-6119

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Article
Publication date: 16 March 2015

Arvind Sahay, Sumitava Mukherjee and Prem Prakash Dewani

The purpose of this paper is to study how consumers process price frames of product bundles (product plus surcharge) and discount offers to weigh contentious positions…

Abstract

Purpose

The purpose of this paper is to study how consumers process price frames of product bundles (product plus surcharge) and discount offers to weigh contentious positions between the weighted-additive and the reference-dependent models. Further, some research suggests bundling, while others suggest partitioning to be a more effective pricing strategy. This research evaluated the relative influences of different price frames to examine which model is supported and what are the boundary conditions for price framing.

Design/methodology/approach

Two online studies were conducted on Indian adults who had prior experiences of online purchases. They were asked to judge attractiveness of bundles (product along with shipping surcharge). Discounts were shown on the product, the surcharge or on the overall bundle either as partitioned prices or as a bundle.

Findings

Across two studies on low- and high-priced products, discounts on shipping surcharge increased attractiveness of the bundle compared to a similar discount on the product or on the overall bundle, supporting the reference-dependent model. Further, for a low-priced product, bundling increased attractiveness, while for a high-priced product, partitioning was more attractive.

Research limitations/implications

More research is needed to examine whether these results translate to other kinds of products, surcharges or discount promotions and in different populations.

Originality/value

This research makes important contributions to theoretical and practical aspects of bundling and partitioned pricing research. It also adds much needed data about evaluation of product bundles with shipping surcharges among Indian customers.

Details

Journal of Indian Business Research, vol. 7 no. 1
Type: Research Article
ISSN: 1755-4195

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Article
Publication date: 8 May 2017

Salome Drechsler, Peter S.H. Leeflang, Tammo H.A. Bijmolt and Martin Natter

The purpose of this paper is to compare the impact of different multi-unit promotions (MUPs) and a single-unit promotion (SUP) on store-level sales and consumer-level…

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4845

Abstract

Purpose

The purpose of this paper is to compare the impact of different multi-unit promotions (MUPs) and a single-unit promotion (SUP) on store-level sales and consumer-level purchase probability and quantity decision.

Design/methodology/approach

The paper combines two empirical studies. Study 1 applies a hierarchical multiplicative model to store-level sales data for four product categories provided by a large Dutch retail chain. Study 2 presents a laboratory experiment in which the quantity requirements of the two focal MUP frames are manipulated to assess their impact on consumer purchase decisions.

Findings

The paper provides empirical evidence for the superiority of the “X for $Y” above “X + N free”, which confirms the hypotheses based on prospect theory, mental accounting and theory about gift-giving. Quantity requirements of four to five units show the largest effects. In addition, the superiority of the “X for $Y” frame holds for functional product categories, but not for the hedonic categories.

Practical implications

The paper provides managerial insights into the relative effectiveness of alternative MUPs and an SUP and how this promotional effectiveness depends on the type of product category and quantity requirements.

Originality/value

This paper combines actual sales data and experimental data. This “mixed approach” extends existing knowledge by comprehensively evaluating two MUP frames, namely, “X + N free” and “X for $Y” promotions, and an SUP.

Details

European Journal of Marketing, vol. 51 no. 5/6
Type: Research Article
ISSN: 0309-0566

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Article
Publication date: 22 March 2011

Eyal Gamliel and Ram Herstein

This paper aims to examine the effect of framing price promotion on consumers' purchase intentions. Retailers typically use the term “save” to present their price deal…

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6748

Abstract

Purpose

This paper aims to examine the effect of framing price promotion on consumers' purchase intentions. Retailers typically use the term “save” to present their price deal offers. However, prospect theory predicts that people will be more willing to waive the gain of a certain amount of money, but less willing to lose the same amount of money.

Design/methodology/approach

Using an experimental design, 497 participants were randomly assigned to two groups that differed only in the framing manipulations of two vignettes: positive framing (“save if you purchase”) or negative framing (“lose if you don't purchase”).

Findings

The prediction was not confirmed: participants did not show more willingness to purchase products offered in sales promotions of discount when presented with a negative frame relative to their presentation in the conventional positive frame.

Research limitations/implications

Future research could confirm the predictions of prospect theory, indicating that methodological characteristics prevented this study from confirming the hypothesis. However, if future research fails to confirm the predictions of prospect theory, it is possible that these predictions are limited to situations of forced choice between two alternatives, and do not apply to situations with a default option of not making a choice (e.g. price deals).

Practical implications

If future research confirms the predictions of prospect theory, then retailers would improve their price promotion effectiveness by replacing their use of “save if you purchase” with “lose if you don't purchase”.

Originality/value

This study is the first attempt to examine the predictions of goal framing effect in the context of price deals.

Details

Journal of Consumer Marketing, vol. 28 no. 2
Type: Research Article
ISSN: 0736-3761

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Article
Publication date: 21 November 2016

Jung Eun Lee and Leslie Stoel

Retailers are known to present tensile price claims (TPCs) stating high discounts to entice shoppers. Prior research on TPCs suggests that high TPC discounts increase…

Abstract

Purpose

Retailers are known to present tensile price claims (TPCs) stating high discounts to entice shoppers. Prior research on TPCs suggests that high TPC discounts increase purchase intentions. However, the current study proposes, first, that the TPC discount shifts expected price discount (EPD) and, second, that the gap between the actual price discount and the EPD influence perceptions of the discount deal. Support for these propositions would suggest that high TPC discounts will only be effective when they closely match the actual price discount. Therefore, the purpose of this paper was to evaluate the effectiveness of exaggerated maximum-discount TPCs.

Design/methodology/approach

Two experiments were used. Study 1 investigated the effect of exposure to a TPC on EPD. Study 2 examined discount discrepancy as a mediator of the relationship between a TPC and consumer perceptions (i.e. perceived savings and price fairness) and purchase intentions. PROCESS and ANOVA were used for the analysis.

Findings

This research showed that exposure to a TPC influenced consumers’ EPDs. As TPC discount increased, EPD increased and the discount discrepancy (i.e. actual price discount minus EPD) decreased (and, in some cases, became negative). The discount discrepancy influenced consumer perceptions of savings and fairness, as well as purchase intentions. Consequently, when the actual price discount encountered was not as large as the advertised TPC discount, the results showed a negative, indirect influence of exaggerated maximum-discount TPCs on consumers’ discount perceptions, mediated by the discount discrepancy.

Originality/value

Previous TPC studies found that the size of the TPC discount positively influences consumers’ discount perceptions, implying that larger discounts are more effective. However, this approach does not take into consideration the notion that larger TPC discounts increase consumer expectations about the size of discount and these expectations are used as a frame to evaluate a discount deal. The findings of the current research show a negative, indirect influence of exaggerated TPC discount on consumer perceptions and purchase intentions through discount discrepancy. Therefore, this study provides a new perspective to explain the influence of TPC discount size on consumer perceptions.

Details

Journal of Product & Brand Management, vol. 25 no. 7
Type: Research Article
ISSN: 1061-0421

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Article
Publication date: 28 October 2014

Alexandra Luong and David Slegh

The purpose of this study was to examine the effects of price discounts on products perceived to provide hedonic value vs those perceived to evoke displeasure. Also…

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1459

Abstract

Purpose

The purpose of this study was to examine the effects of price discounts on products perceived to provide hedonic value vs those perceived to evoke displeasure. Also examined were the effects of various discount levels on consumer intentions to purchase.

Design/methodology/approach

The study design was a 2 (emotion-evoked) × 2 (price) × 3 (level of discount) mixed-factorial design. In this study, 182 participants were presented with several products and indicated whether they would shop with a competitor offering various price discounts on pleasure- vs displeasure-evoking products.

Findings

ANOVA results indicated a significant main effect of price discounts on intention to purchase and a significant interaction between price discount and type/price of product. Discounts mattered more between certain levels (10 and 50 per cent) than others (50 versus 70 per cent). Discounts mattered more for hedonic products (pleasure-evoking) than those that evoked displeasure; however, price trumped all factors such that discounts mattered most when price of product is high.

Research limitations/implications

Limitations include age range of participants and that intentions to shop were measured. Future research should examine price effects on other socio-demographic groups and actual behavior.

Practical implications

Retailers would benefit from using price discounts as a competitive strategy, with attention given to the “percentage-off” levels that are perceived to be steeper. Discounts are more effective when the product offers hedonic value or when price is high.

Originality/value

To our knowledge, this is the first study to examine the relationship between “percentage-off” price discounts on hedonic products. This study contributes to the literature on pricing affect.

Details

Nankai Business Review International, vol. 5 no. 4
Type: Research Article
ISSN: 2040-8749

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