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Article
Publication date: 1 June 2004

Rajneesh Suri, Rajesh V. Manchanda and Sungho Lee

Building on research that has studied cultural differences between South Korea and the USA, the authors' conceptualization suggests that products associated with fixed and…

Abstract

Building on research that has studied cultural differences between South Korea and the USA, the authors' conceptualization suggests that products associated with fixed and discounted price formats would be evaluated differently in these two countries. The differences in product evaluations were expected to lead to differences in perceptions of quality, monetary sacrifice and value of offers between the two pricing formats. These predictions were tested using laboratory experiments conducted in South Korea and the USA. Results showed that Korean subjects’ evaluated a product that was discounted in price to be superior in quality and value and lower in monetary sacrifice than when it was the full price. The US subjects however, reacted in an opposite manner and evaluated products with discounted prices as inferior in quality and value in comparison to a fixed price. These findings were robust across two discount conditions (15 percent and 20 percent off).

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International Journal of Retail & Distribution Management, vol. 32 no. 6
Type: Research Article
ISSN: 0959-0552

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Article
Publication date: 1 June 2002

Rajneesh Suri, Rajesh V. Manchanda and Chiranjeev S. Kohli

Price is an important variable because it has a direct impact on a company’s profitability. However, there is limited evidence to support the effectiveness of competing…

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5789

Abstract

Price is an important variable because it has a direct impact on a company’s profitability. However, there is limited evidence to support the effectiveness of competing strategies of fixed pricing and discounted pricing. As a result, both strategies are practised extensively in the industry. This paper draws on theories on affect, information processing, and pricing to provide a conceptual framework. The aim is to examine the effect of fixed pricing and discounted pricing on consumers’ affect and evaluation of products. Results from an experiment indicate that a fixed price format elicits more positively valenced thoughts and stronger positive affect than a discounted price format. This affective response, in turn, results in a less thorough processing of price information and, consequently, higher perceptions of quality and value for the fixed price format. Managerial implications of these findings are discussed.

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Journal of Product & Brand Management, vol. 11 no. 3
Type: Research Article
ISSN: 1061-0421

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Article
Publication date: 21 September 2020

Sinan Çavuşoğlu, Bülent Demirağ and Yakup Durmaz

This paper aims to determine the effects of hedonic shopping value on discounted product purchasing intention.

Abstract

Purpose

This paper aims to determine the effects of hedonic shopping value on discounted product purchasing intention.

Design Methodology Approach

The population of the research consists of consumers who have wanted to benefit from “Magnificent Friday” campaigns or similar campaigns of big shopping malls in Gaziantep between the November 15, 2019 and the December 31, 2019. Out of non-probability sampling methods, convenience sampling method was used in this research. Sample number was determined as 425. To test the hypotheses, Smart partial least squares 3 statistics program was used, and the evaluation of the hypotheses was conducted by using the bootstrapping technique.

Findings

Analyses show that innovation (β = 0.150, p < 0.001), entertainment (β = 0.192, p < 0.001), praise from others (β = 0.234, p < 0.001), escaping reality (β = 0.274, p < 0.001) and social interaction (β = 0.183, p < 0.001) dimensions of hedonic shopping value positively affect discounted product purchasing intention. Accordingly, H1, H2, H3, H4 and H5 were accepted.

Research Limitations Implications

Because the research has time, cost, accessibility and control limitations, the whole population was not reached. The research was only carried out on the data collected from 425 consumers in Gaziantep who benefited from or want to benefit from Magnificent Friday campaign or similar campaigns.

Practical Implications

During discount season when shopping activities are more intense, consumers tend to focus more on the entertainment value and suitability. Because consumers see these seasons as seasons to buy gifts, their interests in and purchasing intention toward products and shops increase. During discount seasons such as Magnificent Friday or New Year’s, businesses may take advantage of consumers who have a tendency for hedonic shopping.

Originality Value

This research studied the effect of hedonic shopping value on purchasing intention and contributed to the literature in this aspect. There have been no studies in national literature hat studied hedonic shopping with such an extent, and there have also been no studies focusing on Magnificent Friday campaigns. For this reason, this research is original in these aspects and thought to contribute to the literature.

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Review of International Business and Strategy, vol. 31 no. 3
Type: Research Article
ISSN: 2059-6014

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Article
Publication date: 1 June 2001

Vibhas Madan and Rajneesh Suri

In this article we analyze price discounts and fixed price offers in terms of their comparative impact on consumer valuation of products. Using a model of consumer…

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2487

Abstract

In this article we analyze price discounts and fixed price offers in terms of their comparative impact on consumer valuation of products. Using a model of consumer valuation, we explore the interaction between the negative quality effect and the positive monetary sacrifice effect associated with price discounts. This model suggests that intermediate levels of price discounts will be more desirable than a fixed price offer. However, a fixed price offer may be more desirable than both high and low levels of price discounts. The results from an experiment conducted to test this model showed support for the predictions from the model.

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Journal of Product & Brand Management, vol. 10 no. 3
Type: Research Article
ISSN: 1061-0421

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Article
Publication date: 30 August 2019

Subhash Jha, Sujay Dutta and Ahmet Koksal

This study aims to examine whether adding a quantity scarcity message to a monetary discount helps to improve consumers’ offer-related perceptions and intentions, and how…

Abstract

Purpose

This study aims to examine whether adding a quantity scarcity message to a monetary discount helps to improve consumers’ offer-related perceptions and intentions, and how the effectiveness of that message compares with adding time restriction to the offer.

Design/methodology/approach

Two experiments, where participants evaluated retail ads and responded to relevant measures, were conducted in two country markets.

Findings

Adding either a quantity scarcity message or time restriction to a monetary discount increases the potency of a retail offer. Further, when an offer ad emphasizes product and price-related cues in a balanced manner, time restriction results in more favorable consumer perceptions than scarcity. However, this difference in the messages’ efficacy disappears when the offer strongly emphasizes price-related cues.

Research limitations/implications

The US market sample is more homogeneous than the Indian one. Discounts were presented in terms of advertised reference prices; further research with other discount formats is desirable.

Practical implications

Understanding the relative efficacy of quantity scarcity message and time restriction in discounted retail offers can give managers flexibility in the use of these tools.

Originality/value

This paper addresses scholars’ call for theory-grounded research that provides guidance to retailers on the use of sales promotional tools.

Details

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

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Article
Publication date: 8 January 2018

Sumitava Mukherjee and Arvind Sahay

This research aimed to find whether information about a product can give rise to negative perceptions even in inert situations (nocebo effects), and to understand how price

Abstract

Purpose

This research aimed to find whether information about a product can give rise to negative perceptions even in inert situations (nocebo effects), and to understand how price levels impact such judgments.

Design/methodology/approach

In all experiments, participants were exposed to negative product information in the form of potential side-effects. In an initial study, a higher non-discounted versus a discounted price frame was presented for a health drink after customers were exposed to negative aspects. Then, in experiment 1, price (high vs low) and exposure to information (no information vs negative information) was manipulated for skin creams where participants physically evaluated the cream. In experiment 2, price was manipulated at three levels (low, high, discounted) orthogonally with product information (no negative information vs with negative information) to get a more nuanced understanding.

Findings

In the initial study, after exposure to negative information, the non-discounted group had more positive ratings for the drink. Study 1 showed that reading about negative information resulted in a nocebo effect on perception of dryness (side-effect). Moreover, when no information was presented, perception of dryness by low and high price groups were similar but in the face of negative information, perception of dryness by low-price group was more pronounced compared to a high-price group. Study 2 conceptually replicated the effect and also confirmed that not only discounts (commonly linked with product quality), but absolute price levels also show a similar effect.

Practical implications

Nocebo effects have been rarely documented in consumer research. This research showed how simply reading generically about potential side effects gives rise to nocebo effects. In addition, even though marketers might find it tempting to lower prices when there is negative information about certain product categories, such an action could backfire.

Originality/value

To the best of our knowledge, the link between observable nocebo effects and its link with pricing actions is a novel research thread. We were able to show a nocebo effect on product perception after reading about negative information and also find that a higher price can mitigate the nocebo effect to some extent.

Details

Journal of Consumer Marketing, vol. 35 no. 1
Type: Research Article
ISSN: 0736-3761

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Article
Publication date: 1 June 2000

Rajneesh Suri, Rajesh V. Manchanda and Chiranjeev S. Kohli

While fixed price offers are quite common in the marketplace, there is limited empirical evidence that documents the effectiveness of these offers in comparison to price

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5399

Abstract

While fixed price offers are quite common in the marketplace, there is limited empirical evidence that documents the effectiveness of these offers in comparison to price discounting tactics. Drawing on information processing theory we provide a conceptual framework that explains the differential impact of fixed price and price discounting tactics. The empirical study shows that consumers’ perceptions of quality and value for the product were higher when price information was presented in a fixed format (versus a discount). Furthermore, perceptions of sacrifice were higher in the discount format than the fixed price format. Overall, this study finds empirical support for the notion that fixed price formats may be more effective than price discounts.

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Journal of Product & Brand Management, vol. 9 no. 3
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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1460

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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Article
Publication date: 1 September 2001

Keith S. Coulter

Most airlines utilize a revenue maximizing technique called yield management, which allows the airlines to allocate their fixed capacity of “perishable” seat inventory to…

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3651

Abstract

Most airlines utilize a revenue maximizing technique called yield management, which allows the airlines to allocate their fixed capacity of “perishable” seat inventory to various fare categories in the most profitable manner possible. Demand for these fare categories is usually defined in terms of the “business” vs “leisure” customer segments, while capacity is apportioned between discounted vs non‐discounted seats. The discriminatory pricing goal is to sell only non‐discounted seats to the business travel segment. Suggests that yield management techniques may also be appropriate in certain retail settings involving physical products. In the case of physical products, capacity (i.e. product inventory) is not necessarily “perishable” in the same sense as unsold seats on an airline flight; however, its value may decline with the culmination of a well‐defined shopping period or with a particular special event. Examines how the appropriate use of early discount pricing in markets defined by decreasing customer price sensitivity can maximize the revenue gained from sales of a “seasonal” product.

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Journal of Product & Brand Management, vol. 10 no. 5
Type: Research Article
ISSN: 1061-0421

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Article
Publication date: 6 November 2018

Michelle Childs, Byoungho Jin and William L. Tullar

Many apparel brands use growth strategies that involve extending a brand’s line horizontally (same price/quality) and/or vertically (different price/quality). While such…

Abstract

Purpose

Many apparel brands use growth strategies that involve extending a brand’s line horizontally (same price/quality) and/or vertically (different price/quality). While such opportunities for growth and profitability are enticing, pursuing them could dilute a highly profitable parent brand. Categorization theory’s bookkeeping model and the cue scope framework provide the theoretical framework for this study. The purpose of this study is to test whether specific attributes of a line extension (i.e. direction of extension, brand concept, price discount and perceived fit) make a parent brand more susceptible to dilution.

Design/methodology/approach

This experimental study manipulates brand concept (premium or value brand) and price level (horizontal or vertical: −20per cent, −80per cent) and measures perceived fit to test effects on parent brand dilution. ANOVA and t-tests are used for the analysis.

Findings

Vertical extensions dilute the parent brand, but horizontal extensions do not. Dilution is strongest for premium (vs value) brands and when line extensions are discounted (i.e. −20per cent or −80per cent lower than the parent brand), regardless of the perceived fit between brand concept and brand extension price. Overall, brand concept is the strongest predictor of parent brand dilution in the context of vertical-downward extensions.

Originality/value

This study establishes which factors emerge as important contributors to parent brand dilution. Although previous studies on brand dilution are abundant, few studies have compared the effects of horizontal and vertical extensions on brand dilution. This study offers strong theoretical as well as practical implications.

Details

Journal of Product & Brand Management, vol. 27 no. 6
Type: Research Article
ISSN: 1061-0421

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