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1 – 10 of over 22000
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…

1509

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

Keywords

Article
Publication date: 1 April 2004

Bülent Sezen

Consumers are less likely to purchase perishable goods when their expiry dates are near. For this reason, retailers frequently implement a discount pricing policy when the…

2542

Abstract

Consumers are less likely to purchase perishable goods when their expiry dates are near. For this reason, retailers frequently implement a discount pricing policy when the products have reached closer to their expiry dates. This paper introduces a simple methodology for helping the managers in their discount pricing decisions. Based on the expected value approach, the suggested method utilizes the probability values obtained from the past experiences and calculates an expected profit value for each alternative discount policy. Decision maker then selects the discount policy with the highest expected profit.

Details

International Journal of Retail & Distribution Management, vol. 32 no. 4
Type: Research Article
ISSN: 0959-0552

Keywords

Article
Publication date: 31 October 2008

Reed K. Holden

Discounting has become the crack cocaine of senior management with terrifying effects on both revenue and profits. The purpose of this paper to show managers how and where

1746

Abstract

Purpose

Discounting has become the crack cocaine of senior management with terrifying effects on both revenue and profits. The purpose of this paper to show managers how and where to put a stake in the ground to kick the discounting habit and move to a more effective and disciplined approach to pricing.

Design/methodology/approach

The author leverages his research on trust in buyer seller relationships with extensive experience with real world pricing to provide insights in why and when discounting is not appropriate and how business can benefit in terms of both profits and revenue growth by adopting more appropriate pricing tactics.

Findings

Prior research has shown that more effective pricing can lead to an 11 percent improvement in a firm's profitability. By focusing on eliminating unnecessary discounting, managers can improve profits by more than 20 percent. Specific management tactics are identified which reflect the realities of doing business in today's world of increased competition, product commoditization and sophisticated buyers.

Originality/value

Provides insights in why and when discounting is not appropriate and how business can benefit in terms of both profits and revenue growth by adopting more appropriate pricing tactics.

Details

Journal of Business Strategy, vol. 29 no. 6
Type: Research Article
ISSN: 0275-6668

Keywords

Article
Publication date: 31 March 2022

Gao Yuwei, Yuan Chen, Yangguang Zhu and Shaofu Du

The purpose of this paper is to examine how customers’ self-control affects their purchase decisions and to discuss the pricing decisions of the retailer under different…

Abstract

Purpose

The purpose of this paper is to examine how customers’ self-control affects their purchase decisions and to discuss the pricing decisions of the retailer under different forms of contract.

Design/methodology/approach

The authors use the literature on hyperbolic discounting to model customers’ self-control problems. In this framework, the authors examine how the customers’ self-control affects the optimal pricing decision and the selection of the optimal contract form when there is a supplier and a retailer in the supply chain.

Findings

The study’s results show that when wholesale price contract is compared with buyback contract, buyback contract is better when customers’ self-control is weak; when quantity-discount contract is compared with wholesale price contract and buyback contract, although quantity discount can encourage customers to purchase more units of products, but both wholesale price contract and buyback contract can be better than quantity-discount contract in some cases. Additionally, the authors demonstrate that revenue sharing contract can increase the supply chain’s profit. The authors also find that sometimes customers’ preplan will lead to the result that the supplier produces more unhealthy products.

Originality/value

To the best of the authors’ knowledge, this is the first study to analyze the decision-making of the retailer by developing an analytical framework combining customer’s self-control and supply chain contract. These results have important implications for the supplier and the retailer that sell vice goods.

Details

Journal of Modelling in Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1746-5664

Keywords

Book part
Publication date: 1 July 2004

John L. Peterman

A study of the price discounts granted by Morton Salt Company and other producers of table salt in the U.S. on their sales of table salt to grocery wholesalers and…

Abstract

A study of the price discounts granted by Morton Salt Company and other producers of table salt in the U.S. on their sales of table salt to grocery wholesalers and retailers. The discounts were found to be illegal under the Robinson-Patman Act by the Federal Trade Commission and the Supreme Court. The Commission and the Court believed that the discounts were unjustified price concessions granted to “large” buyers, consistent with the concerns of the Robinson-Patman Act. However, the evidence indicates that the most common discount – the “carload discount” – was received by virtually all buyers, regardless of the buyer’s size; the other discounts – “annual volume” discounts – though received primarily by “large” buyers, were likely cost based. The history of the discounts and likely reasons why they were granted are explored in detail.

Details

Antitrust Law and Economics
Type: Book
ISBN: 978-0-76231-115-6

Article
Publication date: 26 October 2012

Jing Chen

Contracting is an important issue in supply chain management. In this paper, the authors aim to discuss and compare the manufacturer's contracting options when the…

Abstract

Purpose

Contracting is an important issue in supply chain management. In this paper, the authors aim to discuss and compare the manufacturer's contracting options when the retailer faces a traditional newsvendor problem with a fixed retail price: a wholesale price only contract, a wholesale price discount contract, a returns policy contract, and a returns policy with the wholesale price discount contract. The paper also aims to examine how these contracting options affect decisions of the manufacturer and the retailer, as well as the supply chain efficiency.

Design/methodology/approach

Models are developed based on the manufacturer's four contracting options. The manufacturer's optimal wholesale prices have been obtained. The ordering decisions of the retailer are discussed in each of the manufacturer's four contracting options. The paper also uses numerical examples to illustrate the author's managerial insights and results.

Findings

As compared to the wholesale price only contract, it is found that implementing a wholesale price discount policy effectively encourages the retailer to order more product and enhances the retailer's profit at the expense of lowering the manufacturer's profit. It is also found that when the manufacturer offers a returns policy and if this policy cannot enhance the retailer's profit, a returns policy with the wholesale price discount contract can lead to a win‐win situation for both the manufacturer and the retailer.

Originality/value

The research provides managerial insights on how different contracts affect decisions and efficiency of the supply chain.

Article
Publication date: 1 January 2006

M.P. Martínez‐Ruiz, A. Mollá‐Descals, M.A. Gómez‐Borja and J.L. Rojo‐Álvarez

To analyze the impact of temporary retail price discount on a consumer goods product category using semiparametric regression and considering different promotional price

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Abstract

Purpose

To analyze the impact of temporary retail price discount on a consumer goods product category using semiparametric regression and considering different promotional price discount characteristics as well as brand characteristics.

Design/methodology/approach

A semiparametric regression model using Support Vector Machines, which aim to evaluate retailers' decisions about temporary price discounts, has been developed. The model is derived from the analysis of historical sales data, which provide precise evaluation of previous temporary price discounts periods. The model is also consistent with ample empirical evidence showing that historical retail sales data can be used to evaluate the impact of past promotions.

Findings

Provides an estimation of the shape of the deal effect curve, indicating which temporary price discounts are more effective to increase sales and showing the existence of different threshold and saturation levels. Confirms that promotional price discounts accelerate sales especially during week ends. Evidences that promoting high‐priced (high‐quality) brands has a stronger impact on sales of low‐priced (low‐quality) brands than the reverse and that cross‐price effects are stronger on the sales of brands with similar prices. Suggests the convenience of the use of the proposed semiparametric methodology to the study of the promotional effects considered.

Research limitations/implications

It is not possible to generalize the modelled shapes of the deal effect curves. There is no information available on feature advertising nor displays. It is important to determine the generalizability of these results to the study of additional promotional effects. It would also be interesting to assume that the retailer's deal policy is exogenous.

Originality/value

Provides a relevant tool to assess the set of price promotional periods by the grocery retailer. With a more precise and accurate knowledge about the performance of past temporary price cuts, retailers can implement more effective promotional periods.

Details

Journal of Product & Brand Management, vol. 15 no. 1
Type: Research Article
ISSN: 1061-0421

Keywords

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

Keywords

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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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.

Details

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

Keywords

Article
Publication date: 1 June 2001

Jeanne Lauren Munger and Dhruv Grewal

This research examines the effects of bundling format (partially‐bundled attributes vs. unbundled attributes) and framing of promotional discounts (rebate, discount and…

7999

Abstract

This research examines the effects of bundling format (partially‐bundled attributes vs. unbundled attributes) and framing of promotional discounts (rebate, discount and free‐options) on perceived quality, price acceptability, perceived value and subsequent purchase intentions. The results indicate that price reductions that are framed as providing “free” product options are perceived more favorably than conventional discounts which, in turn, are more favorable than rebates, holding the total amount of a price reduction constant. The results also suggest that unbundling of deals (or segregation of gains) enhances these perceptions.

Details

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

Keywords

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