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A multivariate analysis of the perception of value from retail price advertisements
... Investigando la influencia del tamaño del descuento sobre distintas variables de respuesta del cliente, Bitta & Monroe (1981) dicen que la magnitud de los descuentos en los precios mostró diferencias significativas en las percepciones. Aunque todas las medidas dependientes estudiadas hayan mostrado patrones de respuesta semejantes, la percepción de la economía se mostró significativa. ...
... En tanto que las diferencias en las respuestas entre los niveles de 30%,40% y 50% fueron poco significativas. Los investigadores atribuyen el resultado a que el consumidor desconfía de las grandes ofertas de descuento (Bitta & Monroe, 1981). ...
... Tanto estudios más antiguos como recientes demuestran que los consumidores están dispuestos a acreditar que el precio de venta de un bien o servicio es substancialmente más elevado que su precio justo (Bitta & Monroe, 1981;Bolton, Warlop & Alba, 2003;Xia, Monroe & Cox, 2004;Dobrescu, 2015). Bolton, Warlop & Alba (2003) observaron que los consumidores son sensibles a varias referencias (precios anteriores, precios de la competencia y costo de los productos vendidos) pero subestiman los efectos de la inflación. ...
... Studies by Della Bitta and Monroe (1980) and Gupta and Cooper (1992) ...
... Specifically, both depth of price discounts and promotion frequency have been found to have a significant, adverse impact on price expectations (Della Bitta and Monroe, 1980; Mobley et al., 1988; Kalwani et al., 1990; Kalwani and Yim, 1992; Frankenberger and Liu, 1994; Kaufmann et al., 1994; Grewal et al., 1996; Alba et al., 1999). So, customers' price expectations are not a function of past prices alone; they are also influenced by the frequency with which a brand is promoted, customer characteristics and the type of store concerned. ...
... If the price reduction is too high, consumers may perceive that the offer is not bona fide (Della Bitta et al., 1981; Mazumdar and Jun, 1992). A study by Della Bitta and Monroe (1980) showed that the price threshold of significant differences in perceived savings occurs at about a 15 percent reduction, in order to attract consumers to a sale in the USA. Gupta and Cooper (1992) found a promotion saturation point, above which the effect of discounts on changes in consumers' purchase intention is minimal. ...
A study is reported, which investigated Singapore consumers’ price thresholds and saturation points for price discounts. The study shows that consumers discount the offered price discount, i.e. they lower the dollar gain value. This discounting of discounts increases significantly with the increase in advertised discounts. Very similar patterns of responses are obtained for products and services. The study also indicates that the saturation point for price discounts of 20 to 30 percent is found to be the same in Singapore and the USA. However, a price threshold of less than 10 percent is found for Singapore consumers, compared to 15 percent in the USA. Frequent price promotions in Singapore may have lowered the products’ expected price and appear to lead consumers to defer purchases when regular prices are offered.
... The degree of the discount influences consumer perceptions, and there exists a discount threshold. Consumers do not notice a price change when the discount is less than 15%, and there is little variation in how consumers perceive their savings when the discount is between 30% and 50% [46]. Deep price reductions provide consumers with a perk that will make them more interested in the promoted item [47]. ...
... In contrast to items with lower average costs and greater storage resistance, heavier products and more competitive products exhibit less volatility in sales during price promotions [21]. Promotions are more successful when frequently bought items or those with more brand recognition are selected [46]. This is also verified in this study. ...
Price promotions are commonly employed to enhance supermarket performance and the sustainable development of the retail industry, yet their effectiveness may vary among similar supermarket chains. In contrast to Western countries, Chinese supermarkets are typically community-centered, allowing consumers to make frequent visits due to lower transaction costs. This multiple-visit pattern discourages substantial one-time purchases based on promotions. This study aims to investigate how pricing promotions can attract consumers more effectively and which product categories are most suitable for this purpose. Utilizing scanner data from Chinese chain supermarkets, we empirically assess the impact of promotion depth, breadth, and duration on consumer purchasing behavior using fixed effects models, IV, and GMM methods. Furthermore, we identify product category characteristics that are more appealing to consumers based on the relationships between different product category promotions and consumer behavior. Results demonstrate that each of the three price-promotion features has a positive effect on Chinese supermarket performance, with varying degrees of significance. Different promotion methods not only benefit promoted products but also stimulate sales of non-promotional items. At the product level, the impact of supermarket promotions on performance differs across categories. The most attractive category in terms of consumer purchases influenced by discounts is special paper, while small kitchen appliances have the least impact. Promoting categories with lower average prices, higher average sales volumes, fewer products, and better storage durability is conducive to attracting consumer shopping. These empirical findings have implications for academic research on price promotion theory and supermarket managers’ pricing strategy decisions, as well as the sustainable development of the offline retail industry.
... A widely-held belief among practitioners is that small price discounts do not persuade consumers to buy, i.e., that consumers have a "promotion threshold". For example, Della Bitta and Monroe (1981) document that many retailers believe that there is a minimum discount threshold of 15% before one can attract consumers to a sale. In the left-hand-side panel of Figure 1, we plot the demand for a yogurt product using consumer-level purchase data. ...
... We provide strong evidence of discontinuities in purchase quantity around these thresholds. With this identification strategy, we also propose direct tests for costly consid-5 Della Bitta and Monroe (1981) and Gupta and Cooper (1992) relate this phenomenon to reference point theories in psychology. eration using standard marketing data, as well as a structural model that can be used to quantify these costs. ...
... On 2020, 11 th march the the WHO reveals that COVID-19 was a intercontinental pandemic came up with newly different worldwide spread of newly formed disease . At this point were more then 1 lakhs confirmed cases of the corona virus in overall countries [5]. China was the first country with a corona virus is South Korea in January, Iran and Italy following in February .Therefore this virus spreads all over the continent as well as many countries and as the days pass the united states returned into highest number of covid-19 confirmed cases with more mortality [6]. ...
In the present situation COVID-19 global pandemic, an overall world got embrace with covid-19 virus. Moreover every country went under quarantine and firm mitigation measures by temporary shutdown in people crowded place like schools, restaurants, theatres and domestic and international transport facilities[1]. So government made these measures to be effective to support and compliance of public[2]. Advanced medical technology put up with new vaccines to control infection of virus. Vaccination is one of the most effective step to control the virus from affecting the entire population. This paper aims to explore the optimal effectiveness of Vaccination for novel COVID-19 non clinical approach. We need smart solutions and decisions to mitigate the coronavirus`s impact. We formulate the mathematical model to Analyse the vaccination effectiveness[3]. The objective function is designed to reduce both awareness of vaccination and effectiveness of vaccination using WHO data/ Indian dashboard data[4]. The degree of protection As a part we can analyse the risk factors of immunization using multivariate models using statistical analysis.
... Dans d'autres études, 15% se révèlent nécessaires pour attirer le consommateur (A.J. Della Bitta et K.B. Monroe, 1980). De plus, le rappel des pourcentages sur la planche, bien qu'il respecte les pratiques constatées sur la Toile, peut avoir un impact sur la perception du gain. ...
Is price discount a real sales leverage? How to improve the estimate of the perceived gain and the commercial efficiency?
Price discount is a widely used promotional technique. Its commercial efficiency is limited due to a lack of knowledge of earnings by consumers. This research examines the effect of framing a price discount on perceived gain estimation to deeply understand how to reduce cognitive bias and generate real sales leverage. An experiment using a factorial design was carried on with 180 participants in the context of a premium brand and prices below ș100. We demonstrated that it is in managers’ interests to provide percentage offer rather than a reference price when they encourage consumers to think of the percentage gain, according to a principle of similarity. In addition, the favorable effect of the similarity of the formats is reinforced by the promotional signal « free delivery » and is amplified for consumers whose need for cognition is moderate.
... original price: $550 HKD with 20 per cent off). In total, 20 per cent is chosen because Della Bitta and Monroe (1980) report that price reductions of 15 per cent or above are needed to attract customers to purchase an item. ...
Purpose
This paper aims to examine how incentive framing format and language congruency interactively influence readers’ post-reading responses to hotel-related email advertisements.
Design/methodology/approach
A 2 (incentive framing format: amount-off versus percentage-off) × 2 (language congruency: use of readers’ native language versus use of readers’ foreign language) between-subject experiment was conducted with 233 bilingual speakers from China.
Findings
The findings unveil that readers are more likely to be enticed to search for more information about the promoted hotel restaurant, click the call-to-action button and share the promotional message with friends and families if an email advertisement presents the incentive of a price promotion in the form of amount-off (versus percentage-off). The indirect impact of language congruency is also verified. Specifically, the impact of incentive framing format on readers’ post-reading response is more salient when information is communicated using readers’ native (versus non-native) language.
Practical implications
The findings provide actionable clues for hoteliers to optimize their email marketing campaigns. If hotels want to publicize a price promotion for their high-priced service (e.g. hotel restaurant dining) via email advertisements, marketers should present the incentive in the form of amount-off. Hotels should also personalize the language used in the email advertisements according to readers’ native language.
Originality/value
This study enriches the literature on email marketing by explicating how hoteliers can improve the efficacy of email marketing via personalizing the incentive framing format and language used in the email advertisement according to the readers’ preferences.
... Owing to a few reasons, 15% off coupon is also not perceived positive by the respondents. One plausible explanation for this finding is that previous research (Della Bitta & Monroe, 1980) has shown that at least 15% price discount level should be offered to encourage consumers to purchase services or products. The respondents were not convinced with the 15% off coupon; thus, the utility is negative. ...
This study examines how restaurant customers make trade-offs among several restaurant rate fences using a sample of mainland Chinese travelers to Hong Kong. A total of six restaurant rate fences (i.e., lunch/dinner pricing, weekday/weekend pricing, table location pricing, restricted coupon pricing, meal period, and reservation and seating policy) and menu price were selected, and a conjoint analysis was performed. Findings reveal that price, restricted coupon pricing, and meal period are the most important attributes when restaurant customers select a restaurant. This study is the first attempt to examine the relative importance of different types of restaurant rate fences. The findings will help restaurant operators to better understand the decision-making process of Chinese travelers and design appropriate rate fences accordingly.
... Participants in the low-budget condition (€23) exceeded their budget by €7, while participants in the high-budget condition (€37) had €7 left of their budget. The €7 difference in price points was based on Della Bitta and Monroe (1981) recommendation that price differences in a retail setting should be at least 15% for consumers to change their attitudes and behaviors. The €7 difference (23%) corresponds to these findings and rounded numbers helped to facilitate participants' mental comparisons between price points. ...
... The €7 difference in price points was based on previous literature. Della Bitta and Monroe (1981) state that price differences in retail should be at least 15 percent for consumers to change their attitudes and behaviors. The €7 difference (23%) corresponds to these findings and was a round number to facilitate participants' mental comparisons between price points. ...
The study here is one of the first to consider how mobile payment and basket price judgments affect shoppers' overall price image of retail stores (OSPI). The OSPI concept reflects customers' beliefs about the overall price level of a store relative to competition. A low OSPI is a strong driver of store loyalty. Three empirical studies building on prospect theory show that positive comparisons of basket prices with mental budgets trigger favorable OSPI judgments. The study also investigates the effects of cash, card, and mobile payments on OSPI formation following Soman's (2003) payment transparency concept. Results show that mobile payment, as an innovative payment option, leads to more positive OSPI judgments. Finally, mobile payment significantly increases customers' willingness to pay when compared to cash payments. In sum, these results have major implications for retailers that want to lower their OSPI in customers' minds.
... Rao & Monroe's (1989) meta-analysis results support this prediction as the price -perceived quality main effect from multiple-cue studies (e.g., brand name available) was larger than the price -perceived quality main effect from single-cue studies. Other results support the conflicting prediction, that price becomes a weaker signal of quality when other, perhaps more diagnostic, cues are present (Dodds et al., 1991;Dickson & Sawyer, 1984;Della Bitta & Monroe, 1980;Olson, 1977). ...
Although adorning the body by means of tattoos and body piercings is an ancient practice, it has become increasing popular as of late in Western cultures including the United States. The increasing popularity of body art has been most apparent among young adults and has given rise to a growth industry catering to these consumers. Little attention has been paid to the increasing popularity of body art from the marketing perspective. Since individuals engaged in a variety of marketing-related activities must interact with consumers on a face-to-face basis, it is important to understand the manner in which individuals with body art are perceived. The general purpose of this study was to investigate attitudes toward persons with body art. Data were collected by means of a survey of college students that included 496 respondents at 14 geographically diverse colleges and universities in the U.S. The results indicated that over 40 % of those responding reported that they possessed some form of body art. An analysis of three derived factors revealed that there are both positive as well as negative attitudes associated with persons who possess body art. The implications for the field of marketing management are discussed.
... In conclusion, our preliminary analyses above do not provide conclusive evidence for the presence of threshold and saturation levels for the four perishable product categories. According to Della Bitta and Monroe (1980), in practice managers believe that at least a 15% discount is needed to change customers' purchase intentions. In the four scientific studies that empirically investigated threshold and saturation levels (see Table 2), threshold levels typically varied between 0% (no threshold) and 10% with a maximum of 14% for store brand aerobic shoes. ...
... While there are multiple variables which influence the zone's width, as a point of departure research in the marketing field suggests that to trigger a purchase reaction a discount should be between 15 and 30% below the regular price (Della Bitta & Monroe, 1980;Gupta & Cooper, 1992;Marshall & Long, 2002). If the discount is greater than 30%, then it is likely to be below the acceptable bargain price (Figure 1) and prospective users are likely to be concerned that either the offer is not bona fide or its quality has been compromised (Della Bitta, Monroe, & McGinnis, 1981;Mazumdar, Raj, & Sinha, 2005). ...
The central principle for raising prices without alienating users is to ensure they remain within the latitude of the acceptance zone around their median reference price. The paper discusses four heuristics that leisure managers should embrace which are consistent with the principle and will avoid periodic larger increases that are outside the acceptance zone which leads to resistance. The most risk-free approach is to consistently impose small annual incremental increases in price. A second heuristic is anchoring from which five strategies emanate: (i) do not underprice new services; purposefully use (ii) decoy and (iii) numeric anchors to change users’ perceptions of context; (iv) ensure price consistency among related services; and (v) use prices charged by other suppliers to validate a large price increase. The other two heuristics discussed in the paper are price as a signal of quality and customary pricing.
... This is also consistent with Darke, Freedman and Chaiken's (1995) conceptualization of a small discount and other pricing research which indicates that a 10% discount for a brand named product is above the Just Noticeable Difference (Gupta & Cooper, 1992). Other research suggests that discounts higher than 30% do not evoke a large marginal change in preference, as consumers tend to "discount the discounts" (Della Bitta & Monroe, 1980;Gupta & Cooper, 1992;Nunes & Park, 2004). With this in mind the discount levels were set at 10% and 20%, and framed either as percentages or absolute amounts. ...
Consumer response to price is often subjective and prone to systematic perceptual biases, such as the “face value” effect, whereby consumer perceptions of willingness to pay are systematically biased by the nominal value of a new currency. That is, prices presented in higher denomination currencies are perceived to be more expensive and prices presented in lower denomination currencies are perceived to be less expensive. The results from two separate experiments suggest that for high-price products, when a substantial enough discount is invoked, the face value effect can reverse and becomes a double-edged sword. While existing research implies that the face value effect becomes stronger for high-price products, the findings from this research suggest this is the case only when the product is not being promoted. The findings also reveal that the face value effect is robust for low-price products, even when there is a discount, providing further evidence of the effect in new contexts. Consistent with earlier research, this is because in real terms the discount for a low-price product is not perceived as substantial enough. The experiments also suggest that for high-price products, discounts framed as absolute amounts in higher denomination currencies are perceived to be more substantial than discounts framed as percentage amounts. These findings extend existing theory on the face value effect and have several important managerial implications for pricing management in international markets.
... Participants were randomly assigned to one of three conditions: (1) low discount: 5% less discount (i.e., 10%) than the advertised average discount (15%); (2) average discount: the same discount (i.e., 15%) as the advertised average discount; and (3) high discount: 5% more discount (i.e., 20%) than the advertised average discount. The advertised average discount level, 15%, was chosen based on Della Bitta and Monroe (1980) and Gupta and Cooper (1992), which was enough to attract consumers to a sale. The manipulation of 5% difference across conditions is consistent with previous studies (e.g., Niedrich, Sharma, & Wedell, 2001;Rao, Arjunji, & Murthi, 1995), and is very close to the 6% reported by Kalwani and Yim (1992, p. 96), which is a ''just noticeable difference.'' ...
... Others (e.g. Della Bitta and Monroe 1981;Gupta and Cooper 1992) report that discounts of less than 15% are ineffective. Competition is often posed as a key determinant of the effectiveness of a price reduction (Mela et al. 1997;Bronnenberg and Wathieu 1996;Rajiv et al. 2002;Kauffman and Wood 2007). ...
The authors examine the relative magnitude of price reductions for product systems and their constituent components (e.g., cameras, computers, monitors, lenses) and hypothesize that these price reductions systematically vary across different types of systems. The authors offer rational inattention as an explanation and document patterns of downward rigidity in online prices of computers and cameras that are consistent with this view. Their basic argument is that under certain circumstances, it is rational for consumers to ignore small price changes. This results in some price rigidity because firms would see no demand effect for small reductions. The authors suggest that this inattention systematically varies across different types of multicomponent systems, leading to specific hypotheses about sellers' pricing behavior. They first check the validity of their theoretical arguments using data from two surveys of consumers and managers. They then examine 669,557 daily price listings for 1052 high-end cameras and computers from 102 online vendors and find evidence consistent with their predictions. Using publicly available web traffic data, the authors also find that their predicted pricing behavior is aligned with better traffic response for the firm.
... As the present research is an initial effort in understanding the computational ease effect on points spending and its underlying mechanism, we confined our subsequent sets of stimuli to a narrower and middle range of percentage savings (33% to 66%) and even kept the savings constant (at 66%) in one experiment. This range of values was chosen to avoid possible floor or ceiling effect due to the extreme magnitude of savings (Della Bitta & Monroe, 1980). Future studies, nonetheless, should extend the testing to a broader range of values to explore fully how the magnitude of percentage savings and the ease of computation may have a combined effect on points spending. ...
Many consumers today hold loyalty program points which function as a currency, but are not cash. This paper examines factors that influence consumers' decisions to keep or spend their accumulated points. We found that consumers are more likely to spend points when they can easily anticipate the benefits they can enjoy with the points. Specifically, the decision to spend points is facilitated when it is easier to compute the percentage savings one can get by using the points. This computational ease has effects on point spending beyond that of saving magnitude.
... Della Bitta and Monroe (1981) reported that a price reduction of 15 % for electronic calculators seemed necessary before buyers perceived significant savings (differential price perceptual threshold). Manipulating advertised discounts from 10 to 70 %, Gupta and Cooper (1992) found that for store brand sport shoes, a discount of 20 % would be necessary for participants to favor that brand. ...
This chapter traces the development of the pricing research program of Kent Monroe, beginning with his doctoral dissertation and continuing to the present time. Drawing on psychophysics and adaptation-level theory the early research efforts concentrated on validating two important concepts relative to behavioral pricing research: reference price and acceptable price range. Then the behavioral pricing research program expanded to explore how the context of a purchase situation, including the structure of the prices available for judgment, influences buyers' price perceptions and willingness to buy. In the early years his research included pricing models and research on patronage behavior. Subsequently, concentrating primarily on behavioral pricing research, he began to integrate findings from the research program into examining how various sellers pricing strategies and tactics influence buyers' judgments and purchase decisions. These efforts led to the first edition of his book Pricing – Making Profitable Decisions published in 1979. The book was subsequently revised and expanded in 1990 and again in 2003.
... Research findings suggest that price becomes a stronger signal of quality when other cues are not present (e.g. Della Bitta & Monroe, 1980;Dickson & Sawyer, 1990;Dodds et al., 1991;Olson, 1977). Both Dodds et al. (1991), and later Teas and Agarwal (2000), find support for a positive linkage between price and perceived quality. ...
Prior research on pricing in behavioural economics in closed settings has traditionally delivered positive decelerating demand curves. In consumer behaviour analysis, the effects of price on consumer choice has been analysed with both panel data and in-store experiments. These studies have not only found downward sloping demand curves, but also neutral and upward sloping curves. The purpose of the current research was to try to detect these kinds of neutral or upward sloping demand curves in retailing and analyse the effects of in-store price manipulations on sales to try to scrutinise these anomalies further. The effects of the price interventions were inferred by scanner data from convenience stores, supermarkets and discount stores. The stores belonged to Icelandic and Norwegian retailers. Despite rather intensive price variations, the results confirm either a steady state or even a subtle upward sloping demand curve for all product categories tested. In line with the behavioural perspective model of consumer choice, the findings support a distinction between closed and open settings regarding the effects of price on consumption. The current research shows that the neutral or upward sloping demand curves cannot be attributed to the level of analysis, product or brand selection, type of store, methodological differences or to the data analysis. This behavioural phenomenon in open settings is necessary to study further. This is particularly important for retail executives as it is crucial to know which brand and category sales are inelastic or even upward sloping.
... Anderson (1981) indicates the possibility of an exponential valuation function that increases at an increasing rate, as in part C in Figure A. In Anderson's case the subjective weight associated with a stimulus increases disproportionately with the observed value of the stimulus. As far as price perceptions are concerned, however, Della Bitta and Monroe's (1980) findings suggest that savings perceptions do not significantly differ between 30 percent, 40 percent, and 50 percent discount levels. However, significant differences occur between 10 percent and 30-50 percent levels. ...
Focusing on the perceived value of an observed basket of items as the dependent variable, the article suggests several rival models of integrating serially sampled price information. Within this context, perceptual implications of different discount structures are noted. Also, a computer-controlled laboratory experiment is reported that attempts to provide guidance for subsequent studies that may compare the suggested models. The results suggest that (1) store-profile effects persist after exposure to price information, (2) primacy effects are statistically significant but not strong, and (3) a large number of noticeable discounts lead to a higher perceived value than a small number of extreme discounts.
... Prior research shows that price promotions influence consumers' price expectations and price-quality inferences under certain conditions. Specifically, the recency and frequency (Kalwani & Kin-Yim, 1992), variability (Murthi, Haruvy, & Zhang, 2007), and intensity (depth) (Della Bitta & Monroe, 1980) of prior price promotions heavily influence shoppers' perceptions of the appropriate or reference price of a product. Frequent promotions, for example, dilute the perceived value of a brand, especially in the absence of a warranty. ...
... The variable of brand promotion through a price reduction -measured using the percentage price reduction-during a particular week was established by observing the price levels of the 10 selected brands and assuming that a significant decrease in the regular price of a brand for a limited period (1-2 weeks) represented a price reduction. Previous research has found that a discount of at least 15% is required to obtain a positive effect on consumer choice probability (Della Bitta & Monroe, 1980). Considering the stability in the sale price of the olive-oil brands we feel that this percentage is more than adequate. ...
This study characterises the ‘deal-proneness’ of consumers by analysis of the consumer-level characteristics of price sensitivity and brand loyalty. The study first develops a multinomial logistic (MNL) latent class model suitable for use with universal product code (UPC) point-of-sale (hypermarket) scanner data. The model is then used to assess the deal-proneness of consumers with respect to monetary promotions (price reductions) and non-monetary promotions (store flyers). The results show that almost 47% of consumers can be considered deal-prone, in that both kinds of sales promotions have a significant effect on their choice behaviour. The findings provide important insights for retail management in seeking to optimise the results obtained from promotional budgets.
... We consider this degree of difference to be sufficient for several reasons. First, research on discount thresholds suggests consumers perceive a non-trivial difference in price when prices differ from normal by 10-15 percent or more (Della Bitta and Monroe, 1980;Gupta and Cooper, 1992;Marshall and Leng, 2002). The price differences between tiers used here are considerably larger than 15 percent. ...
Purpose
– Investigates the purchasing of brands across different price tiers. The purpose was to determine if buying across price tiers followed the same pattern widely found in brand purchasing, known as the Duplication of Purchase Law.
Design/methodology/approach
– Uses a consumer survey methodology, using bottled wine as an example category. It provides evidence that while buyers exhibit repeat‐purchase loyalty to price tiers, they also buy from a repertoire of different price tiers.
Findings
– Finds that sharing of purchases with other price tiers does approximate the Duplication of Purchase Law. That is, a price tier shares customers with other price tiers approximately in line with the overall popularity of those other price tiers. This suggests that competition between price tiers is largely predictable, and based on the prevalence of purchases at each tier. However, there is also consistent “partitioning” where adjacent price tiers share customers to a greater extent than would be expected under the Duplication of Purchase Law.
Originality/value
– This research is valuable to both marketers and researchers, as it provides a quantifiable context and structure to those examining competition from a pricing perspective. It provides insights into where new brands should be launched and potential cannibalization effects. Finally, the presence of a price repertoire suggests that researchers should be wary of categorizing buyers to specific segments based on single answers to questions about “last” or “typical” price paid for purchases. Several fruitful areas for further research also emerge from this study, in particular the examination of what price levels or tiers actually constitute break‐points in markets, whereby brands residing in one tier are recognized as markedly different to those in other tiers.
... This scenario offered more money ($10) for a slightly shorter commute (15-minute) than the original, which after almost 20 years we viewed as somewhat dated. Della Bitta and Monroe (1980) found consumers' perceptions of savings from a promotional offer do not vary significantly between 30%, 40% and 50% discount levels, but do vary significantly between the 10% and 30-50% levels. Consequently, our scenarios offered a savings of either $10 on $125 (8%) or $10 on $25 (40%). ...
The pricing literature is replete with research focusing on how consumers respond to sales promotions when both the reference level and the change are expressed in dollar terms (i.e., discounts). The "psychophysics of pricing" suggests changes in monetary magnitude are not based on their absolute level, but rather on their deviation from some reference level, or how the change is "framed." Accordingly, a 15 purchase than a $125 purchase (Tversky and Kahneman 1981). Often times, however, a promotion is presented in non-monetary terms (e.g., a premium). When two resources are delivered simultaneously, but in different currencies (e.g., receive a free razor with the purchase of a can of shaving cream) the marginal value of the non-monetary, incremental benefit may be difficult to evaluate in relation to the focal product or its price. The value of the premium, therefore, may be less likely than a comparable discount to be viewed in a relative sense and suffer from diminishing marginal returns. This research explores how people often fail to exhibit the same diminishing sensitivity to an incremental benefit, or cost, when it is accrued in a currency other than the referent currency. The authors define two different carriers of wealth or welfare (i.e., resources) that are difficult to convert into any meaningful common unit of measurement as "incommensurate." This research introduces a novel mechanism for influencing whether people attend to absolute rather than relative differences, affecting how people value bundled components. This work also offers guidance to managers who might benefit from the strategic use of non-monetary promotions.
Markalama, tedarik zinciri ve tutundurmanın pazarlamadaki önemine dair literatürde yapılan araştırmalardan sonra hem firmalar hem de akademik camia fiyatlandırmanın önemine vurgu yapmaya başlamıştır. Özellikle tüketicilerin ilk ilgilendikleri bilginin fiyat olması bu araştırmaları daha da önemli hale getirmiştir. Son yıllara kadar fiyatlandırma ve özellikle fiyat adalet algısına dair literatürde oldukça az çalışma yapılmıştır. Uçak firmalarında hizmetin talebinde meydana gelen dalgalanmalara göre fiyatlandırmanın bir çeşidi olan dinamik fiyatlandırma politikası uygulanmaktadır. Bu işlemin kimi müşterilerin zihninde soru işaretleri yarattığı görülmektedir. Dinamik fiyatlandırma uygulanırken farklı müşterilere sipariş zamanlarına göre farklı fiyatlar sunulmaktadır. Bu da tüketici zihninde adalete dair belirli endişeler oluşturabilir. Fiyat adalet algısı (FAA), verilen bilgilerin ışığında müşterilerin fiyatlandırmalardan dolayı adalet algısının nasıl şekillendiğini gösteren bir olgudur. FAA`nın müşterinin firmanın sunduğu ürünü değiştirme veya tekrar satın alma niyetine olan etkisi bu çalışmada incelenmiştir. Araştırmada, literatürden ölçekler bulunmuştur ve 408 katılımcıya ulaşılmıştır. Örnekleme yöntemi olarak tesadüfi kolayda örnekleme belirlenmiştir. FAA`nın sosyo-demografik özelliklere göre farklılık gösterip göstermediğinin incelenmesinin yanı sıra, tekrar satın alma niyeti ve değiştirme niyeti ile durumuna bakılmış ve etkileme miktarları belirlenmiştir. Sonuç olarak, fiyat adalet algısının yüksek olduğu durumda, tekrar satın alma niyeti yüksek, değiştirme niyeti ise düşük oranda etkilenmektedir.
Reward-based crowdfunding has evolved as a significant alternative source of financing for new product development over the past years. Unlike traditional investors, reward-based crowdfunding investors financing the production process are essentially consumers pre-ordering the product. Since financing takes place prior to production, this context is prone to information asymmetries. Consumers financing new product development have incomplete information regarding the quality of the product they have pre-ordered and the reward they will receive for their early support. We draw on information economics to examine how signals, such as price commitment, discount, and reward classes, play a role in conveying information about product quality and the financial reward backers receive for pre-ordering the product. Our empirical analysis covers detailed hand-collected information on a random sample of 1835 Kickstarter campaigns. We find that signaling information regarding the future retail price enhances campaign performance. Moreover, when the different signals originate from the same source and overlap in the information they convey, the more informative signals partially offset the effect of the less informative signals.
La presente investigación aborda uno de los temas tendencia del momento: los Dog-lovers y la introspección al estudio de algunos de sus comportamiento como consumidores.
Many marketers use sales promotions but excessive discounting can lower consumers’ internal reference prices. Scant research examines the implications of discounts and premiums varying in frequency and depth across multiple buying periods on period-by-period reference prices. In three studies, we find discounts with deep depth generate lower internal reference prices than those with shallow depth at high frequency. Then, we find frequency moderates depth, identifying approximate threshold levels of reference-price change. Finally, we find that premiums with the same value as discounts preserve internal reference price even if they are implemented with high frequency and deep depth.
Discounted food-buying (DFB) programs aim to enhance food security among low-income households through sales of aggregated food packages at low cost. This study used the theory of planned behavior to investigate content, price, and value in relationship to the decision to purchase DFB packages. Mixed methods included a cross-sectional survey of low-income consumers (n = 76), and an analysis of 3 years of program sales data. Respondents reported protein, vegetables, and fruit of highest importance, and were willing to pay more for protein packages. Sales were associated with price, but not measured value after controlling for seasonality. Unwanted items were the leading barrier to purchase. DFB programs that prioritize food preferences and price may enhance sales to low-income consumers.
This research article attempts to determine brand loyalty by classifying current and potential customers in the commercial paints industry based on eight promotional parameters. It is a prerogative to understand customer response towards brand promotions, which necessitates exploring the concept of brand loyalty determinants. Primary data of these eight parameters are collected (paints industry contractors) as factors contributing to brand loyalty. Parameters are ranked according to their order of importance using analytic hierarchy process (AHP). Factors having their priority vectors greater than 10 per cent are selected for further analysis. This study further uses discriminant analysis to examine if the parameters are capable of classifying the respondents into two distinct groups based on brand loyalty. Five-point Likert scale was used for each variable to collect the response on the perception of its importance in deciding whether to remain loyal to the brand or not. Five out of eight parameters are finally selected for discriminant analysis to determine if it is possible to distinguish the two groups significantly. The five parameters are preview, free sampling, perceived brand value, training and word-of-mouth communication. Analysis of the responses collected reveal that there exists a significant difference between the two groups based on the parameters. The results of this study are expected to help practitioners expand and execute customer-centric promotion strategies to prevent customers from switching to other brands.
The authors report results from a controlled experiment designed to investigate the impact of a brand's price promotion frequency and the depth of promotional price discounts on the price consumers expect to pay for that brand. A key feature of the work is that expected prices elicited directly from respondents in the experiment are used in the analysis, as opposed to the latent or surrogate measures of expected prices used in previous studies. As hypothesized, both the promotion frequency and the depth of price discounts are found to have a significant impact on price expectations. Evidence also supports a region of relative price insensitivity around the expected price, such that only price changes outside that region have a significant impact on consumer brand choice. Further, the authors find that consumer expectations of both price and promotional activities should be considered in explaining consumer brand choice behavior. Specifically, the presence of a promotional deal when one is not expected or the absence of a promotional deal when one is expected may have a significant impact on consumer brand choice. Finally, as in the case of price expectations, consumer response to promotion expectations is found to be asymmetric in that losses loom larger than gains.
Green consumerism encourages consumers to demonstrate environmentally friendly behavior for protecting the environment and health of human beings. For example, if consumers wish to purchase take-out beverages, they are encouraged to bring their own cups or water bottles rather than use disposable cups. This study, through 2 experiments, discussed the use of price discounts for encouraging green consumerism behavioral intentions. Experiment 1 examined the relationships among a green promotion setting, perceived nonmonetary and monetary sacrifice, and purchase intention toward the list price. The results of hierarchical regression models based on 120 valid questionnaires showed that perceived nonmonetary sacrifice fully mediated the relationship between a green promotion setting and the purchase intention toward the list price. Experiment 2 investigated the relationship between price discount levels and frames and a green or general promotion setting used by take-out beverage shops. The results of the analysis of variance based on 900 valid questionnaires demonstrated that (i) the variation in consumer purchase intention in response to green consumerism promotion was lower than that in response to general promotion; (ii) the price discount threshold used in green consumerism promotion was 20%, which was higher than that in a general promotion setting; and (iii) consumers preferred a percentage discount offered during green consumerism promotion; however, they preferred a discount with a specific dollar amount in a general promotion setting. These results provide suggestions for improving green marketing and green consumerism. Copyright
Aiming at decision-making problems in order process, an advance order discount strategy based on price as decision variable was proposed. The mathematical model of joint pricing and inventory decision by taking price, discount rate and order quality as decision variables was constructed. Through analysis on the model, the attribute and existence uniqueness of optimal model solution and its expression were obtained. Numerical example results revealed sensitivity of profit function to various parameters, especially to the price was much higher. It implied the rationality of taking price as decision variable. Moreover, the investigation result of a saturation point for price discounts which was found by other researchers was verified by experiments. A feasible method for estimating decision variables optimal values was found, and its accuracy was further verified.
This research considers brand name and price cue interaction effects on perceived quality judgments within a brand extension context. A lab experiment was conducted within the context of a new grocery product and brand name quality was manipulated at two levels, high and moderate. Price information was manipulated at two levels, high and low. Results suggest that high price information may enhance perceived quality evaluations of new offerings extended from moderate quality parent brands, and that there may be a limit to the enhancing effect of high price on perceived quality evaluations of a new offering extended from a high quality parent brand. Further, results showed that low price information was interpreted as an indicator of strong value as opposed to low quality for extensions introduced by both high and moderate quality brands. The findings have important implications for manufacturers of moderate quality brands in particular, and brands that are pursuing growth opportunities by a brand leveraging strategy. The findings, along with theoretical and managerial implications, are discussed.
This paper examines the effects of price claims on consumers' reference price (RP) adaptation for specific saving formats and after repeated exposure to a price promotion. The reduced (initial reference) price has stronger (weaker) effects with more exposures in the case of the percentage-off format. The initial reference (the reduced) price has stronger (weaker) effects with more exposures in the case of the amount-off format. The findings provide insights to retailers as to how they can avoid strong RP reductions subsequent to a price promotion. The theoretical contribution consists of presenting a new model that goes beyond previous studies that have focused on the direct effects.
目的：探讨折扣深度与促销方式对促销活动的短期效果与长期效果的影响。方法：390名大学生参与了本研究，指导他们想象在某个特定的消费场景中购买一款洗发水。采用量表对促销活动的短期效果与长期效果进行评估。结果：消费者对产品的感知价值会受到折扣深度的影响；在价格折扣中，消费者的购买意向会受到折扣深度的影响，而在买赠折扣中，折扣深度对购买意向的影响不显著；消费者对产品的感知质量和预期未来估价会受到折扣深度与促销方式的双重作用。结论：促销活动的短期效果主要受折扣深度的影响，促销活动的长期效果则会同时受到折扣深度与折扣方式的影响。研究结果启示商家在进行促销活动时，应该合理考虑折扣深度与促销方式以获得最大的短期与长期促销效果。 Objective: To study the influences of discount depth and promotion type on short-term and long- term effects of sales promotions. Methods: 390 college students participated in this study, they were asked to imagine purchasing a shampoo under a certain sales promotion situation. We esti-mated short-term and long-term effects of sales promotions with scales. Results: The consumers’ perceived values were affected by discount depth. The consumers’ purchase intention was affected by discount depth in price discounting, while the influence of discount depth on the consumers’ purchase intention was not significant in bonus pack promotion. The consumers’ perceived quality and expected future price were affected by discount depth and promotion type. Conclusion: The short-term effects of sales promotions were mainly affected by discount depth, and the long-term effects of sales promotions were affected by both discount depth and promotion type. Research results indicated that the marketers should consider reasonably about discount depth and promotion type to maximize the short-term and long-term effects of sales promotions.
This paper’s goal was to investigate the effect different forms of price presentation have on Brazilian customers’ evaluations regarding the following variables: purchase intentions, word-of-mouth communications, trust in advertising, perceived value, and perception of expensive prices. We use the literature suggested by Smith and Nagle (2005a, b) and Krishna, Briesch, Lehmann, and Yuan (2002), in which they suggested that perceived value of price explains customer judgments. Findings from Study 1 indicated that when price is presented in the form of R 1,599.00 here (versus the control group with the traditional price), the retailer had better results in terms of customer purchase intentions. This finding was achieved for products with both high involvement and high monetary value: i.e., values over $ 1,500.00. Outcomes from Study 2, which was based on a low involvement product, a hair dryer, on a specific date in the retail calendar, Mother’s Day, showed that the price presented as only this weekend significantly increased customer purchase intentions. Study 3 supported that a 5% discount (vs. regular price vs. 10% vs. 15%) resulted in greater positive impact on buying intention. The paper contributes to price theory by supporting the assumption that price presentation positively influences buying intention, confirming the arguments of Nagle, Hogan and Zale (2011), Urbany, Bearden and Weilbaker (1988) and rejecting the studies by Blech (1981), Golden (1979), and Goodwin andEtgar (1980).
This study uses a between-subjects experimental design to test the effect of two sales promotion formats (coupon versus markdown) with either high and low face values on consumer attitudes toward the deal, perceived product quality, and purchase intentions. The reputation of the retailer offering the deal is predicted to moderate the relationship between the promotional offer and consumer responses. Consumers perceive product quality to be higher when offered a high value coupon vs. markdown but there is no significant difference in perceived quality across promotion types when the promotion face value is low. When a deep price discount is offered by a retailer with a negative reputation, however, consumers have more favorable attitudes toward the deal and higher purchase intentions when provided with a markdown vs. coupon. Conversely, a high value coupon elicits more favorable evaluations than a markdown when the retailer has a positive reputation. When the value of the promotion is low and the retailer has a positive reputation, consumers have more positive deal attitudes and purchase intentions when offered a markdown vs. coupon. There is no significant difference in the effects of promotion type when the retailer has a negative reputation. The findings therefore establish retailer reputation as an important moderator of sales promotions effectiveness. This research is limited by the use of a single product category and a student sample. Process measures are also needed to validate the proposed theoretical conceptualization. The results provide managers insight into the type and value of the sales promotion to offer based on consumer perceptions of the retailer's reputation in the market.
This paper's goal was to investigate the effect different forms of price presentation have on Brazilian customers' evaluations regarding the following variables: purchase intentions, word-of-mouth communications, trust in advertising, perceived value, and perception of expensive prices. We use the literature suggested by Smith and Nagle (2005a, b) and Krishna, Briesch, Lehmann, and Yuan (2002), in which they suggested that perceived value of price explains customer judgments. Findings from Study 1 indicated that when price is presented in the form of R 1,599.00 here (versus the control group with the traditional price), the retailer had better results in terms of customer purchase intentions. This finding was achieved for products with both high involvement and high monetary value: i.e., values over $ 1,500.00. Outcomes from Study 2, which was based on a low involvement product, a hair dryer, on a specific date in the retail calendar, Mother's Day, showed that the price presented as only this weekend significantly increased customer purchase intentions. Study 3 supported that a 5% discount (vs. regular price vs. 10% vs. 15%) resulted in greater positive impact on buying intention. The paper contributes to price theory by supporting the assumption that price presentation positively influences buying intention, confirming the arguments of Nagle, Hogan and Zale (2011), Urbany, Bearden and Weilbaker (1988) and rejecting the studies by Blech (1981), Golden (1979), and Goodwin and Etgar (1980).
How do buyers judge prices? How do they know whether a product or service is priced reasonably, is a good deal or is too expensive? Do buyers perceive all price increases and all price promotions? Do price promotions and price increases necessarily change buyer behavior? How do buyers process the plethora of price information they encounter each day? Economists contend that price primarily represents the monetary sacrifice to obtain a product or service. Behavioral price researchers argue that more complex phenomena are involved. Buyers have individual, internal norms against which they judge prices. There are threshold points below which buyers do not perceive price changes. There are also specific ranges of prices buyers find acceptable for a particular product. Despite over four decades of behavioral price research, we know little about the root causes of these buyer responses to price information. This article is the first of several planned essays that will review the historical, theoretical and empirical developments in the field of behavioral price research. In this first review, we examine the core concepts behind buyer responses to price as well as the complex way that people process numbers. The objective of these essays is to bring focus to, clarify conceptual definitions, examine empirical developments and raise future research questions for this field of study.
Feature promotions or advertised deals constitute an important element of retailer promotion activities. In particular, the effectiveness of store flyers is one of the aspects of most concern to the marketing managers of retail stores as part of their marketing strategy. This paper looks to shed more light on this issue by analysing the effect of brand presence in flyers on consumer choice for both national brands and store brands. To this end, a Multinomial Logit Model (MNL) is estimated with parameters specific to brands using store-flyers. With these specific parameters, a competitive flyer effect ratio is estimated in order to establish which brand benefits from being featured in the same flyer. The results provide key insights for both retailers and manufacturers on how to improve the effectiveness of store flyers.
The purpose of this paper is to reveal some insights for increasing the effectiveness of promotions. To achieve this purpose, first, the existence of multiple customer benefits of promotions is proved. It is empirically validated that promotions deliver three utilitarian (monetary savings, higher quality and shopping convenience) and two hedonic (variety and pleasure) benefits to the customers. Second, a structural equation model is estimated to measure the relative contribution of these benefits on the customers’ overall evaluation of promotions. The research suggests that in order to increase their effectiveness, promotions must be framed by focusing not only on their primary benefits but also on all other benefits with a significant contribution to customers’ attitudes towards promotions. Finally, a benefit-based segmentation is conducted. Four market clusters are identified (none-benefit, all-benefit, utilitarian-benefit and hedonic-benefit customer segments). Further, these clusters are profiled using demographic and psychographic variables.
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.
We suggest that consideration of costs of price adjustment in marketing offers a promising research direction. These costs can have substantial implications for research in pricing-from determining the magnitude and frequency of price changes to asymmetric pricing, pass-through in channels, and price synchronization. Our understanding of the nature and scope of these costs has been undergoing an evolution recently, from simple menu costs to richer decision-making, organizational, and customer-based costs. In this chapter, we review the literature in marketing and economics to summarize what we know about the nature, magnitude, and broad impact of these costs. We then identify some areas of potential interest to both researchers and practitioners in marketing, where consideration of price adjustment costs is likely to yield greater insights into marketing decisions.
Purpose
The paper seeks to examine cross‐cultural differences in how consumers evaluate “scratch and save” (SAS) promotions (which are characterized by uncertainty of savings outcomes) between Canada and Korea, where the promotion tool is widely used but the countries have different cultural values.
Design/methodology/approach
An experiment was conducted to examine cross‐cultural differences in SAS promotion evaluations between Canada ( n =77) and Korea ( n =78).
Findings
SAS promotions effectively stimulate favorable shopping intentions in Canada, a country with a low uncertainty avoidance culture, more so than in Korea, a country with a high uncertainty avoidance culture. However, subjects in Korea show consistently higher savings expectations from SAS promotions than subjects in Canada. Thus, the results report that consumers with the highest savings expectations do not necessarily have the highest intention to shop. In addition, in Korea, a SAS promotion with guaranteed minimum savings is found to be very effective due to reduced ambiguity about its outcome.
Research limitations/implications
The study suggests cross‐cultural differences in the applicability of the disjunction effect.
Practical implications
The findings suggest that when SAS promotions are presented in a country with high uncertainty avoidance, retailers should explicitly indicate the value of the guaranteed minimum savings. By promising guaranteed savings, retailers can reduce consumers' relatively high concerns about unknown SAS outcomes, which results in a greater advantage in building favorable perceptions.
Originality/value
Very little work has been undertaken into SAS promotions and no known empirical research has been undertaken into cross‐cultural differences. This paper fills some of the gaps.
This study examines consumers' responses to advertisements employing “Scratch and Save” (SAS) type promotions, which are emerging store-level promotional tools. Due to SAS promotions' “gambling” characteristics, they offer the possibility of high savings levels, however, they also confront the consumer with uncertainty about the value of the discount at the point of purchase. Particular attention is paid to the depth of the claimed savings, and its effect on regular price believability and consumers' expected savings, as well as perceived value and shopping intentions. The depth of the advertised SAS promotions was observed to not affect consumer believability of the regular price in SAS advertisements. In addition, the disjunction effect is made applicable through showing that the minimum claimed saving information enhances the level of savings expectation. The results also report the positive impact of expected savings on offer value and, in turn, shopping intentions. © 2010 Wiley Periodicals, Inc.
Consumer response to price stimuli may involve cognitive processes such as attention, comprehension, retention and recall, as well as behavioral processes such as the formation of purchase intentions and actual purchase behaviors. Consumers acquire products as buyers and dispose of them as sellers. After they decide to buy or sell, however, they might interpret the price they pay or receive using different frames. Previous research has demonstrated that our cognitive judgments are indeed influenced by the way decision problems are framed. Thus, the purpose of this study was to investigate whether degrees of perceptual saving of consumers with different product familiarity are influenced by the presentation form of the price discount. Moreover, the findings demonstrate that for the low-price product category conditions, consumers that are less familiar with the product perceived that there was a more significant difference in price reduction when it was presented in percentage terms than presented in dollar terms, and the opposite was true for the high-price product category conditions. However, when people have a higher level of product familiarity, no matter the price discount information is presented in dollar or percentage terms, there is no significant difference in their perceptual saving.
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