Sales promotions for preorder products: The role of time‐of‐release

Abstract

Preorder offers are increasingly common for many types of products and services. Sales promotions, such as price discounts and free gifts, are frequently used to raise offer attractiveness and elicit a stronger sales response. Through a series of experiments, we show that a preorder promotion's effectiveness depends on whether it matches the construal level associated with timing of the featured product's release. When a match occurs, it increases consumers’ positive affect leading to higher purchase intention directly or by raising the perceived certainty of new product quality. In addition, we find interesting differences related to promotion type. Specifically, we show that a larger discount promotes low‐level construals, which leads to stronger purchase intentions only when the product is scheduled for near‐future release. Since a gift may elicit either high‐ or low‐level construals, a premium offer of higher perceived value leads to stronger purchase intentions regardless of release timing.

Full text

Psychol. Mark. 2019;36:875–890. wileyonlinelibrary.com/journal/mar © 2019 Wiley Periodicals, Inc.
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DOI: 10.1002/mar.21242
RESEARCH ARTICLE
Sales promotions for preorder products: The role of
time‐of‐release
Subhash Jha
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George D. Deitz
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Phillip Hart
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Marla B. Royne Stafford
4
1
Department of Managerial Studies, Purdue
University Northwest, Hammond, Indiana
2
Department of Marketing and Supply Chain
Management, The University of Memphis,
Memphis, Tennessee
3
Department of Economics and Management,
Westfield State University, Westfield,
Massachusetts
4
Harrah College of Hospitality, University of
Nevada‐Las Vegas, Las Vegas, Nevada
Correspondence
Subhash Jha, Department of Managerial
Studies, Purdue University Northwest,
Hammond, Indiana.
Email: subhashjha.iimt@gmail.com
Abstract
Preorder offers are increasingly common for many types of products and services.
Sales promotions, such as price discounts and free gifts, are frequently used to raise
offer attractiveness and elicit a stronger sales response. Through a series of
experiments, we show that a preorder promotion’s effectiveness depends on whether
it matches the construal level associated with timing of the featured product’s
release. When a match occurs, it increases consumers’positive affect leading to
higher purchase intention directly or by raising the perceived certainty of new
product quality. In addition, we find interesting differences related to promotion type.
Specifically, we show that a larger discount promotes low‐level construals, which
leads to stronger purchase intentions only when the product is scheduled for near‐
future release. Since a gift may elicit either high‐or low‐level construals, a premium
offer of higher perceived value leads to stronger purchase intentions regardless of
release timing.
KEYWORDS
construal level theory, new product release, positive affect, preorder, quality certainty, sales
promotion
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INTRODUCTION
In a growing number of contexts, consumers have the option of
preordering a product or service before its official launch. A preorder
product is one that can be reserved in advance of its actual release
date by paying the provider in advance, thereby guaranteeing
immediate delivery or access upon its availability. Preorder cam-
paigns have become an integral aspect of new product introduction
strategies across several major categories, including books, music,
video games, and consumer electronics. For instance, in a 1‐week
period, Apple generated an estimated 50 million orders for its latest
iPhone X model (Seitz, 2017). This practice has even spread to big‐
ticket items, such as automobiles. Tesla CEO Elon Musk announced
the company secured more than 200,000 preorders and correspond-
ing $1,000 deposits for its Model 3 electric car within the campaign’s
first 24 hr (Isidore, 2016). Consumer response to preorder offers
provide retailers and manufacturers with a number of key advan-
tages, including: acceleration of future cash flows, greater accuracy in
gauging market demand, ability to reduce risk by adjusting initial
production and inventory levels, and the ability to optimize sales
revenue via discriminatory pricing strategies (Li & Zhang, 2013;
McCardle, Rajaram, & Tang, 2004).
Firms often seek to incentivize acceptance of preorder offers
using a variety of promotional schemes, such as price discounts and
free gifts. To date, academic research on preorder promotions has
largely been comprised of modeling papers that seek to identify the
usefulness of these promotions in determining optimal sales and risk‐
reduction strategies (e.g., Chu & Zhang, 2011; Hui, Eliashberg, &
George, 2008; Zhao & Stecke, 2010). Relatively few studies have
examined consumer perceptions, attitudes, and behaviors in re-
sponse to preorder promotions (see Mukherjee, Jha, & Smith, 2017
for a recent exception). Understandably, manufacturers and retailers
would like to ensure maximum returns on the promotional tools that
accompany preorder offers. Thus, research aimed at providing
guidance on how and when different types of preorder promotions
will be more effective addresses a key gap in the literature and