Cashback is Cash Forward: Delaying a Discount to Increase Future Spending

Vana, Prasad; Lambrecht, Anja; Bertini, Marco

doi:10.2139/ssrn.2588611

Cited by 12 publications

(11 citation statements)

References 23 publications

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“…However, they did trigger increased total coupling and mental discounting (as measured by perceived costs) in relation to standard discounts. Most notably, we see results consistent with Vana, Lambrecht, and Bertini (2017), who focus on Purchase 2: we find that consumers who receive a cash-back promotion mentally discount a portion of that promotion from their Purchase 2 (and simultaneously increase coupling with Purchase 2). Thus, although cash back appears to induce mental discounting, especially when it is linked temporally with spending, it does not do so to the same degree as promotional credit, for which coupling across purchases is the strongest.…”

Section: Discussionsupporting

confidence: 83%

“…Recent empirical research has closely examined “cash-back” price promotions (Vana, Lambrecht, and Bertini 2017), in which customers make an initial purchase and then receive a portion of that purchase amount as “cash back” in their bank account. Relative to no price promotion, consumers may increase spending both for an initial purchase when accepting a cash-back offer (Dhar, Morrison, and Raju 1996; Raju, Dhar, and Morrison 1994) and for a subsequent purchase on receipt of cash back in their bank account (Vana, Lambrecht, and Bertini 2017). Indeed, Vana, Lambrecht, and Bertini (2017) document an increase in spending in the time period following receipt of the cash back.…”

Section: Conceptual Overviewmentioning

confidence: 99%

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Double Mental Discounting: When a Single Price Promotion Feels Twice as Nice

Cheng

Cryder

2018

Journal of Marketing Research

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This research finds that when a single gain has strong associations with multiple costs, consumers often mentally deduct that gain from perceived costs multiple times. For example, with some price promotions (e.g., spend $200 now and receive a $50 gift card to spend in the future), consumers mentally deduct the value of the price promotion from the cost of the first purchase when they receive the promotion, as well as from the cost of the second purchase when they use the promotion. Multiple mental deductions based on a single gain result in consumers' perceptions that their costs are lower than they actually are, which can trigger higher expenditures. This mental accounting phenomenon, referred to as “double mental discounting,” is driven by the extent to which gains feel associated, or coupled, with multiple purchases. This article also documents methods to decouple promotional gains from purchases, thus mitigating double mental discounting.

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Section: Discussionsupporting

confidence: 83%

Section: Conceptual Overviewmentioning

confidence: 99%

Double Mental Discounting: When a Single Price Promotion Feels Twice as Nice

Cheng

Cryder

2018

Journal of Marketing Research

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“…Vana, Lambrecht, and Bertini () shows that cashback payments increase the likelihood of repeated purchases and their behaviour its significantly different from those without it, as they make not only more diverse transactions but also with higher weight in categories that require economic investment. While click/visit transactions and search generate cashback do not need a financial outlay by the customer, purchase transactions require some kind of acquisition.…”

Section: Theoretical Questionsmentioning

confidence: 99%

Social Networks on Cashback Websites

Ballestar

Sáinz

Torrent‐Sellens

2016

Psychology and Marketing

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The relevance of Cashback sites as a profitable business model has grown considerably over the last decade, where customer's social networks have been one of the most important keys of success. Hence, the success of cashback websites business model not only lays on strategies such as offering a wide portfolio of affiliate merchants and competitive cashbacks per transaction to attract new customers, but also on their ability of engaging them and enrolling new target customers through recommendation in a word-of-mouth marketing strategy. By a applying this kind of strategies, both the recommender and the referee benefit from referee's transactions in the network, meaning that benefits for customers and companies grow at the same time that the customer's social network grows and become more active. Consequently, this research focuses on the analysis of the impact of customer's social network on cashback websites from two different perspectives. From the customer's perspective, determining the impact of the social network composition and their activity in customer's benefits of cashback. Second, the research focuses on the ecommerce's perspective, testing which kind of customers, characterized by whether they have social network or not, are more profitable to the brand in terms of purchase behavior and loyalty. The findings are a step forward to understand customer behaviour and the relevance of social networks on cashback websites business model and help the companies to establish the basis to develop new digital marketing strategies less concentrated in media advertisements and oriented to increase customer acquisition, retention, and profitability.

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“…For instance, some researchers have concluded that although online shopping has provided a new international landscape to conduct business, the use of this medium and the absence of face-to-face interactions has presented the law with numerous challenges in terms of the scope of consumer protection [41].Some researchers investigated the impact of factors affecting consumers' trust in online product reviews and suggest that both argument quality and perceived similarity contribute to increased trust, but in varying degrees [42]. Moreover, in the case of payments that are automatically processed, such as online cashback, a benefit of separating a discount payment from the purchase event may arise out of positive spillover effects on future purchases rather than from imperfect redemption behavior [43].…”

Section: Literature Reviewmentioning

confidence: 99%

Trapping Fake Discounts as Drivers of Real Revenues and Their Impact on Consumer’s Behavior in India: A Case Study

et al. 2019

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This empirical study contributes towards identifying the effect of both fake and real discounts in the Indian marketing environment. A common but unsustainable practice in India is to increase the selling price and then offer a discount on the product. Increasing sales based on fake discount pricing strategy is a primary business development objective in India. The discounts, however, vary across store type and time and are based on product features. The selected databases were collected from the top five Indian e-commerce portals in terms of volume of sales, and from popular brick and motor outlets of tier 2 and tier 3 cities in India. The empirical results indicate that offers based on price in India had an impact of 2.8 times higher than the actual quality of the product. The outcomes suggest that marked price has a significant impact on consumer’s behavior. The results also indicate the existence of a strong correlation between trapping fake discounts and purchase by deceiving and persuading customers in India. Research is empirical in nature and respondents have been selected based on purposive sampling. The study is limited to tier 2 and 3 cities of India for 250 days, and the results are applicable to online and offline retail stores.

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Cashback is Cash Forward: Delaying a Discount to Increase Future Spending

Cited by 12 publications

References 23 publications

Double Mental Discounting: When a Single Price Promotion Feels Twice as Nice

Double Mental Discounting: When a Single Price Promotion Feels Twice as Nice

Social Networks on Cashback Websites

Trapping Fake Discounts as Drivers of Real Revenues and Their Impact on Consumer’s Behavior in India: A Case Study

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