Effects of pricing and promotion on consumer perceptions: it depends on how you frame it

Darke, Peter R.; Chung, Cindy M.Y.

doi:10.1016/j.jretai.2005.01.002

Cited by 256 publications

(180 citation statements)

References 30 publications

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“…This second step was not existent in Experiment 5a. 12 Note, in this separate valuation setting, the inferiority of the sure price promotion to the probabilistic free price promotion could also be in part a result of the sure discount undermining perceptions of quality, which free offers are believed less likely to do (see, e.g., Chandran andMorwitz 2006, Darke andChung 2005).…”

Section: Discussionmentioning

confidence: 99%

When Retailing and Las Vegas Meet: Probabilistic Free Price Promotions

2017

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Abstract. A number of retailers offer gambling-or lottery-type price promotions with a chance to receive one's entire purchase for free. Although these retailers seem to share the intuition that probabilistic free price promotions are attractive to consumers, it is unclear how they compare to traditional sure price promotions of equal expected monetary value. We compared these two risky and sure price promotions for planned purchases across six experiments in the field and in the laboratory. Together, we found that consumers are not only more likely to purchase a product promoted with a probabilistic free discount over the same product promoted with a sure discount but that they are also likely to purchase more of it. This preference seems to be primarily due to a diminishing sensitivity to the prices. In addition, we find that the zero price effect, transaction cost, and novelty considerations are likely not implicated.

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Section: Discussionmentioning

confidence: 99%

When Retailing and Las Vegas Meet: Probabilistic Free Price Promotions

2017

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“…Price discounts are pervasive in today's retail stores and marketers often spend a large part of their budget on this promotional tool (Darke and Chung 2005). However, price discounts have drawbacks that pose a considerable threat to their effectiveness, as customers become accustomed to the lowered sale price-that is, they adjust their IRP downwards or may draw negative quality inferences from the price discount.…”

Section: Managerial Implicationsmentioning

confidence: 99%

Gambled Price Discounts: A Remedy to the Negative Side Effects of Regular Price Discounts

Alavi

Bornemann

Wieseke

2015

Journal of Marketing

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In the context of price discounts, a special type of price promotion, in which savings depend on the outcome of a gamble and are thus uncertain, has recently achieved some popularity. The question arises as to whether such gambled price discounts (GPDs) incur the negative reference price effect—that is, a downward shift in customers’ internal reference price (IRP)—which is often associated with regular price discounts (RPDs). From several studies, including two longitudinal field experiments, the authors find that GPDs indeed alleviate the negative reference price effect: IRPs and actual repurchasing tend to be lower for RPDs than for GPDs and a no-discount control condition. Moreover, the authors explore the psychological underpinnings of these effects and show that the different consequences of GPDs versus RPDs on IRPs are more pronounced if information regarding product quality is limited. The authors demonstrate that findings are robust to variations of GPD discount levels and the probability of winning.

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“…For salient information to constitute a separate entity, people must be able to process it as a concrete (rather than abstract) entity. Thus, how the same information facilitates people's processing influences their decision making (Darke & Chung, 2005;Heath et al, 1995). For example, it is more difficult to process information presented in proportions than in raw units (Estelami, 2003).…”

Section: Visual Saliencementioning

confidence: 99%

The effect of salience on mental accounting: how integration versus segregation of payment influences purchase decisions

Kim

2006

Behavioral Decision Making

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Although mental accounting principles are generally robust, the integration-of-losses principle often fails. This research argues that when information salience is high, people actively segregate. To demonstrate that effect, this research uses purchase decision making for which the total payment is a key decision factor and compares examples such as the following equivalent total payments: ''$120.95 for a stroller plus $19.95 for shipping'' (i.e., segregation) versus ''$140.90 for a stroller including shipping'' (i.e., integration). Two studies demonstrate that integration increases purchase intentions when the salience of the smaller payment is higher. Specifically, integration leads to higher purchase intentions than does segregation when (1) the surcharge is visually more salient, (2) the surcharge is easy to process, and (3) price perceptions are stimulus instead of recall driven. Therefore, this research extends mental accounting by identifying conditions in which the integration-of-losses principle is likely to prevail.

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Effects of pricing and promotion on consumer perceptions: it depends on how you frame it

Cited by 256 publications

References 30 publications

When Retailing and Las Vegas Meet: Probabilistic Free Price Promotions

When Retailing and Las Vegas Meet: Probabilistic Free Price Promotions

Gambled Price Discounts: A Remedy to the Negative Side Effects of Regular Price Discounts

The effect of salience on mental accounting: how integration versus segregation of payment influences purchase decisions

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