Effects of Spatial Distance and Paid Card on Price Promotions

Abstract

Abstract. Paid card is an important mean of companies to maintain the customers and increase gain. It is applied extensively in retailing, fitness center, and by other service delivers. However, there is lack of studies focused on promotion mechanisms of paid card in the literature. In this paper, the promotion mechanisms of paid card based on the theories of mental accounting, construal level, and customer's perceived value. The study has the results that the intention to purchase of paid card holders is higher than that of the consumers without payment in advance in the same discount rate. When there is large spatial distance between paid card holder and the target store, the traffic mode will impact on the purchase intention of paid card holders. Finally, the study has provided the corresponding suggestions for companies' promotion management.Keywords. paid card; spatial distance; price promotions Reducing customer's attrition has important impacts on a company's profit, so many companies start to employ paid card to maintain the customers. The nature of a paid card is that customers pre-purchase a class of products or services. However, what a specific product or service and when will be bought is not yet determined. That is a latent price bundling and is characteristic that payment and consumption are separate. There is lack of studies about the influences that the paid card leads to separate transactions on consumption behaviors in the literature. This paper applies the theories of mental accounting, construal level, and customer's perceived value to study the promotion mechanisms of paid card. We firstly review the literature related to the transaction separation caused by paid card, and develop the conceptual framework and hypothesis. Then, we collect data through survey and scenarios experiments, and analyze the data and test the hypothesis.