Sweepstakes or contests: The effect of uncertainty type on consumption behavior

Abstract

Given their widespread application and the benefits provided to marketers, the inconclusive effects of uncertain promotions need to be further explored. This research demonstrates that the effectiveness of uncertain promotions varies with the type of uncertainty involved in the promotions (i.e., sweepstakes and contests). Based on real‐world data from one of the largest commercial banks in China and three controlled experiments, we found consistent evidence supporting the advantages of sweepstakes promotions over contest promotions, even when both uncertain promotions had the same cost for consumers. We suggest that this effect occurs because of the consumers have a higher perception of confidence and thus, perceive the probability of winning the reward is higher in sweepstakes than in contest, thereby indicating the underlying mechanism of the effect of the uncertain promotion type on consumer preference.