The dark side of discounts: An inaction inertia perspective on the post‐promotion dip

Abstract

After a product has been on promotion, the sales of that product may temporarily decrease. This post-promotion dip is normally explained in terms of forward buying or stockpiling. This article offers a third explanation in terms of brand switching. The results of two experiments show that after missing a discount on their regular brand, consumers may switch to another brand. Switching behavior is much more pronounced when a large discount is missed in comparison to when a small discount is missed. This finding is consistent with recent social psychological research on inaction inertia, and the results are discussed in relation to this phenomenon. © 2005 Wiley Periodicals, Inc.Marketers often use discounts as a way of increasing sales. By temporarily lowering the price of a product, companies can attract consumers that normally buy different brands, and thus increase their market share. In addition, by the use of discounts companies can also increase the amount of products bought by the already loyal consumers and thereby increase the share of wallet of these customers. The frequency by which discounts are used nowadays clearly suggests that this tactic is efficient.

Dealing with Missed Opportunities: Action vs. State Orientation Moderates Inaction Inertia

“…Thus, the more attractive the missed opportunity (initial inaction) was, the lower the likelihood that people will act on an attractive action opportunity now (inertia). This effect is very robust and has been found for numerous different decisions, such as for buying shoes or beer, joining fitness centers, booking vacations, investing in the stock market and registering for college courses (Arkes, Kung, & Hutzel, 2002;Butler & Highhouse, 2000;Kumar, 2004;Sevdalis, Harvey, & Yip, 2006;Tykocinski, Israel, & Pittman, 2004;Tykocinski & Pittman, 1998Tykocinski et al, 1995;Van Putten, Zeelenberg, & Van Dijk, 2007Zeelenberg, Nijstad, Van Putten, & Van Dijk, 2006;Zeelenberg & Van Putten, 2005).…”

The long‐term effects of sales promotions on brand attitude across monetary and non‐monetary promotions

“…If the reference price of a brand gets lower, consumers may think the brand is worth less (Diamond & Johnson, 1990;Kalwani et al, 1990;Krishna, Currim, & Shoemaker, 1991;Zeelenberg & van Putten, 2005). Monetary promotions can adversely affect consumer perception of brand quality by lowering the reference price.…”

“…The long-term effect in the literature is often defined in three ways. The first is the effect measured at the next shopping point from the initial sales promotion after its withdrawal (Dodson, Tybout, Sternthal, 1978;Zeelenberg & van Putten, 2005). The second is the effect measured after 4-16 weeks' promotions (Davis, Inman, & McAlister, 1992;Kahn & Louie, 1990;Kalwani & Yim, 1992;Krishna, 1991).…”

Restaurant membership fee and customer choice: The effects of sunk cost and feelings of regret

“…In other words, consumers tend to regret their choices if they know there were better alternatives (e.g., Arkes et al, 2002;Tsiros and Mittal, 2000;Zeelenberg and Putten, 2005). In this study, we propose that comparisons among membership fees between two restaurants will influence the level of regret associated with the initial commitment.…”