"Dual-Process Perspectives on Consumer Price Promotions."
by Marco Bertini, London Business School
Abstract:
"Price Promotion for Emotional Impact"
Managers and academics often think of price promotions simply as incentives that entice consumers to choose products they otherwise may not even consider. But the prospect of paying a lower price for a given quality can also compromise deliberation, “dumbing down” the purchase decision by making it less consequential. The authors capture this intuition in a dual-process model of behaviour, wherein a drop in deliberation tilts the relative weight of cognitive and affective processes in decision-making in favour of the latter, thereby also shifting choice toward goods with a strong affective component. We report experiments that establish the phenomenon, provide support for the proposed mechanism, rule out justification and mood as plausible alternative explanations, and test a number of extensions. Collectively, these findings contribute to the debate on price promotion-induced brand switching and, in particular, they point to a new source of asymmetry in the way consumers substitute one brand for another.
"Consumer Reactance to Conditional Price Promotions"
Firms routinely ask consumers to perform some specific action in order to qualify for a price discount. This practice reflects the straightforward intuition that a firm can improve the payoff to promotional campaigns if it uses the incentive to discriminate between customer segments and/or motivate additional attractive behaviors than simply the act of purchase. However, consumers may perceive conditions, even those that are not directly related to the transaction at hand, as threatening their freedom to exploit price deals and consequently “act out” against the firm by spending less than they otherwise would. This proposition, which builds on the social psychology of reactance, is tested in three experiments. Experiment 1 shows the phenomenon. Experiments 2 and 3 explore the underlying theory by varying factors known to moderate the subjective experience of reactance.