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Disguised-monetary discounts and purchase decisions: What is petrol worth?

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Abstract:

Manufacturers routinely use sales promotions to encourage purchases by consumers. A growing literature focuses on the differential effectiveness of various pricing promotions. Research has shown consumers to favour monetaryvalue framed, versus percentage-of-price framed, discounts for high priced items; while the opposite preference ranking has been found to hold for low price items. Other studies find that consumers perceive the greatest value from monetary promotions; followed by extra product (non-monetary) promotions; and lastly, mixed promotions, representing the least perceived value to consumers. In two experiments, we compare consumer responses to instant savings (monetary discounts) and monetary discounts framed as non-monetary (e.g., gallons of gasoline worth). The results of the present study suggest that consumers do perceive the gallons-of-gas worth frame as more attractive than a monetary discount at high prices, but not at low prices. The results also show support for the proposed effects of consumer quality perceptions, perceptions of offer fairness, consumer attitudes towards the sales promotion, and finally, consumer deal proneness.

Keywords: DISCOUNTS; FRAMING; PRICING; PROMOTION

Document Type: Editorial

DOI: http://dx.doi.org/10.1362/147539213X13832198548175

Publication date: June 1, 2013

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