In Research for academia, Research reports
Marketing Science Institute

A familiar concern with the use of price promotion is that it can exacerbate deal-seeking behaviors, creating consumers who are more calculated in their purchase decisions than otherwise may be the case. Aware of this possibility, some managers understandably fear that price promotion, though generally successful at lifting immediate sales, turns shopping into a dispassionate affair that dilutes the emotional connection between brand and customer and perhaps even accelerates the process of commoditization in a market.

Most of the research in marketing on price promotion presumes this calculated consumer, traditionally portraying a shopper whose objective is to maximize quality per dollar spent. In this calculus, a price promotion clearly improves the consumer’s payoff, boosting the appeal of the discounted product relative to competition.

Aylin Aydinli and Marco Bertini present a different interpretation of the way consumers respond to price promotion, in particular with respect to product choice. This interpretation deviates from tradition in two important aspects. First, the authors assume that consumer purchase behavior is the outcome of separate cognitive and affective processes. Second, they argue that price promotions not only motivate action, but they also discourage deliberation. The intuition for this idea is straightforward: the prospect of paying a lower price with no corresponding change in quality, while certainly enticing, also reduces the consequences of making a bad decision. With less money at stake, the consumer is encouraged to economize on effortful thinking, effectively “dumbing down” the purchase encounter and allowing affect to play a large role in choice behavior.

The authors conducted six experiments to test this theory. Experiments 1 and 2 provide evidence of the phenomenon in choice as well as in valuation. They also demonstrate that price promotions mitigate deliberation. Experiments 3 and 4 test the underlying causal sequence by controlling in different ways a moderating variable that is conceptually linked to deliberation. Finally, experiments 5 and 6 study extensions of the basic phenomenon.

The results of the research speak primarily to the study of price promotion-induced brand switching and, in particular, the debate on the form and cause of asymmetric cross-price effects. More broadly, the possibility that price promotion elevates the relative standing of affect in product choice is an encouraging sign for the manager who fears a dilution of brand equity. The authors speculate that the emotional connection between brand and customer may not be in as much danger as assumed. They suggest that price reduction can open to door for firms to step in and reinvigorate interest in the more emotional aspects of their relation with customers.