"Pay 80%" versus "get 20% off": The effect of novel discount presentation on consumers' deal perceptions

Hyeong Min Kim, Thomas Kramer

Research output: Contribution to journalArticlepeer-review

29 Scopus citations

Abstract

Consumers often undervalue price promotions because they discount the discounts. In this research, we examine the effect of using a novel type of discount presentation (e.g., "Pay 60% of the regular price") on deal evaluations, and compare it to that of an equivalent discount presentation commonly used in the U.S. (e.g., "Get 40% off the regular price"). In three experiments we show that the former discount presentation results in higher perceived savings and higher purchase likelihood than the latter. Using process measures, we demonstrate that this effect is due to increased systematic processing induced by the novelty of the discount presentation, which improves calculation accuracy and hence decreases the underestimation of discounts. We also report a boundary condition of the effect of discount presentations on deal evaluations by showing that it is eliminated when consumers do not need to expend effort to accurately process price information.

Original languageEnglish (US)
Pages (from-to)311-321
Number of pages11
JournalMarketing Letters
Volume17
Issue number4
DOIs
StatePublished - Dec 2006
Externally publishedYes

Keywords

  • Deal perception
  • Discount presentation
  • Pricing
  • Systematic processing

ASJC Scopus subject areas

  • Business and International Management
  • Economics and Econometrics
  • Marketing

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