Does different kinds of promotion affect people’s purchase intention
Project description
This project asks you to read two scholarly articles on the same topic and compare/contrast their
research methods and results. In a way, this project builds on the previous project in that you seek out a
conversation in your field and analyze its methodology and delivery. Like the previous project, your goal is
not to engage in the conversation so much as explore how that conversation takes place—its language,
its methods, its assumptions
To save or to lose: does framing price
promotion affect consumers’ purchase
intentions?
Eyal Gamliel
Behavioral Sciences Department, Ruppin Academic Center, Emek Hefer, Israel, and
Ram Herstein
Business Administration Department, Ruppin Academic Center, Emek Hefer, Israel
Abstract
Purpose
– This paper aims to examine the effect of framing price promotion on consumers’ purchase intentions. Retailers typically use the term “save”
to present their price deal offers. However, prospect theory predicts that people will be more willing to waive the gain of a certain amount of money, bu
t
less willing to lose the same amount of money.
Design/methodology/approach
– Using an experimental design, 497 participants were randomly assigned to two groups that differed only in the
framing manipulations of two vignettes: positive framing (“save if you purchase”) or negative framing (“lose if you don’t purchase”).
Findings
– The prediction was not confirmed: participants did not show more willingness to purchase products offered in sales promotions of discount
when presented with a negative frame relative to their presentation in the conventional positive frame.
Research limitations/implications
– Future research could confirm the predictions of prospect theory, indicating that methodological characteristics
prevented this study from confirming the hypothesis. However, if future research fails to confirm the predictions of prospect theory, it is possible th
at
these predictions are limited to situations of forced choice between two alternatives, and do not apply to situations with a default option of not maki
ng
a choice (e.g. price deals).
Practical implications
– If future research confirms the predictions of prospect theory, then retailers would improve their price promotion
effectiveness by replacing their use of “save if you purchase” with “lose if you don’t purchase”.
Originality/value
– This study is the first attempt to examine the predictions of goal framing effect in the context of price deals.
Keywords
Promotional methods, Consumer behaviour, Discounts, Pricing
Paper type
Research paper
An executive summary for managers and executive
readers can be found at the end of this article.
Consumer sales promotion technique
Businesses today are continually looking for marketing
strategies to improve the effectiveness and efficiency of their
operations (Srinivasan and Anderson, 1998). Advertising and
sales promotion seem to be very powerful ways for businesses
to market their product and make it a powerful brand (De
Chernatony and McDonald, 2003). Whereas in the past,
advertising seemed to be a much more effective way to market
a business, today there appears to be widespread evidence of a
switch of emphasis by marketers away from advertising and
towards sales promotion (Keon and Bayer, 1986; Peattie and
Peattie, 1995; Shultz, 1987). The rising costs of advertising,
the intangibility of advertisements’ messages, and the lack of
reliability of advertising are the main factors that explain this
switch in recent years (Dickson and Sawyer, 1990; Quelch,
1983). Blattberg and Neslin (1990) describe sales promotion
as an action-focused marketing event the purpose of which is
to have a direct impact on the behavior of the firm’s
customers. Totten and Block (1994) stated that term “sales
promotion” refers to many kinds of selling incentives and
techniques intended to produce a short-term sales effect. In
general sales promotion can be classified into three categories:
1 consumer promotions;
2 trade promotions; and
3 retailer promotions (Shimp, 2003).
Consumer promotions (e.g. coupons, samples, price packs,
refunds, special events, and contests) are typically employed
by manufacturers to stimulate purchases by end-consumers.
Trade promotions (e.g. cas
e allowances, advertising
allowances, display allowances, trade coupons, financing
incentives, and contests) are designed by manufacturers to
motivate marketing intermediaries or channel members to
stock and promote products. Retailer promotions (e.g. price
cuts/deals, displays, feature advertising, free goods, retailer
coupons, and contests/premiums) are initiated by retailers to
attract shoppers and in-store purchasing.
Price deals
Since sales promotion expenditures are often the largest
discretionary expenses in the promotional budget, it explains
why marketers analyze the impact of each type of sales
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/0736-3761.htm
Journal of Consumer Marketing
28/2 (2011) 152–158
q
Emerald Group Publishing Limited [ISSN 0736-3761]
[DOI 10.1108/07363761111115999]
152
promotion and their profitability (Srinivasan and Anderson,
1998). Although the realm of the effectiveness of monetary
sales promotion has been studied extensively (Dhar and
Hoch, 1996; Hoch
et al.
, 1994), price cuts or price deals have
received less attention. It appears that over the last half
century, retailers have offered consumers periodic short-term
price cuts – called “deals” – on a regular basis (Blattberg
et al.
, 1981). Deals are considered to be one of the major
forms of price competition used by retailers. The reason for
this derives from several explanations. The most common
explanation is that retailers offer deals to attract customers
from other stores. Another explanation is that dealing occurs
because retailers have higher inventory holding costs than
some consumers. Therefore, the retailer is motivated to take a
reduction in sales revenue if the consumer holds some of the
inventory. The consumer is willing to carry some inventory in
return for a reduction in price. A deal is the condition needed
to complete this exchange, since consumers cannot be
persuaded to hold inventory at a constant price (Blattberg
et al.
, 1981).
Previous research examined the possible effect that framing
of the price deal might have on the consumers’ purchase
behavior. The following section elaborates on the term
“framing”, as it has multiple meanings and various
applications.
Framing
The term “framing” was initially introduced by Tversky and
Kahneman (1981). In their famous “Asian disease” problem,
Tversky and Kahneman (1981) presented the same situation
in either a positive or negative frame, showing that people
exhibit a preferences reversal that was explained in terms of
prospect theory (Kahneman and Tversky, 1979): Positive
framing of problems emphasizes benefits, while negative
framing emphasizes risks. When contemplating benefits,
decision makers are prone to minimize risks (exhibiting
“risk aversion”), whereas they are prone to eliminate risks,
even if the costs are high, when contemplating risks
(demonstrating “risk seeking”; Kahneman and Tversky,
1979; Tversky and Kahneman, 1981).
To sort the numerous applications of the framing effect
since it was initially introduced by Tversky and Kahneman
(1981), Levin
et al.
(1998) offered a typology that
distinguishes between three different kinds of framing effects:
1 risky choice framing;
2 goal framing; and
3 attribute framing.
These three types are distinguishable in terms of their
operational definitions, their typical results, and their likely
underlying processes (Levin
et al.
, 2002).
Risky choice framing relates to problems such as the “Asian
disease” (Tversky and Kahneman, 1981). The second type,
attribute framing, relates to situations in which an object or an
event is evaluated more favorably when presented in a positive
frame relative to presenting the very same object or event in a
negative frame. In a famous study, Levin and Gaeth (1988)
demonstrated attribute framing by showing that participants
evaluated the quality of a ground beef product presented as
“75 percent lean” (positive frame) as higher than when
presented with the same product described as “25 percent
fat” (negative frame).
The third framing type, goal framing, describes the
consequences of an action given in a positive frame that
emphasizes gain following action, or in a negative frame that
focuses attention on a negative consequence (loss) following
inaction. The typical finding is that people are less likely to
take an action when presented with the positive consequences
of taking it while they are more likely to take it when
presented with the negative consequences of not taking it. For
example, Meyerowitz and Chaiken (1987) showed that a
negative message containing the risks of not engaging in
breast self-examination was more persuasive than the same
information presented in positive terms of the gains associated
with it; Banks
et al.
(1995) found that women viewing
negatively framed messages regarding mammography
screening were more likely to undergo a mammogram
relative to women viewing a positively framed message;
Ganzach and Karsahi (1995) found that credit card
customers were more receptive to messages stressing losses
from not using the card than messages stressing gains from
using it.
Thus, while people are willing to waive a certain objective
value when it is presented as a gain, they might be less willing
to waive it when the same objective value is presented as a
loss. This effect is consistent with loss aversion suggested by
prospect theory (Kahneman and Tversky, 1979): The
subjective value of objective information is more extreme for
losses than for gains, causing people to experience losses more
intensely than gains of similar objective magnitude (Tversky
and Kahneman, 1991, 1992). Thus, while the subjective
value associated with a given gain might not be sufficient to
justify an action, loss of the same objective value is ascribed a
more extreme subjective value, which might justify the action.
Framing and price sales promotion
Previous research examined the possible effect that framing
might have on consumers’ behavior when offered sales
promotion of two kinds: non-monetary (e.g. free extra
product) and monetary (e.g. discounts) promotions
(Campbell and Diamond, 1990). Regarding non-monetary
sales promotion, several st
udies presented potential
consumers with different ways of gaining the same amount
of money in price promotions such as straight price
promotion (“50 percent off”), an extra-product or volume
promotion, and “mixed” promotion (Li
et al.
, 2007; Sinha
and Smith, 2000). With respect to monetary sales
promotions, previous studies presented consumers with the
same discount described in percentage versus dollar terms
(Chen
et al.
, 1998; Gendall
et al.
, 2006). Other studies
examined predictions of prospect theory presenting
consumers with the same discount regarding products with
different regular prices (Bonini and Rumiati, 2002).
An additional manner in which the predictions of prospect
theory could be applied to monetary sales promotion involves
loss aversion as presented by the goal framing effect. A retailer
can present consumers with “two halves of the same glass”:
save money when purchasing the product offered at a
discount or lose the same amount of money when not
purchasing it. The traditional manner in which these sales
promotions are offered uses the “save” terms. However, the
loss aversion principle and previous studies of goal framing
predict that people will be more willing to waive the gain
when a product is offered at a discount more than they would
Does framing price promotion affect consumers’ purchase intentions?
Eyal Gamliel and Ram Herstein
Journal of Consumer Marketing
Volume 28 · Number 2 · 2011 · 152 – 158
153
Effect of price discount frames
and levels on consumers’
perceptions in low-end service
industries
Khaldoon Nusair
Rosen College of Hospitality Management, University of Central Florida,
Orlando, Florida, USA
Hae Jin Yoon
Nutrition, Food Science and Hospitality, South Dakota State University,
Brookings, South Dakota, USA, and
Sandra Naipaul and H.G. Parsa
Rosen College of Hospitality Management, University of Central Florida,
Orlando, Florida, USA
Abstract
Purpose
– The purpose of this study is to investigate the effects of price discount frames and price
discount levels on consumer perceptions about the quality of the service product, the value of
the discount, their purchase intentions and their willingness to spread the word of mouth about the
discount savings across different types of services.
Design/methodology/approach
– The study uses an experiment design method using three
interesting variables: discount format, discount level and service industry type. The experiment
included four different types of low-end price service levels: restaurants, hotels, mailing services, and
retail services.
Findings
– The findings indicate that price discount frames and discount levels do affect consumers’
perceptions on the value of the discount, the quality of the service, their intention to purchase and their
willingness to engage in WOM advertising.
Practical implications
– The practical implication for service firms that want to use price discount
promotions to encourage sales and increase revenue is that they should carefully consider the price
range and the value or quality of image they intend to signal when using these different price discount
frames and the service they are selling to determine the discount level to use.
Originality/value
– This paper is valuable to low-end service marketers that seek to use price
discount promotions to encourage sales and increase revenue.
Keywords
Prices, Discounts, Hospitality services
Paper type
Research paper
1. Introduction
Price promotion is well studied in marketing. In marketing literature, a large body of
research relates various aspects of price promotions (Darke and Dahl, 2003; Hardesty
and Bearden, 2003; Raghubir, 2004). Indeed, retailers often spend a third to half of their
marketing budgets on promotions (IRI, 2006). By some estimates, price promotions
account for almost a quarter of the marketing budget of some companies (Blattberg
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/0959-6119.htm
IJCHM
22,6
814
Received 2 February 2009
Revised 1 September 2009,
13 October 2009,
2 December 2009
Accepted 31 January 2010
International Journal of
Contemporary Hospitality
Management
Vol. 22 No. 6, 2010
pp. 814-835
q
Emerald Group Publishing Limited
0959-6119
DOI 10.1108/09596111011063106
and Neslin, 1989). Price promotions are used in various contexts, e.g. quick service
restaurants, entertainment shows, hair salons, laundry and cleaning services, and
travel services (Peattie and Peattie, 1995). Previous studies have shown the importance
of price promotions in influencing sales, increasing perception of quality, and
enhancing service firm profitability (Taylor, 2001; Raghubir, 2004). Despite the
positive effect price promotions have on consumers’ perceptions and purchase
decisions, they also have some negative effect such as lowering consumers’ perception
of quality (Dodson
et al.
, 1978), lowering consumers’ expectations for the brand
(Monroe, 1971), and doubting the value proposition, that is positioning of the brand and
creating a perceivable distinction in the competitive market, of the firm (Daun and
Klinger, 2006). Thus, knowledge on how consumers respond to price promotions is
essential in making critical decisions concerning price promotions (Oliveira-Castro
et al.
, 2008) for service industries. Understanding how consumers perceive price
promotions and respond to them should be of interest to retailers.
The service sector plays a significant role in economic growth. In the US the service
sector accounts for 55 percent of the economic activity (Trading Markets, 2008). A
service firm is defined as one that derives more than 50 percent of its sales from
providing services. Given the importance of the service oriented products in the
economy, it is necessary to further investigate the effect of price promotions on service
products. This paper provides an understanding of how consumers perceive different
discount frames ($ vs percent) and different discount levels in low-end services. Thus,
the purpose of this study is two-fold: firstly, to investigate how consumers perceive two
different discount frames (dollar format, $ vs percentage format, percent) that describe
the same price promotion; secondly, to examine how consumers’ perceptions change
when different discount levels are offered with different service products. This paper
investigates the effects of different promotional price discount frames and discount
levels on consumers’ perceptions of value, quality, purchase intention, word of mouth
advertising (WOM), and overall evaluation of the discount. This study is undertaken
with four service industries with which the respondents are very familiar as evidenced
in pre-testing.
Price promotions are often used as the primary sales promotion strategy in service
industries. Price promotions are especially important to the sale of service products due
to their unique characteristics such as intangibility, inseparability, heterogeneity, and
perishability. Because service products are intangible, it becomes difficult for service
firms to define their products and the quality level. Given this unique characteristic of
service oriented products, it becomes difficult to assess the effect price discount levels
have on consumers’ perception of the value and the service quality level they gain from
the discounts offered in price promotions.
2. Literature review
2.1 Price promotions
One of the earliest theories of promotions effect was the hierarchy of effects model
developed by Lewis in 1898 (as cited in Strong, 1925). Beerli and Santana (1999) have
articulated a relatively recent version of that model. They presented a conceptual
framework for measuring individual responses to a promotion, and concluded that
individual responses are based on three dimensions: cognition (knowledge,
perceptions, and beliefs with regard to a stimulus), affection (attitudes, feelings, and
Price discount
frames and levels
815
Review Final Total
25 100 150
This project asks you to read two scholarly articles on the same topic and compare/contrast their research methods and results. In a way, this project builds on the
previous project in that you seek out a conversation in your field and analyze its methodology and delivery. Like the previous project, your goal is not to engage in
the conversation so much as explore how that conversation takes place—its language, its methods, its assumptions. One way you might consider approaching this project:
In Project 1 you sought out an article based on your general interests in your field. Now that you’ve read one article from a conversation in your field, seek out
another article in that same conversation. Since you already have a pretty good handle on the first article, reading a second should reveal interesting things about
the conversation and how arguments in your field are constructed. If you found that your first article was not much to your liking, then Project 2 can offer you a new
start— pick something else, something new, a different conversation in your field. This will mean a bit more reading and work, but chances are the pay off will be good
because you now have a better sense of how to select good articles. Like with Project 1, this project is restricted to scholarly articles published in discipline
specific journals. Articles must be peer reviewed and published in respected journals in your field. This leaves out book reviews, editorials, letters, literature
reviews, newspapers, trade journals, or other types of magazines. Length: 1500+ words Audience: Instructor, Class, perhaps English Department Format: The format of
your discipline (APA, IEEE, CSE, etc.) This assignment should have two main parts: I. Brief (100-150 words for each article) summary of each article. (Do not base this
summary on the abstracts of the articles.) LIKE Project 1, your summary should seek to encapsulate the main ideas of each article in succinct and accurate ways. UNLIKE
Project 1, you will need to combine the summary of each article in an effort to establish the “big picture” for your reader. This means that you will need to first
understand how each article presents the conversation and then draw on their similarities to present your summary (save major differences for the analysis!). II.
Compare/contrast research methods and results. You should start with the same questions you used to analyze your article in Project 1—answering them for both articles:
• Who wrote the article and what are their qualifications? • Where was it published (what kind of publication) and who seems to be the intended audience? (You might
need to find the journal’s website to find out more on these questions.)
• •
What seems to be the authors’ purpose for writing? (Evidence for your answer to this question?) How do the authors make use of previous research? What is the authors’
thesis? Is it explicitly stated? If so, where in the article? What kinds of material do the authors use to support their thesis? How is the material used to support
the thesis? What do the authors do with the material (what are their methods)? What are their theoretical/methodological assumptions, and how might these assumptions
reflect the assumptions of the discipline? Are there any alternative ways of interpreting the evidence? Do the authors acknowledge any alternative arguments that could
be made? How do they deal with counterarguments? What does the article seem to contribute to the field (as far as you can tell)?
The main difference between Project 1 and Project 2 comes with how you handle the answers to these questions: • Who wrote the article and what are their
qualifications?
Do the authors of these articles ‘know’ each other? Are they approaching the conversation from similar perspectives and/or in the same time period? In most academic
conversations, major writers and scholars ‘talk’ to each other—they cite each other, contest previous results, add new evidence, etc. How well known the authors are
also affects how much their research is used, reused, and/or debated. • What seems to be the authors’ purpose for writing? (Evidence for your answer to this question?)
How do the authors make use of previous research?
These questions follow from above: If the scholars who wrote your articles are in the same conversation, then they will likely refer to some of the same research. Your
task is to figure out and understand how each article uses that research (similarly or differently). In some cases, you may find articles that are direct responses to
each other: The purpose of one article may be to directly dispute or extent the other article. Again, your goal is to understand and evaluate how these authors and
articles ‘talk’ to each other. • What is the authors’ thesis? Is it explicitly stated? If so, where in the article?
A good way to compare/contrast is to isolate each article’s thesis and then do just that: compare and contrast them. If both articles are writing about similar things,
their theses will reveal how they approach those same things. • What kinds of material do the authors use to support their thesis? How is the material used to support
the thesis? What do the authors do with the material (what are their methods)? What are their theoretical/methodological assumptions, and how might these assumptions
reflect the assumptions of the discipline?
You may have struggled with understanding methodology in Project 1. Reading two articles from the same conversation should reveal interesting methodological patterns—
what you didn’t notice in one article may be come very clear by reading two articles, simply because each article uses the same methods, etc. • Are there any
alternative ways of interpreting the evidence? Do the authors acknowledge any alternative arguments that could be made? How do they deal with counterarguments?
This is the ‘meat’ of your compare/contrast analysis: Each article is a variation on the same theme (topic, etc.), so each will have different ways of interpreting the
same evidence (or similar evidence). Your goal as an analyst is to show your reader how these articles present their findings differently/similarly, and then explain
what those similarities/differences might mean (to you, to your field). • What does the article seem to contribute to the field (as far as you can tell)?
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