Payment formats have many important influences on consumer behavior. However, few studies have examined how the payment format affects hedonic consumption. This study explores how the transparency of the payment format (e.g., bonus points vs. cash) influences consumers' willingness to pay, budget assignments, and consumption choices through differences in their perceived pain of purchasing (exchanging) hedonic and utilitarian options. Specifically, consumers who pay with highly transparent payment formats (e.g., cash), compared with consumers who pay with less transparent payment formats (e.g., store points, bonus points, and gift certificates), are willing to pay less, assign a lower budget, and are less likely to choose hedonic products. The perceived pain of purchasing (exchanging) a hedonic product plays an important mediating role on the influence of the payment format on hedonic consumption. However, the perceived pain of purchasing (exchanging) a utilitarian option plays a parallel mediating role only when people have paid for the less transparent payment format (e.g., buying store points) rather than when they accumulate the points through previous consumption events. The research findings provide insights that can benefit both theory and practice.
Inaction inertia is the phenomenon in which people are less likely to accept a less attractive opportunity after having missed a relatively more attractive one. Previous studies have mainly explored the inaction inertia effect on single products or services, whereas this study explored how the promotional frames of sales packages influence inaction inertia toward the individual items within the sales packages and the inaction inertia effect of the target product under different price strategies. On the basis of the cost assignments of mental accounting and comparisons of the current inferior promotion with missed superior promotion, this study found evidence that when consumers encounter a freebie (bundle) condition, they assign a higher cost to the focal (supplementary) product and a lower cost to the supplementary (focal) product.Therefore, consumers who have missed a freebie (bundle) promotion exhibit lower (higher) inaction inertia toward the focal product, but higher (lower) inaction inertia toward the supplementary product. Applying a similar internal mechanism to pricing strategies, the findings also show that when consumers encounter a two-component sales package with a surcharge promotion using a partitioned price (vs. a price discount promotion using an all-inclusive price), they assign a higher cost to the base product and a lower cost to the surcharge. So, consumers who have missed the surcharge (vs. price discount) promotion show higher inaction inertia when the surcharge of the current inferior opportunity is salient, but show less inaction inertia when it is not salient. Moreover, the percent of a surcharge as a part of the total package value moderates the impact of promotional price strategy frames on inaction inertia. These findings have significant implications for both theoreticians and practitioners interested in inaction inertia, promotional frames, and price strategies.
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