A Dragging-Down Effect: Consumer Decisions in Response to Price Increases

Abstract

Four studies, across a range of domains, all find evidence of a dragging-down effect in which consumers purchase fewer units of a product when a discount applies to a larger (vs. smaller) number of units. In each case, and in contrast to basic economic principles, this purchasing pattern leads consumers to purchase more units of the same item when they are sold for a higher per-unit price. Results show that consumers adopt the maximum discounted quantity as their purchase quantity only if that quantity falls within an acceptable range relative to the consumer’s purchasing preferences. Mediation analyses reveal that the perceived acceptability of a given quantity as the final purchase quantity explains the importance of this numeric cue in causing the observed pattern. Implications of the research for consumers, marketers, and policy-makers are discussed.

Tiered discounts as multiple reference points for spending

“…Existing literature finds that consumers may use a number within a promotion (e.g., how much to buy) as a reference point for spending (Cheng & Baskin, 2021; Della Bitta et al, 1981; Grewal et al, 1998; Huang, 2016; Kamins et al, 2004; Thaler, 1985; Zhang et al, 2021). For example, both multiple unit pricing (e.g., 6 cans of soda for $3) (Wansink et al, 1998) and conditional promotions with high quantity thresholds (e.g., buy 3 or more, get 1 free) (Inman et al, 1997) increase sales as compared to single unit pricing.…”