How consumers respond to missing a quantity discount with multiple price breaks

Abstract

This study investigates how consumers evaluate and respond to different discount schemes (i.e., one versus multiple price breaks) in the wake of a missed quantity discount. Two field experiments are conducted. The results demonstrate that promotions with multiple price breaks (e.g., 2 for 30% off and 3 for 40% off) will result in a higher likelihood of purchasing one item at the regular price than promotions with only a single price break (e.g., 2 for 30% off) when a quantity discount is missed. The results of Experiment 2 reveal that increasing the number of price breaks (i.e., from two to three) can strengthen the assimilation of the advertised regular price into consumers' internal reference price range when there is a greater interval between the two price breaks (e.g., 2 for 30% off, 5 for 40% off, and 8 for 50% off) and that subsequently raises consumers' purchase likelihood if they are not able to take advantage of the promotional price. Finally, the effect of the discount scheme on purchase likelihood is shown to be mediated by the internal reference price. These observations have important implications for retailers.

Optimal Ordering Strategy for Goods at Multiple Retail Prices under Simultaneous Sales

“…The effect of price discount coefficient and demand volatility on retailer's MRPS is analyzed through sensitivity analysis. (1) =35, (2) = (35,34), and (3) = (35,34,33) to denote the pricing strategies of Retailers A, B, and C, respectively, and the price discount…”

“…(2) =671.95, (2) =81.24; and (3) =768.74, (3) =106.97. As per the definition of the demand ratio in Section 3, it is easy to get (1) =1, (2) =(0.29,0.71), and (3) =(0.14,0.33,0.53).…”

“…Most MRPS researches are concerned with the effects of MRPS on consumer behavior. Some have demonstrated that MRPS often results in greater sales volume relative to SRPS [1][2][3][4]. There are other research papers covering the consumers' purchasing intention under MRPS [5,6] and the effects of consumers' perceptions towards MRPS [7].…”

Consumer affects when making undesirable purchases to meet the minimum purchase requirement: Decision‐related variables as moderators

“…The other stream of research relates to consumers' responses to missing a quantity discount (e.g., Huang, 2016;Huang & Yang, 2015;Yoon & Vargas, 2010). There has been little if any research into how the way of making a purchase to meet the MinPR might drive potential differences in consumers' satisfaction levels with the shopping experience.…”

“…Given the widespread use of the MinPR tactic in retailing contexts, however, only a few scholars have examined the impact of quantity discounts on consumer buying behavior, such as purchase quantity (e.g., Wansink, Kent, & Hoch, ; Yoon & Vargas, ) and consumers' attitude and purchase intentions (e.g., Teng, ). The other stream of research relates to consumers' responses to missing a quantity discount (e.g., Huang, ; Huang & Yang, ; Yoon & Vargas, ). There has been little if any research into how the way of making a purchase to meet the MinPR might drive potential differences in consumers' satisfaction levels with the shopping experience.…”