Less willing to pay but more willing to buy: How the elicitation method impacts the valuation of a promotion

Abstract

Willingness to pay (WTP—how much one is willing to pay for something) and willingness to buy (WTB—whether one is willing to buy something at a given price) are two common methods to elicit valuations and normatively should yield the same valuation order between two options. However, this research finds that WTP and WTB can yield opposite valuation orders between the regular offer and the promotional offer of a product. Specifically, it demonstrate that, (a) if the valuation of a product is only elicited with WTP, consumers value the product less when it is offered with a price promotion than when it is not; (b) if the valuation of a product is only elicited with WTB, consumers value the product more when it is offered with a price promotion than when it is not; and (c) if the valuation of a product is first elicited with WTP and then elicited with WTB, consumers always value the product less when it is offered with a price promotion than when it is not. A value‐inference account is proposed for the above findings, according to which, consumers infer the value of a promoted product differently when the valuation is elicited only with WTP or only with WTB. Theoretically, this research extends prior literature on sales promotion, showing that the valuation of a promotion is subject to the elicitation method. Practically, this research suggests how to help consumers manage their purchase intentions for promoted products.

Big business returns on B Corp? Growing with green & lean as any label is a good label

“…A common approach to measure CBFLE is to examine the impact of specific food labels on, for instance, perceived quality, choice, WTB, and willingness to pay (WTP), which emphasizes the food labels' "global equity" (Coderre et al, 2022). Since WTB and WTP normatively should yield the same valuation order (Lu & Hsee, 2019), we focus in the current research on WTB as a measure of commercial value to elicit consumers' underlying valuations of a food label.…”

Framing a promotional offer as free-with-purchase or as a bundle? The perspective of information salience

“…The current issue and full text archive of this journal is available on Emerald Insight at: https://www.emerald.com/insight/0263-4503.htm assignments of target items (focal vs. supplementary), upgrade intentions (Liu, 2013), and inaction inertia (Liu and Chou, 2018) and their price judgment when the temporary price is retracted (Kamins et al, 2009;Liu and Chou, 2015;Palmeira and Srivastava, 2013;Raghubir, 2005). Focused on the role of inference in preference construction, Lu and Hsee (2016) find that relative to individuals who encounter the bundled offer, those who encounter the free-withpurchase offer will indicate a lower willingness-to-pay price for their offer, but a higher willingness-to-buy at a given price. This body of research evidences that how consumer promotions communicated has an informational effect and impacts consumer responses.…”