Message framing effects on price discounting

Abstract

PurposeThe purpose of this paper is to report the results of two experiments designed to examine the effect on consumers of the way in which price discount messages are expressed, or “framed”.Design/methodology/approachBoth studies involved stated‐preference choice modelling experiments. The aim of the first experiment was to test the hypothesis that a price reduction framed in dollar terms is more effective for high‐priced items, whereas a price reduction framed as a percent discount is more effective for lower‐priced items. The aim of the second experiment was to determine which of four alternative ways of expressing the same 33 per cent price discount – cents off, percent discount, or one of two volume discounts – is most effective.FindingsFor two “low‐priced” items, potato chips and cola drinks, the framing of a price discount had little or no effect. However, for two ”high‐priced” items, stereos and computers, framing a discount in dollar terms was significantly more effective than expressing it as a percent off discount. For three fast moving consumer goods the most effective framing of the same price discount depended on whether the product concerned was amenable to stockpiling. For tinned spaghetti, which is relatively cheap and easy to store, volume discounting was more attractive than a monetary discount, whereas for bottled water and semi‐soft butter, which are more expensive and bulkier, the opposite was true.Originality/valueFor high‐priced products, it is better to express price discounts as dollars or cents off than as a percentage off; the opposite may be true for low‐priced products, but this is much less certain. However, if using a volume promotion, “buy x get one free” is likely to be more effective than “y for the price of x”.

Format effects in volume discounts to consumers

“…In more general terms, many studies have established that consumers' evaluations and preferences vary when presented with economically equivalent promotional deals that are worded differently (Das, 1992;Seibert, 1997;Sinha and Smith, 2000;Gendall et al, 2006). These "framing" effects are called "semantic" effects when deals are strictly equivalent on a unit-cost basis and on a total cost basis.…”

“…First, it has been argued that the response to framing effects depends on the product category, whether the brand is a national brand or a store brand, the level of the discount offered, the original price of the product, and the type of store offering the discount (Gendall et al, 2006).…”

Efeitos do framing de promoções de preço nas escolhas dos consumidores

“…Estes estudos abordam os mecanismos pelos quais os consumidores processam e internalizam o estímulo de preço em situações de compra, examinando questões como preço de referência, deal framing, precisão na recuperação de preços na memória, codificação e armazenamento (SINHA; SMITH, 2000;GENDALL et al, 2006). Uma generalização essencial para esta literatura é que os consumidores frequentemente exibem um comportamento não racionalcontraditório às suposições da economia neoclássica -e são altamente sensíveis a dicas contextuais oferecidas nas ofertas de preço.…”

“…Uma promoção não monetária de volume pode ser comunicada "compre dois e leve um de graça", "três pelo preço de dois", "leve 500 ml e pague 400 ml", dentre outras formas. Existem também formas híbridas de promoção, que mesclam tanto elementos monetários quanto não monetários, como, por exemplo, "compre dois e ganhe 50% de desconto" (SINHA; SMITH, 2000;GENDALL et al, 2006).…”

“…Gendall et al (2006) Monetárias e não monetárias -promoções formuladas como ganho e perda Promoções mostradas como ganho (compre um molho de $ 1.89 e ganhe uma sopa que custa $ 0.49) são mais desejáveis do que as apresentadas como perda reduzida (compre um molho e uma sopa por $ 1.89 e economize $ 0.49).…”