Relational Price Discounts: Consumers’ Metacognitions and Nonlinear Effects of Initial Discounts on Customer Retention

Olivares, Marcelo; Wittkowski, Kristina; Aspara, Jaakko; Falk, Tomas; Mattila, Pekka

doi:10.1509/jm.16.0267

Cited by 26 publications

(25 citation statements)

References 68 publications

(118 reference statements)

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“…To further examine the effect of sustainability on perceived product performance, we used spotlight analysis (Aiken and West 1991) at one standard deviation below and above the mean of environmental values ( M = 3.92 vs. M = 6.42) while controlling for product category (see Figure 1). We used cluster‐robust standard errors to account for the panel structure of the data (Mizik & Jacobson, 2009; del Rio Olivares et al., 2018).…”

Section: Methodsmentioning

confidence: 99%

When Sustainability is Not a Liability: The Halo Effect of Marketplace Morality

Chernev¹,

Blair

2020

J Consum Psychol

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Prior research has suggested that consumers believe that products made using sustainable, environmentally friendly technologies are likely to underperform those made using traditional methods. We question the robustness of this assumption and identify scenarios in which sustainability is likely to have the opposite effect, strengthening rather than weakening consumers' product performance beliefs. Specifically, we argue that sustainability is likely to produce a halo effect able to attenuate and even override the negative impact of compensatory inferences underlying consumers' belief that sustainability comes at the expense of performance. We propose that this halo effect stems from consumers' view of the company as a moral agent engaged in a prosocial behavior. In this context, we identify two factors that are likely to influence the strength of the halo effect: the degree to which consumers view the company as a moral agent whose actions aim to benefit society and the degree to which moral concerns are prominent in consumers' minds. Following this line of reasoning, we identify two ways in which managers can increase the perceived performance of sustainable products: by associating sustainable benefits with the company rather than with its products and by emphasizing the societal benefits of sustainability. We test these predictions in a series of four empirical studies that show convergent evidence for our theorizing. Our findings have important public policy implications, documenting actionable strategies that managers can use to mitigate the potential negative impact of sustainability and strengthen the perceived performance of sustainable products.

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Section: Methodsmentioning

confidence: 99%

When Sustainability is Not a Liability: The Halo Effect of Marketplace Morality

Chernev¹,

Blair

2020

J Consum Psychol

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“…When perceived value increases, higher levels of relationship equity should more readily translate into brand equity as a result of the reciprocal responses;, because the consumers interpret the increased value as a relationship-building effort of the brand (Fazal-e-Hasan et al , 2018). For instance, granting initially moderate discounts to new customers might, in return, activate the customers’ motive to build long-term relationships with brands (del Rio Olivares et al , 2018), which subsequently enhances consumers’ brand equity and accelerates their purchases (Dwivedi et al , 2012; Inman et al , 1997). In the context of service branding, consumers perceiving that switching costs outweigh switching benefits are more inclined to maintain the relationship with a brand regardless of their satisfaction level with that brand (Lee and Cunningham, 2001; Jones et al , 2000).…”

Section: Literature Review and Theoretical Modelmentioning

confidence: 99%

Not all experiential consumers are created equals: the interplay of customer equity drivers on brand loyalty

Cuong

Nguyen

Ngo

et al. 2020

EJM

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Purpose This study aims to use social exchange theory and the principle of reciprocity in proposing a theoretical model to examine the essential but unexplored unique roles of individual customer equity drivers (CEDs) and their contribution to brand loyalty. This study identifies a reciprocity pathway in that brand equity, which mediates the linkage between relationship equity and brand loyalty. This study further posits that the linkage between relationship equity and brand equity is contingent on value equity. The authors then incorporate value equity as a moderator upon which the interrelationships among CEDs and brand loyalty may vary. Design/methodology/approach A sample consisted of 2,268 shoppers in a metropolitan city in Vietnam. Findings Relationship equity significantly determines brand loyalty through the moderating effect of value equity and the mediating effect of brand equity. Interestingly, these relationships are diverse across different experiential types of consumers. Research limitations/implications This study contributes to a better understanding of why and when value equity, brand equity and relationship equity trigger brand loyalty. Brand equity and value equity are the two underlying mechanisms that establish a moderated mediation model between CEDs and brand loyalty. The findings of this study show that experiential consumers are not created equals. The strength of the relationships between CEDs and brand loyalty differ among the five clusters of experiential consumers. Practical implications This study reveals the critical relationships between the three components of customer equity in the supermarket industry. The findings provide concrete direction for managers and marketers to be more effective in allocating resources, tailoring their marketing strategies and, accordingly, promoting brand loyalty of different types of consumers. Originality/value This study reveals the underlying modus operandi that explains the reciprocity effects of CEDs and the contingency role of brand experience on the CEDs–loyalty link. This study shows that brand equity fosters and sustains the reciprocity generated when consumers perceive a high level of relationship equity, serving as a mediator between relationship equity and brand loyalty. Importantly, value equity is an important moderator for strengthening this reciprocity effect. Furthermore, this study identifies a typology of experience-focussed consumers and shows that the CEDs–loyalty link significantly varies by these types of experiential appeal that characterise the consumers.

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“…Yet Kalwani and Yim (1992) cautioned that consumers form discount expectations after being exposed to frequent discounts and thus may start to purchase discounted products only. In their meta-analysis, DelVecchio, Henard, and Freling (2006) indicated that price discounts greater than 20% negatively influence sales in the long run, although other studies have claimed that a moderate discount depth (about 30%) is most effective (e.g., Andrews et al 2014;Del Rio Olivares et al 2018). Hence, prior studies also point to the importance of accounting for consumer discount expectations and for nonlinear effects of discounts on consumer purchase behavior.…”

Section: Literature Reviewmentioning

confidence: 99%