TY - JOUR
T1 - Final Price Neglect in Multi-Product Promotions
T2 - How Non-Integrated Price Reductions Promote Higher-Priced Products
AU - Jia, He (Michael)
AU - Huang, Yunhui
AU - Zhang, Qiang
AU - Shi, Zhengyu
AU - Zhang, Ke
N1 - Funding information:
The authors thank the editor, associate editor, and anonymous reviewers for their constructive comments. This research was supported by the Research Grants Council of Hong Kong (GRF17503121 and GRF17503420), the National Natural Science Foundation of China (72032004, 71802125, 72002185, and 72031004), the Basic Research Fund from HKU Education Consulting (Shenzhen) Co, Ltd (SZRI2023-BRF-02), and the HKU Seed Fund for Strategic Interdisciplinary Research. Supplementary materials are included in the web appendix accompanying the online version of this article.
Publisher copyright:
© The Author(s) 2023.
PY - 2024/4
Y1 - 2024/4
N2 - Price reductions take either an integrated form (e.g., a discount shown directly on the price tag) or a non-integrated form (e.g., a discount contained in a coupon sent to consumers and thus separate from the price tag). This research examines how non-integrated versus integrated promotions influence choices among vertically differentiated products. Under an integrated promotion (e.g., $10 off) applicable to multiple products (e.g., original list prices: $50 vs. $30), consumers directly compare these products’ post-promotion final prices displayed on their price tags (after a reduction of $10: $40 vs. $20). In contrast, under a non-integrated promotion of the same monetary value, consumers simply compare these products’ original list prices ($50 vs. $30) and neglect their post-promotion final prices, which require calculations. The list prices ($50 vs. $30; relative to the final prices: $40 vs. $20) as a basis for price comparison reduce the perceived price difference between these products. Consequently, a non-integrated promotion (compared to an integrated promotion) increases consumers’ choice of higher-priced products. A series of experiments (N = 5,187) demonstrate this effect and support the final price neglect mechanism. Furthermore, although attenuated, this effect still emerges for price reductions of a smaller magnitude or in a percent-off format.
AB - Price reductions take either an integrated form (e.g., a discount shown directly on the price tag) or a non-integrated form (e.g., a discount contained in a coupon sent to consumers and thus separate from the price tag). This research examines how non-integrated versus integrated promotions influence choices among vertically differentiated products. Under an integrated promotion (e.g., $10 off) applicable to multiple products (e.g., original list prices: $50 vs. $30), consumers directly compare these products’ post-promotion final prices displayed on their price tags (after a reduction of $10: $40 vs. $20). In contrast, under a non-integrated promotion of the same monetary value, consumers simply compare these products’ original list prices ($50 vs. $30) and neglect their post-promotion final prices, which require calculations. The list prices ($50 vs. $30; relative to the final prices: $40 vs. $20) as a basis for price comparison reduce the perceived price difference between these products. Consequently, a non-integrated promotion (compared to an integrated promotion) increases consumers’ choice of higher-priced products. A series of experiments (N = 5,187) demonstrate this effect and support the final price neglect mechanism. Furthermore, although attenuated, this effect still emerges for price reductions of a smaller magnitude or in a percent-off format.
KW - discount
KW - coupon
KW - multi-product promotion
KW - behavioral pricing
KW - vertical differentiation
KW - numerical cognition
UR - http://www.scopus.com/inward/record.url?scp=85187990184&partnerID=8YFLogxK
U2 - 10.1093/jcr/ucad045
DO - 10.1093/jcr/ucad045
M3 - Journal article
SN - 0093-5301
VL - 50
SP - 1097
EP - 1116
JO - Journal of Consumer Research
JF - Journal of Consumer Research
IS - 6
ER -