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Using consumer-perceived risks to set optimal discount levels

Author

Listed:
  • Marlene Jensen
  • Ronald G. Drozdenko

Abstract

Managing revenue includes setting the lowest discounts necessary to achieve the desired boost in unit sales and profits. This study systematically examines how four risk types; financial, performance, social/psychological and physical, relate to the optimal discount selected by consumers in 12 product categories. Higher priced products had the highest perceived financial risk; performance and physical risk was highest for tyres; and social/psychological risk was highest for shirt/blouse. Two of the risk factors, social/psychological and physical, were found to be predictive of optimal discount levels. The revenue management implications of setting discount levels in different product categories are discussed.

Suggested Citation

  • Marlene Jensen & Ronald G. Drozdenko, 2008. "Using consumer-perceived risks to set optimal discount levels," International Journal of Revenue Management, Inderscience Enterprises Ltd, vol. 2(4), pages 327-343.
    • Handle: RePEc:ids:ijrevm:v:2:y:2008:i:4:p:327-343
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    Cited by:

    1. Miquel Carreras-Simó, 2016. "Advanced sales and competition in a service industry," International Journal of Revenue Management, Inderscience Enterprises Ltd, vol. 9(1), pages 1-16.

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