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The influence of regular price level (low, medium, or high) and framing of discount (monetary or percentage) on perceived attractiveness of discount amount

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  • Aku-Ville Lehtimäki

    (Aalto University School of Business)

  • Kent B. Monroe

    (University of Illinois at Urbana-Champaign)

  • Outi Somervuori

    (Aalto University School of Business)

Abstract

Generally, discounting prices increases unit sales but decreases profit margins. If presenting a discount more attractively, will profits increase with sales? We tested discounts presented to customers in euros or percentages at three regular price levels (low, medium, or high). Store visitors were surveyed to determine the discount that would make a promoted product attractive to them. Results align with previous literature: the normal (or regular) price influences the discount attractiveness when the discount is presented in absolute (monetary) terms. However, percentage discounts were perceived similarly between price levels. The amount saved was not only considered: the discount attractiveness was also compared to some reference discount. Second: relative and absolute promotions’ references differ: the evaluations in absolute terms led to higher attractive discount levels.

Suggested Citation

  • Aku-Ville Lehtimäki & Kent B. Monroe & Outi Somervuori, 2019. "The influence of regular price level (low, medium, or high) and framing of discount (monetary or percentage) on perceived attractiveness of discount amount," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 18(1), pages 76-85, February.
    • Handle: RePEc:pal:jorapm:v:18:y:2019:i:1:d:10.1057_s41272-018-0152-2
    DOI: 10.1057/s41272-018-0152-2
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    Cited by:

    1. De Vries, Eline L.E. & Zhang, Sha, 2020. "The effectiveness of random discounts for migrating customers to the mobile channel," Journal of Business Research, Elsevier, vol. 110(C), pages 272-281.
    2. Maxime C. Cohen & Michael D. Fiszer & Baek Jung Kim, 2022. "Frustration-Based Promotions: Field Experiments in Ride-Sharing," Management Science, INFORMS, vol. 68(4), pages 2432-2464, April.

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    Keywords

    Pricing; Discount; Framing;
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