How to formulate conditional promotion propositions

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Context

Conditional promotions are a widespread practice among firms. They consist in granting consumers who buy several products together a discount. Conditional promotions may be formulated in several manners. For instance, in the case of a promotion that is conditional on the purchase of two items, two framings exist:
– “buy two items, get 20% off on both items”
– “buy two items, get 40% on the cheaper item”

Even though these framings seem to yield a similar expected income for the seller, consumers may not react in the same way to both formulations.  

Research questions

In the case of a conditional promotion on two items, Sokolova and Li investigate how consumers react to both possible framings (“buy two, save 30% on both” or “buy two, save 60% on cheaper”) of these promotions. Since consumers faced with a conditional promotion need to pick two items, they will select one item first (“the primary item”) and another item second that will allow them to qualify for the promotion (“the secondary item”). More precisely, Sokolova and Li’s article helps understand how consumers pick the primary and the secondary items. Their research was published in 2020 in the Journal of Consumer Psychology. It aims at answering the following research question: does the composition of the consumer’s basket vary across framings of a conditional promotion on two items?

Method

To answer their research questions, Sokolova and Li conducted a pretest (165 participants), two laboratory studies (respectively 533 and 500 participants) and one field experiment (69 participants). The studies included different discount rates and involved different product categories (clothing, bed settings). Some of the studies were devised to replicate “real” shopping conditions, in which consumers may shop for more or less items than the ones featured in the conditional promotion. All experiments manipulated discount framings and evaluated consumer basket choices and motivations.

Results

The likelihood of consumers purchasing two items rather than one does not vary across framings.

– Consumers facing a conditional promotion choose the primary item based on liking considerations. However, since the secondary item allows them to qualify for the promotion, the secondary item is chosen based on savings considerations. Therefore, promotion framings affect the choice of the secondary item rather than the choice of the primary item. Hence, the choice of the primary item does not vary across framings.

–   Since consumers are driven by savings considerations while picking their secondary item, they will opt for the composition strategy that allows them to maximize their saving. In the “buy two, save x% on both” context, consumers are already assured of saving x% on the primary item, which decreases their motivation to look for additional savings. Therefore, consumers facing a “buy two, save x% on both” promotion spend significantly less money on the secondary item than consumers presented with a “buy two, save 2x% on cheaper” framing. In other words, in a “buy two, save x% on both”, consumers will choose the secondary item based on liking considerations, while in a “buy two, save 2x% on cheaper”, consumers will choose the secondary item based on savings considerations.

Why is this article relevant for researchers?

This article provides evidence against the multiple gain processing framework which predicts that two segregated gains (in our case, discount on both products) should lead to greater satisfaction than one integrated gain (in our case, discount on the cheaper product).

Moreover, it gives new insight on how promotion framings shape consumer choices. However, in this research, the primary item was often deduced by the authors rather than indicated by consumers, thus treating the purchases of the primary and secondary items as successive events. In addition to checking for external validity across product categories (since all products are not affected by promotions in the same way) and extending the results to a conditional promotion on more than two items, future research could evaluate the impact of promotion framings on basket composition considering the latter as an integral strategy rather than a succession of events. Finally, this article addresses conditional promotions in terms of discounts, but does not study the particular framing of free products. For example, “buy 1, get one free” equals to “buy 2, get 100% on cheaper” in terms of revenue, but does this different formulation have an impact on consumer behavior?

Why is this article relevant for professionals?

This research invites managers and marketers to choose wisely between different framings of a promotion that may seem equivalent, think about what consumers might read into it and what kind of advantages the firm expects to derive from the promotion. If the aim is to be more profitable, the “buy two, save 2x% on cheaper” seems like a safe formulation. Some firms might prefer the “buy x, get one free” version of this proposition, but this article does not provide evidence that this exact formulation is as beneficial as the “buy two, save 2x% on cheaper” framing.

Source: Sokolova, T., & Li, Y. (2021). Mix or Match? Consumer Spending Decisions in Conditional Promotions. Journal of Consumer Psychology, 31(1), 91-102.

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