In Which Conditions Do Price Promotions Have the Most Negative Effects on Product Attitudes? A Structured Abstract

As consumers are often exposed to price-related advertising in purchase situations and as, among other factors, both prices (Chang and Wildt 1994) and product attitudes (Spears and Singh 2004) affect purchase decisions, it is important to examine possible negative effects of price promotions on product attitudes. Some previous studies provide evidence for positive effects of price promotions on purchase intentions (Ailawadi and Neslin 1998; Grewal et al. 1998), but other studies show that discounts can negatively affect future sales (Kalwani et al. 1990; Lattin and Bucklin 1989). A possible explanation for such opposite findings might be that sales promotions have direct positive effects on purchase intentions but indirect negative effects through more negative product attitudes on purchase intentions (Davis et al. 1992). The objective of this study is to focus on effects of price promotions on product attitudes and to examine in which conditions such effects are more or less negative. This study goes beyond previous studies that analyzed possible negative effects of price promotions (Dodson et al. 1978; Raghubir and Corfman 1999) by considering conditions in which price-related advertising can have more or less negative effects on product attitudes. The conditions are the number of consumers’ ad contacts (1 vs. 5), the saving format used to display the price reduction (percentage off vs. amount off), and the salience of the regular price in the ad (yes vs. no) as well as the perceived levels of discount information credibility (low vs. high). We simultaneously analyze direct and interaction effects of marketer-controlled factors and consumers’ perceptions that play a role in the context of consumers’ responses to price promotions in terms of product attitudes. An analysis of effects of marketer-controlled factors helps marketers to choose the combination of factors that produce the most positive consumer responses. The effects of price promotions on consumers’ attitudes could be moderated by as how credible consumers perceive the price claims displayed in the ad. Perceived ad credibility is the extent to which consumers perceive the claims as believable (MacKenzie and Lutz 1989). When consumers perceive a discrepancy with prior perceptions, they might perceive price claims as less credible (Lutz et al. 1983). The findings provide marketers with insights in which conditions a sales promotion leads to comparatively negative product attitudes and thus enables them to avoid such constellations when launching a sales promotion.