Events

Prof. Thomas Allard
Associate Professor of Marketing
Lee Kong Chian School of Business
Singapore Management University

ABSTRACT

This research documents how creating redemption tasks requiring a token (i.e., minimal) amount of effort—for instance, by asking the consumer to enter a promo code or solve a CAPTCHA to receive a discount—increases price promotion effectiveness compared to equivalent straight discounts (i.e., applied automatically). Nine studies, including two field experiments, provide robust evidence for the beneficial effect of token effort requirements on redemption rates. This counterintuitive effect occurs because the easy-to-attain redemption task induces a positive effort-based transaction utility. As such, this effect only occurs when the redemption task requires token-type effort but not when it is effortful. Our results also show that a token redemption effort can boost the promotional effectiveness of small discounts—which prior research often finds ineffective. This research offers costless and easy-to-implement managerial recommendations for effective price promotion management.