Zhengyu SHI
Ms. Zhengyu SHI
Research Postgraduate Student
Final Price Neglect in Multi-Product Promotions: How Non-Integrated Price Reductions Promote Higher-Priced Products

Price reductions take either an integrated form (e.g., a discount shown directly on the price tag) or a non-integrated form (e.g., a discount contained in a coupon sent to consumers and thus separate from the price tag). This research examines how non-integrated versus integrated promotions influence choices among vertically differentiated products. Under an integrated promotion (e.g., $10 off) applicable to multiple products (e.g., original list prices: $50 vs. $30), consumers directly compare these products’ post-promotion final prices displayed on their price tags (after a reduction of $10: $40 vs. $20). In contrast, under a non-integrated promotion of the same monetary value, consumers simply compare these products’ original list prices ($50 vs. $30) and neglect their post-promotion final prices, which require calculations. The list prices ($50 vs. $30; relative to the final prices: $40 vs. $20) as a basis for price comparison reduce the perceived price difference between these products. Consequently, a non-integrated promotion (compared to an integrated promotion) increases consumers’ choice of higher-priced products. A series of experiments (N = 5,187) demonstrate this effect and support the final price neglect mechanism. Furthermore, although attenuated, this effect still emerges for price reductions of a smaller magnitude or in a percent-off format.

Do Promotions Make Consumers More Generous? The Impact of Price Promotions on Consumers’ Donation Behavior

Despite growing concerns regarding the increasing consumerism related to promotions, this research documents a positive effect of price promotions on consumers’ donation behavior. Specifically, the authors propose that price promotions increase consumers’ perceived resources, which in turn increase consumers’ donation behavior. A series of seven studies, combining field and experimental data, provide converging support for this proposition and its underlying mechanism of perceived resources. Furthermore, the authors show that the positive effect of price promotions on consumers’ donation behavior is attenuated when consumers focus on the amount of money spent (rather than saved), when consumers feel they have overspent their budget, and when the monetary savings cannot be realized immediately. Finally, the authors show that this effect is stronger when donation solicitation occurs immediately after the price promotion (vs. after a delay). This research documents a novel behavioral consequence of price promotions and uncovers a mechanism by which price promotions can lead to positive social consequences and contribute to a better world.