An unintended consequence of exaggerated maximum-discount tensile price claims
| DOI | https://doi.org/10.1108/JPBM-01-2016-1091 |
| Pages | 700-709 |
| Date | 21 November 2016 |
| Published date | 21 November 2016 |
| Author | Jung Eun Lee,Leslie Stoel |
| Subject Matter | Marketing,Product management,Brand management/equity |
An unintended consequence of exaggerated
maximum-discount tensile price claims
Jung Eun Lee
Department of Apparel, Housing, and Resource Management, Virginia Polytechnic Institute and State University,
Blacksburg, Virginia, USA, and
Leslie Stoel
Farmer School of Business, Miami University, Oxford, Ohio, USA
Abstract
Purpose – Retailers are known to present tensile price claims (TPCs) stating high discounts to entice shoppers. Prior research on TPCs suggests that
high TPC discounts increase purchase intentions. However, the current study proposes, first, that the TPC discount shifts expected price discount
(EPD) and, second, that the gap between the actual price discount and the EPD influence perceptions of the discount deal. Support for these
propositions would suggest that high TPC discounts will only be effective when they closely match the actual price discount. Therefore, the purpose
of this paper was to evaluate the effectiveness of exaggerated maximum-discount TPCs.
Design/methodology/approach – Two experiments were used. Study 1 investigated the effect of exposure to a TPC on EPD. Study 2 examined
discount discrepancy as a mediator of the relationship between a TPC and consumer perceptions (i.e. perceived savings and price fairness) and
purchase intentions. PROCESS and ANOVA were used for the analysis.
Findings – This research showed that exposure to a TPC influenced consumers’ EPDs. As TPC discount increased, EPD increased and the discount
discrepancy (i.e. actual price discount minus EPD) decreased (and, in some cases, became negative). The discount discrepancy influenced consumer
perceptions of savings and fairness, as well as purchase intentions. Consequently, when the actual price discount encountered was not as large as
the advertised TPC discount, the results showed a negative, indirect influence of exaggerated maximum-discount TPCs on consumers’ discount
perceptions, mediated by the discount discrepancy.
Originality/value – Previous TPC studies found that the size of the TPC discount positively influences consumers’ discount perceptions, implying
that larger discounts are more effective. However, this approach does not take into consideration the notion that larger TPC discounts increase
consumer expectations about the size of discount and these expectations are used as a frame to evaluate a discount deal. The findings of the current
research show a negative, indirect influence of exaggerated TPC discount on consumer perceptions and purchase intentions through discount
discrepancy. Therefore, this study provides a new perspective to explain the influence of TPC discount size on consumer perceptions.
Keywords Purchase intentions, Price fairness, Perceived savings, Price discount, Tensile price claim
Paper type Research paper
1. Introduction
How do shoppers react when they are drawn to a store by an
advertisement stating “Save up to 70 per cent” but discover
that most items are discounted only 20 per cent? What role
does the size of the gap between the promoted discount and
the actual price discount for an item play when a consumer
evaluates a discount deal? These are important questions
because this tactic is commonly used in the retail sector to
attract shoppers. This tactic is called the “tensile price claim”
(TPC), and it refers to the practice of stating broad amounts
of savings by using ranges such as “as low as $9.99”, “Save 20
to 50 per cent” and “Save up to 80 per cent”. Retailers are
known to present TPCs stating a high maximum discount and
then offer only a few items at that high discount with most
other items at a low discount. They expect that once consumers
enter the store, they will purchase low- and/or non-discounted
products. However, the exaggerated maximum-discount TPC
(i.e. “Save up to 80 per cent”), where the advertised discount is
much higher than the actual discount, may cause unintended
consequences. And those consequences are examined in this
paper.
Previous studies investigating TPCs have found evidence of
only positive consequences of the maximum discount across
various forms of TPCs. For example, consumers perceive a
higher price reduction for “Save up to 50 per cent” than for
“Save 30 per cent” (Mobley et al., 1988) and “Save up to 40
per cent” over “Save 10 per cent” or “Save 10 per cent to 40
per cent” (Biswas and Burton, 1994). However, this point of
view does not consider that a higher maximum-discount TPC
evokes a higher expected price discount (EPD) that
corresponds to the maximum savings stated. This study
proposes that in the case of an exaggerated TPC, where the
actual price discount is much lower than the discount stated in
the maximum-discount TPC, consumers may not be pleased
with a discount that is not as high as they expected based on
the TPC. Their disappointment, stemming from the gap
between the EPD and the actual price discount, may result in
negative perceptions of the discount offer.
The current issue and full text archive of this journal is available on
Emerald Insight at: www.emeraldinsight.com/1061-0421.htm
Journal of Product & Brand Management
25/7 (2016) 700–709
© Emerald Group Publishing Limited [ISSN 1061-0421]
[DOI 10.1108/JPBM-01-2016-1091]
700
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