The moderating role of price consciousness on the effectiveness of price discounts and premium promotions
| Pages | 306-312 |
| Published date | 17 July 2009 |
| DOI | https://doi.org/10.1108/10610420910972837 |
| Date | 17 July 2009 |
| Author | Mariola Palazón,Elena Delgado |
| Subject Matter | Marketing |
Pricing strategy & practice
The moderating role of price consciousness on
the effectiveness of price discounts and
premium promotions
Mariola Palazo
´n and Elena Delgado
Marketing Department, University of Murcia, Murcia, Spain
Abstract
Purpose – This study aims to integrate price consciousness into the promotional effectiveness framework. Specifically, it aims to analyse whether price
consciousness affects the evaluation of price discounts and premiums at two different benefit levels (moderate vs high).
Design/methodology/approach – An experiment was conducted with two promotional benefit level (moderate, high) £two promotion type (price
discount, premium) between subjects design. A sample of 229 undergraduate students was randomly assigned to a specific product-promotion
combination.
Findings – The results obtained indicate that at moderate benefit level, price discounts and premiums are equally effective for high price conscious
consumers. However, price discounts are more effective than premiums for low price conscious consumers. At high benefit level price discounts are
more effective than premiums, but this effect is more apparent for high price conscious consumers.
Research limitations/implications – The limitations of the study are those typically applied to the experimental methodology. Specifically, only two
product categories and two types of sales promotions were used which limits the generalization of the results. Another potential limitation is the useof
students’ respondents.
Practical implications – It is recommended that managers should know how price conscious their consumer segment is before taking any decisions
regarding the promotional strategy. To be more effective, it is recommended to offer premiums instead of moderate price discounts if the target
segment is high price conscious. However,such a recommendation should only be followed when the target is not low price conscious, because for this
consumer segment a moderate discount is preferred.
Originality/value – To analyze the effectiveness of a promotion, most of the present research has focused on the benefit provided, and the
promotional framework used. However, lacking in this research are insights into how consumer personal characteristics may affect that effectiveness.
The current research is to fill this gap in knowledge about consumer responses to sales promotions incorporating price consciousness in the analysis.
Keywords Discounts, Premium pricing, Promotional methods, Consumer behaviour
Paper type Research paper
Introduction
In recent years the increasing relevance of consumer
promotions is exemplified by the increased budget allocated
to marketing communications by many firms. According to
the 2006 PROMO industry trends reports, the percentage of
executives polled using promotions as a part of an overall
marketing strategy has grown from 55 percent in 2004 to 64
percent in 2005. Although price discounts are the most
traditional form of sales promotion, premiums are also
becoming popular. The premium provided by a company as a
promotional stimulus is simply a product or a service offered
for free or at a relatively low price in return for the purchase of
one or many products or services (d’Astous and Jacob, 2002).
In light of this, managers may be interested in knowing what
strategy is the best when deciding how to promote their
products.
To analyze the effectiveness of a promotion, most of the
present research has focused on the benefit provided
(Raghubir, 2004; Hardesty and Bearden, 2003; Nunes and
Park, 2003; Alford and Biswas, 2002; Inman et al., 1997), and
the promotional framework used (Palazon-Vidal and
Delgado-Ballester, 2005; Nunes and Park, 2003). However,
lacking in this research are insights into how consumer
personal characteristics may affect that effectiveness (Alford
and Biswas, 2002). In this sense, consumer heterogeneity
deserves special consideration because different consumer
segments are likely to vary in their responsiveness to sales
promotions and would determine the most effective form of
policy for reaching target consumer segments (Kukar-Kinney
et al., 2007).
The goal of the current research is to fill this gap in
knowledge about consumer responses to sales promotions
incorporating price consciousness in the analysis. Although
consumers’ level of price consciousness has been extensively
discussed, there is limited research to date examining its
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1061-0421.htm
Journal of Product & Brand Management
18/4 (2009) 306–312
qEmerald Group Publishing Limited [ISSN 1061-0421]
[DOI 10.1108/10610420910972837]
306
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