Attractiveness of discount rate versus limited quantity

Hye Kyung Park,Jong-Ho Huh,Bong-Sup Shin

doi:10.1108/apjie-12-2016-001

Abstract

Purpose This paper aims to examine how the temporal distance can influence the effect of the scarcity message. To demonstrate this effect, the authors use the limited-quantity flash sales and compare two types of mixed promotion method comprising discount rate and limited quantity. Design/methodology/approach The results of the experiment reveal that consumers in the temporally distant condition have a relatively high-level construal of the limited-quantity flash sales and are more likely to value desirability (discount rate) over feasibility (limited quantity). Findings When the expected value is identical, consumers prefer limited-quantity flash sales with smaller limited quantity but higher discount rates. However, consumers in the temporally near condition have a relatively low-level construal of the limited-quantity flash sales and are more likely to value feasibility (limited quantity) over desirability (discount rate). Originality/value When the expected value is identical, consumers prefer limited-quantity flash sales with lower discount rates but larger limited quantity.

Highlights

In the everyday consumption environment, we frequently encounter messages such as “selling out soon”, “best-selling”, “limited stock” or “limited-edition” that indicate limited supplies and opportunities to purchase (Kim and Baek, 2014)
Several studies comparing the differences in effects by scarcity type have been conducted; these studies categorize scarcity messages as time limited messages or quantity limited messages depending on whether the limitation is in terms of purchase time or the quantity of products available for purchase (Cialdini, 1985)
Supply-side scarcity messages are effective under the following conditions: conspicuous consumption (Gierl et al, 2008), hedonic consumption (Park, 2010), consumers with propensity toward promotion focus (Ku et al, 2012; Yoon et al, 2014) and strong inclination to satisfy the need for conformity (Kim and Baek, 2014)

Summary

Introduction

In the everyday consumption environment, we frequently encounter messages such as “selling out soon”, “best-selling”, “limited stock” or “limited-edition” that indicate limited supplies and opportunities to purchase (Kim and Baek, 2014). In this dimension, limited-quantity flash sales could be viewed in terms of desirability and feasibility, i.e. if “price discount” is related to desirability, the positive end state to be achieved, “limited quantity” can be considered in terms of feasibility in that it is related to the degree of difficulty in reaching the end state Assuming this to be the case, we may hypothesize that for temporally distant situations, where consumers have a relatively high-level construal of the limited-quantity flash sales and are more likely to value desirability (discounts rate) over feasibility (limited quantity), if the expected value is identical, consumers will prefer limited-quantity flash sales with smaller limited quantity but higher price discount rates. If the expected value is identical for temporally distant situations, consumers will prefer limited-quantity flash sales with high discount rates even if it means a smaller limited quantity. After the experiment was completed, the participants were debriefed and returned home

Analysis results

Conclusion and discussion