Differences in Reactions to Sales Promotions

Abstract

This study examines whether product promotions are influenced by the market standing of promoted products, using social comparison theory (upward versus downward comparisons). It is hypothesized that people in possession of a product that is inferior to the one on promotion express less discomfort about the promotion and use the information more than do people in possession of a superior product. People in possession of an inferior product may also exhibit more positive attitudes toward the product on promotion, but may show poorer attitudes toward their own possessed product than do people with a superior product. This is because people in an inferior socioeconomic position show a strong motivation to improve themselves through upward social comparison, whereas people in a superior socioeconomic position maintain a strong sense of superiority in downward social comparison, which suggests strong endowment effects. The findings mainly support the hypotheses, and suggest that sales promotions are more effective for people who currently own an inferior product, but not for people with a superior product, who have a strong motivation to maintain their sense of superiority. The findings also imply that, in order to attract consumers in the superior market, managers for inferior products need to turn to methods other than sales promotions, which may include introducing a new brand or sub-brand, or emphasizing luxury and modern features. In contrast, managers for superior products may emphasize product functions and attributes of superior products in their promotions, as people with inferior products may consider such information as benefits of the superior products.