Hedonic product discounts: When is the price right?

Abstract

Purpose – The purpose of this study was to examine the effects of price discounts on products perceived to provide hedonic value vs those perceived to evoke displeasure. Also examined were the effects of various discount levels on consumer intentions to purchase. Design/methodology/approach – The study design was a 2 (emotion-evoked) × 2 (price) × 3 (level of discount) mixed-factorial design. In this study, 182 participants were presented with several products and indicated whether they would shop with a competitor offering various price discounts on pleasure- vs displeasure-evoking products. Findings – ANOVA results indicated a significant main effect of price discounts on intention to purchase and a significant interaction between price discount and type/price of product. Discounts mattered more between certain levels (10 and 50 per cent) than others (50 versus 70 per cent). Discounts mattered more for hedonic products (pleasure-evoking) than those that evoked displeasure; however, price trumped all factors such that discounts mattered most when price of product is high. Research limitations/implications – Limitations include age range of participants and that intentions to shop were measured. Future research should examine price effects on other socio-demographic groups and actual behavior. Practical implications – Retailers would benefit from using price discounts as a competitive strategy, with attention given to the “percentage-off” levels that are perceived to be steeper. Discounts are more effective when the product offers hedonic value or when price is high. Originality/value – To our knowledge, this is the first study to examine the relationship between “percentage-off” price discounts on hedonic products. This study contributes to the literature on pricing affect.