Sales Promotions and the Choice Context as Competing Influences on Consumer Decision Making

Abstract

Although brand switching is one of the most researched topics in marketing, we still know very little about the moderators of switching between brands in different price‐quality tiers (e.g., from Häagen–Dazs ice cream to Breyers or to a store brand). Building on the notion that buyers have a (category‐specific) consideration set of price–quality tiers, we propose that sales promotions and the choice set composition (or the choice context) have compensatory effects on brand switching between price–quality tiers. Specifically, if one of these factors causes buyers to switch to a higher price–quality tier within their brand‐tier consideration set, then the other factor is less likely to induce switching in the same direction (to an even higher tier) and more likely to induce switching in the opposite direction. This general proposition leads to several specific hypotheses, including (a) the likelihood of switching between particular brand tiers due to price promotions can be predicted based on the choice set composition; (b) asymmetric switching, whereby consumers are more likely to switch up from a low‐tier to a promoted high‐tier brand than from a high‐tier to a promoted low‐tier brand, is reduced or eliminated if consumers consider three price–quality tiers; and (c) the compromise effect is reduced when the lowest tier brand offers a price promotion. These hypotheses were supported in a series of studies, which also examined rival explanations. The theoretical and practical implications of the findings are discussed.