The discount consolidation effect: How brands can present quantity discounts more effectively

Abstract

AbstractHow should brands present quantity discounts to increase consumer appeal? We propose that, compared to distributed presentations that spread a discount across units (e.g., buy two, get 30% off on each unit), consolidated presentations that place the discount on a single unit (e.g., buy two, get 60% off on the second unit) can lead to a higher purchase likelihood. Four studies demonstrate this “discount consolidation effect” across a variety of consumption contexts, product categories and price levels. The studies show that this effect occurs because compared to consolidated presentations of a quantity discount, distributed presentations can lead to less favorable perceptions about the quality of the discounted product and about the savings offered. We also identify an important boundary condition, illustrating that when the discount offered is substantively small in size, the effect is attenuated. These findings add to the theoretical literature and offer actionable managerial insights.