The moderating role of price consciousness on the effectiveness of price discounts and premium promotions

Abstract

PurposeThis study aims to integrate price consciousness into the promotional effectiveness framework. Specifically, it aims to analyse whether price consciousness affects the evaluation of price discounts and premiums at two different benefit levels (moderate vs high).Design/methodology/approachAn experiment was conducted with two promotional benefit level (moderate, high) × two promotion type (price discount, premium) between subjects design. A sample of 229 undergraduate students was randomly assigned to a specific product‐promotion combination.FindingsThe results obtained indicate that at moderate benefit level, price discounts and premiums are equally effective for high price conscious consumers. However, price discounts are more effective than premiums for low price conscious consumers. At high benefit level price discounts are more effective than premiums, but this effect is more apparent for high price conscious consumers.Research limitations/implicationsThe limitations of the study are those typically applied to the experimental methodology. Specifically, only two product categories and two types of sales promotions were used which limits the generalization of the results. Another potential limitation is the use of students' respondents.Practical implicationsIt is recommended that managers should know how price conscious their consumer segment is before taking any decisions regarding the promotional strategy. To be more effective, it is recommended to offer premiums instead of moderate price discounts if the target segment is high price conscious. However, such a recommendation should only be followed when the target is not low price conscious, because for this consumer segment a moderate discount is preferred.Originality/valueTo analyze the effectiveness of a promotion, most of the present research has focused on the benefit provided, and the promotional framework used. However, lacking in this research are insights into how consumer personal characteristics may affect that effectiveness. The current research is to fill this gap in knowledge about consumer responses to sales promotions incorporating price consciousness in the analysis.