Tiered discounts as multiple reference points for spending
Date
2022-12-13
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Journal of Consumer Psychology
Abstract
Tiered discounts offer larger discounts as consumers meet higher spending thresholds (e.g., spend $100+, receive 10% off; spend $200+, receive 20% off). This research investigates how consumers treat these multiple dollar thresholds as reference points for spending. We find that tiered discounts with smaller increments between thresholds encourage higher spending compared to those with larger increments. This effect occurs because consumers treat thresholds as motivational spending goals when the distance to higher thresholds is smaller (vs. larger). Consistent with this reasoning, signaling goal progress (i.e., displaying cart amount while shopping) attenuates the spending difference smaller versus larger increment sizes yield. Additionally, the effect of tier increment size on spending is more prominent for maximizers. From a theoretical perspective, this work contributes to our understanding of how individuals process multiple reference points within a single promotion and identifies that spending thresholds in price promotions may be treated as spending goals. From a managerial perspective, this work investigates the relationship between tiered discount design and consumer spending.
Description
This is the peer reviewed version of the following article: Cheng, Andong, and Gretchen R. Ross. “Tiered Discounts as Multiple Reference Points for Spending.” Journal of Consumer Psychology, December 13, 2022, jcpy.1339. https://doi.org/10.1002/jcpy.1339, which has been published in final form at https://doi.org/10.1002/jcpy.1339. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions. This article may not be enhanced, enriched or otherwise transformed into a derivative work, without express permission from Wiley or by statutory rights under applicable legislation. Copyright notices must not be removed, obscured or modified. The article must be linked to Wiley’s version of record on Wiley Online Library and any embedding, framing or otherwise making available the article or pages thereof by third parties from platforms, services and websites other than Wiley Online Library must be prohibited. This article will be embargoed until December 13, 2024.
Keywords
goals, maximizing, motivation, price promotions, reference points, tiered discounts
Citation
Cheng, Andong, and Gretchen R. Ross. “Tiered Discounts as Multiple Reference Points for Spending.” Journal of Consumer Psychology, December 13, 2022, jcpy.1339. https://doi.org/10.1002/jcpy.1339.