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Journal Article

The asymmetric effect of discount retraction on subsequent choice

Journal of Consumer Research 31 (3): 652–657
Luc Wathieu, A. V. Muthukrishnan, Bart J. Bronnenberg (2004)
price promotion, price discount, brand preference
This article examines the subsequent impact of a temporary price discount on brand preference after the promotion is retracted. Theorizing that price salience has an impact on price sensitivity, we propose that the effects of retracting a discount depend on the promoted brand's regular price_quality positioning. In a first experiment in which we track consumer choices across a sequence of choice occasions, we show that retracting a discount posted by a higher quality, higher price brand is detrimental to that brand. In contrast, a discount posted by a lower quality, lower price brand is capable of enduringly diverting consumers away from high_end brands. A second experiment relies on process measures to provide evidence for the underlying price salience mechanism. A third experiment tests our hypotheses with real incentives and offers additional support for our price salience theory by testing its most peculiar behavioral implication.
With permission of the University of Chicago Press
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