The Effect of Consistency of Price Promotion Cues on Retailer Credibility, Product Quality, Value of a Deal and Purchase Intentions

Research on price promotions suggests that higher discounts often result in more favorable deal evaluations. However, consumers reactions do not always follow a consistently linear path when evaluating the deal. Price promotions offering too high or too low value may result in adverse deal evaluations.In this dissertation we investigate consumers reactions and possible evaluations of price promotions when they are provided information on the two primary price promotion attributes - discount and time restrictions. If the price promotion attributes, acting as cues, are consistent with consumers expectations (e.g., a high discount with a short time period, or vice versa), then the price promotion will be perceived as typical and consumers will evaluate it heuristically by using a small number of the cues. Typical price promotions are also likely to be processed automatically by using the default cause(s) for a retailers price promotions. Consumers evaluations of these deals can then be predicted by using simple linear models (Bettman, 1971) like the concept of perceived value (Monroe, 1982).On the other hand, when a combination of price promotion attributes indicates that a retailer breaks the common sense rules of selling consumers will discount the default explanation and work to find a valid alternative explanation. In doing so, atypical price promotions induce attributional thinking and more complex information processing utilizing all relevant cues. The consumers reactions in such situations may be best represented by more configural models like attribution theory (Kelley, 1972; Weiner, 1968).The proposed conceptual model results in a set of hypotheses tested in two studies. The first study finds support for the hypotheses related to consumers reactions to typical and atypical price promotions when a retailer is fully responsible for offering the price promotion. The second study also finds support for the role of attributions due to external circumstances. The results demonstrate that respondents deal evaluations are dependent on whether the price promotion is typical or atypical and whether its inferred cause is internal or external. As a result the proposed conceptual model parsimoniously accounts for the prior mixed findings found in the research on price promotion.