When less is better than more: Just-below discount in tensile price promotions

#Consumer behavior has been found to respond tensile #pricing strategies where the discount percentage is specified slightly below round figures.

Retailers often use Tensile Price Claims (TPC) such as “up to 40% off” or “from 10% to 40% off” to promote a line of merchandise. This enables them to have a salient communication while allowing specific level of discount on particular items. Recently, retailers have started using just-below TPC frames such as “upto 39% off”. This research explores the influence of TPC framed with “just-below” numbers on consumers’ perceived benefits through three studies.

The results indicate that just-below temporal frames have a more favorable impact on consumer perceptions than round frames; this is contrary to left digit salience heuristic but is in line with anchoring and adjustment theory. The effect of just-below framing disappears both for deep discount levels and with sequential TPC discounts. This study has important managerial implications for the use of TPC as a promotional tool. The study also contributes to theory in multiple ways.

Photo Credit: Achresis Khora