The discount framing in different pricing schemes: Combined versus partitioned pricing
DOI:
https://doi.org/10.25255/jss.2015.4.1.705.725Keywords:
discounting, combined pricing, partitioned pricingAbstract
Pricing is one of the most sophisticated and critical issues which managers have to face. It is obvious that managers have been undervaluing the behavioural and psychological perspective of pricing for many years. With a clear understanding of behavioural pricing, managers are able to make extra profit for their firms. In the current study, it was interesting to investigating exactly how manipulation of discounts in the combined pricing scheme and partitioned pricing scheme affects the purchase decisions of consumers, such as consumers’ purchase intentions, value perceptions and motivation to purchase. In the experiment of this paper, the four scenarios were based on different pricing schemes and price discount framing, namely Combined/Non-discounted condition, Combined/Discounted condition, Partitioned/Non-discounted condition and Partitioned/Discounted condition. The ultimate goal of this study is to provide further insight for managers so as they can identify and understand consumers’ reactions from psychological and behavioural perspectives under different pricing schemes, as well as how consumers frame price discount in order to ethically capture additional profit from their businesses.
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References
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Doob, A. N., Carlsmith, J. M., Freedman, J. L., Landauer, T. K., & Tom, S. (1969). Effect of initial selling price on subsequent sales. Journal of Personality and Social Psychology, 11(4), 345-350.
Drumwright, M. E. (1992). A demonstration of anomalies in evaluations of bundling. Marketing Letters, 3(4), 311-321.
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Estelami, H. (2003). The effect of price presentation tactics on consumer evaluation effort of multi-dimensional prices. Journal of Marketing Theory & Practice, 11(2), 1-16.
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Lattin, J. M., & Bucklin, R. E. (1989). Reference effects of price and promotion on brand choice behavior. Journal of Marketing Research, 26(3), 299-310.
Maclnnis, D. J., & Jaworski, B. J. (1989). Information processing from advertisements: Toward an integrative framework. Journal of Marketing, 53(4), 1-23.
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Morwitz, V. G., Greenleaf, E. A., & Johnson, E. J. (1998). Divide and prosper: Consumers' reactions to partitioned prices. Journal of Marketing Research, 35(4), 453-463.
Novemsky, N., & Kahneman, D. (2005). The boundaries of loss aversion. Journal of Marketing Research, 42(2), 119-128.
Thaler, R. H. (1985). Mental accounting and consumer choice. Marketing Science, 4(3), 199-214.
Thompson, L. L. (2012). The mind and heart of the negotiator (5th ed.). Boston: Pearson Education Inc.
Tversky, A., & Kahneman, D. (1974). Judgment under uncertainty: Heuristics and biases. Science, 185(4157), 1124-1131.
Tybout, A. M., & Scott, C. A. (1983). Availability of well-defined internal knowledge and the attitude formation process: Information aggregation versus self-perception. Journal of Personality and Social Psychology, 44(3), 474-491.
Bertini, M., Ofek, E., & Ariely, D. (2009). The impact of add-on features on consumer product evaluations. Journal of Consumer Research, 36(1), 17-28.
Carlson, K. A., Meloy, M. G., & Russo, J. E. (2006). Leader-driven primacy: Using attribute order to affect consumer choice. Journal of Consumer Research, 32(4), 513-518.
Compeau, L. D., & Grewal, D. (1998). Comparative price advertising: An integrative review. Journal of Public Policy & Marketing, 17(2), 257-273.
Darke, P. R., & Chung, C. M. Y. (2005). Effects of pricing and promotion on consumer perceptions: It depends on how you frame it. Journal of Retailing, 81(1), 35-47.
Darke, P. R., & Dahl, D. W. (2003). Fairness and discounts: The subjective value of a bargain. Journal of Consumer Psychology, 13(3), 328-338.
DelVecchio, D., Krishnan, H. S., & Smith, D. C. (2007). Cents or percent? The effects of promotion framing on price expectations and choice. Journal of Marketing, 71(3), 158-170.
Dodson, J. A., Tybout, A. M., & Sternthal, B. (1978). Impact of deals and deal retraction on brand switching. Journal of Marketing Research, 15(1), 72-81.
Doob, A. N., Carlsmith, J. M., Freedman, J. L., Landauer, T. K., & Tom, S. (1969). Effect of initial selling price on subsequent sales. Journal of Personality and Social Psychology, 11(4), 345-350.
Drumwright, M. E. (1992). A demonstration of anomalies in evaluations of bundling. Marketing Letters, 3(4), 311-321.
Duncan, C. P., & Olshavsky, R. W. (1982). External search: The role of consumer beliefs. Journal of Marketing Research, 19(1), 32-43.
Estelami, H. (2003). The effect of price presentation tactics on consumer evaluation effort of multi-dimensional prices. Journal of Marketing Theory & Practice, 11(2), 1-16.
Garbarino, E. C., & Edell, J. A. (1997). Cognitive effort, affect, and choice. Journal of Consumer Research, 24(2), 147-158.
Goodstein, R. C. (1993). Category-based applications and extensions in advertising: Motivating more extensive ad processing. Journal of Consumer Research, 20(1), 87-99.
Greenwald, A. G., & Leavitt, C. (1984). Audience involvement in advertising: Four levels. Journal of Consumer Research, 11(1), 581-592.
Grewal, D., Marmorstein, H., & Sharma, A. (1996). Communicating price information through semantic cues: The moderating effects of situation and discount size. Journal of Consumer Research, 23(2), 148-155.
Hamilton, R. W., & Srivastava, J. (2008). When 2 + 2 is not the same as 1 + 3: Variations in price sensitivity across components of partitioned prices. Journal of Marketing Research, 45(4), 450-461.
Hu, H. H., Parsa, H. G., & Zhao, J. L. (2006). The magic of price-ending choices in European restaurants: A comparative study. International Journal of Contemporary Hospitality Management, 18(2), 110-122.
Inman, J. J., McAlister, L., & Hoyer, W. D. (1990). Promotion signal: Proxy for a price cut? Journal of Consumer Research, 17(1), 74-81.
Inman, J. J., Peter, A. C., & Raghubir, P. (1997). Framing the deal: The role of restrictions in accentuating deal value. Journal of Consumer Research, 24(1), 68-79.
Jain, S. P., & Maheswaran, D. (2000). Motivated reasoning: A depth-of-processing perspective. Journal of Consumer Research, 26(4), 358-371.
Janiszewski, C., & Lichtenstein, D. R. (1999). A range theory account of price perception. Journal of Consumer Research, 25(4), 353-368.
Kahneman, D. (2011). Thinking, fast and slow (1st ed.). New York: Farrar, Straus and Giroux.
Kahneman, D., & Tversky, A. (1979). Prospect theory: An analysis of decision under risk. Econometrica, 47(2), 263-291.
Kim, H. M. (2006). The effect of salience on mental accounting: How integration versus segregation of payment influences purchase decisions. Journal of Behavioral Decision Making, 19(4), 381-391.
Krishnamurthi, L., Mazumdar, T., & Raj, S. P. (1992). Asymmetric response to price in consumer brand choice and purchase quantity decisions. Journal of Consumer Research, 19(3), 387-400.
Lattin, J. M., & Bucklin, R. E. (1989). Reference effects of price and promotion on brand choice behavior. Journal of Marketing Research, 26(3), 299-310.
Maclnnis, D. J., & Jaworski, B. J. (1989). Information processing from advertisements: Toward an integrative framework. Journal of Marketing, 53(4), 1-23.
Manning, J. (2003). The proliferation of surcharging. Journal of Revenue and Pricing Management, 2(3), 255-260.
Miller, C. C. (2013, August 27). Technology isn't enough: Google wants its Glass to be chic, International Herald Tribune, p. 14.
Miyazaki, A. D. (2003). Guest editorial: The psychology of pricing on the Internet. Psychology & Marketing, 20(6), 471-476.
Morwitz, V. G., Greenleaf, E. A., & Johnson, E. J. (1998). Divide and prosper: Consumers' reactions to partitioned prices. Journal of Marketing Research, 35(4), 453-463.
Novemsky, N., & Kahneman, D. (2005). The boundaries of loss aversion. Journal of Marketing Research, 42(2), 119-128.
Thaler, R. H. (1985). Mental accounting and consumer choice. Marketing Science, 4(3), 199-214.
Thompson, L. L. (2012). The mind and heart of the negotiator (5th ed.). Boston: Pearson Education Inc.
Tversky, A., & Kahneman, D. (1974). Judgment under uncertainty: Heuristics and biases. Science, 185(4157), 1124-1131.
Tybout, A. M., & Scott, C. A. (1983). Availability of well-defined internal knowledge and the attitude formation process: Information aggregation versus self-perception. Journal of Personality and Social Psychology, 44(3), 474-491.
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Published
2018-01-26
How to Cite
Lee, M., & Law, D. F. (2018). The discount framing in different pricing schemes: Combined versus partitioned pricing. Journal of Social Sciences (COES&Amp;RJ-JSS), 4(1), 705–725. https://doi.org/10.25255/jss.2015.4.1.705.725
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