Study: Double discounts confuse consumers

September 13, 2007

A U.S. study showed that consumers often are unable to determine the true cost of goods when confronted with a "double discount."

For example: You're walking by a store window and you see a sign that offers a product at 20 percent off the original price, plus an additional 25 percent off the already reduced sale price.

How much is the discount?

Researchers said consumers often mistakenly believe the total discount is 45 percent off the original price when, in fact, the true discount is 40 percent.

"Retailers frequently use the strategy of double discounts for their regular promotions or to induce customers to open a credit card account with them," said researchers Allan Haipeng Chen of the University of Miami and Akshay Rao of the University of Minnesota. "Such errors in peoples' judgments of the net effect of multiple price discounts ... have implications for a variety of marketing settings including advertising, promotion, pricing, and public policy."

The study, reported in the Journal of Consumer Research, explored why consumers frequently believe a double discount is a better deal than a single discount of the same total magnitude.

Copyright 2007 by United Press International

Explore further: Scientists say polar bears won't thrive on land food

Related Stories

Scientists say polar bears won't thrive on land food

April 1, 2015

A group of researchers say polar bears forced off melting sea ice will not find enough food to replace their current diet of fat-laden marine mammals such as seals, a conclusion that contradicts studies indicating that bears ...

Recommended for you

Earliest evidence of reproduction in a complex organism

August 3, 2015

Researchers led by the University of Cambridge have found the earliest example of reproduction in a complex organism. Their new study has found that some organisms known as rangeomorphs, which lived 565 million years ago, ...

Model shows how surge in wealth inequality may be reversed

July 30, 2015

(Phys.org)—For many Americans, the single biggest problem facing the country is the growing wealth inequality. Based on income tax data, wealth inequality in the US has steadily increased since the mid-1980s, with the top ...

French teen finds 560,000 year-old tooth (Update)

July 28, 2015

A 16-year-old French volunteer archaeologist has found an adult tooth dating back around 560,000 years in southwestern France, in what researchers hailed as a "major discovery" Tuesday.

0 comments

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.