Why do discounts backfire when you make consumers wait?

Oct 15, 2013

Consumers like to reap the benefits of discounts immediately (not later), according to a new study in the Journal of Consumer Research. Consumers enjoy discounted products much less if they have to wait for them.

"Price promotions are common in the marketplace. For , these promotions translate into real economic savings, guide buying decisions, encourage trial of new , and make consumers feel smart and good about themselves," write authors Leonard Lee (Columbia University) and Claire I. Tsai (University of Toronto). But sometimes backfire, especially if consumers need to wait to enjoy the product.

The authors examined how discounts influence pleasure-related consumption experiences. They found that discounts generally make consumers happier. But they also found that paying a lower price for a product reduces the need to justify the expenditure, which causes people to pay less attention during consumption, dampening enjoyment. The relative strength of these opposing forces depends on when the product is consumed after payment—right away or after a delay.

The authors conducted four experiments involving real spending and consumption, using a variety of products (chocolates, music, orange juice) and different durations of delay. In one of the experiments, participants purchased one of two types of chocolate truffles at either the regular price of $1 or a discount of 50 cents. Half of the participants consumed the chocolate right away, and the other half waited for a week before consuming the chocolate. Consumers enjoyed the chocolate less when they had to wait a week.

"Our research provides new insight for better understanding the mixed effects of discounts on sales and loyalty, offering an explanation for why discounts may increase sales in the short run, but could have negative long-term effects on customer satisfaction and brand loyalty," the authors conclude.

Explore further: When do consumers think a freebie is more valuable than a discounted product?

More information: Leonard Lee and Claire I. Tsai. "How Price Promotions Influence Postpurchase Consumption Experience over Time." Journal of Consumer Research: February 2014.

add to favorites email to friend print save as pdf

Related Stories

Is the iPad Creative? It depends on who's buying it

Mar 05, 2013

Encouraging consumers to feel ownership of products they haven't yet purchased can backfire because consumers tend to see themselves in the products they own, according to a new study in the Journal of Consumer Research.

Recommended for you

Study finds law dramatically curbing need for speed

21 hours ago

Almost seven years have passed since Ontario's street-racing legislation hit the books and, according to one Western researcher, it has succeeded in putting the brakes on the number of convictions and, more importantly, injuries ...

Newlyweds, be careful what you wish for

Apr 17, 2014

A statistical analysis of the gift "fulfillments" at several hundred online wedding gift registries suggests that wedding guests are caught between a rock and a hard place when it comes to buying an appropriate gift for the ...

Can new understanding avert tragedy?

Apr 17, 2014

As a boy growing up in Syracuse, NY, Sol Hsiang ran an experiment for a school project testing whether plants grow better sprinkled with water vs orange juice. Today, 20 years later, he applies complex statistical ...

Creative activities outside work can improve job performance

Apr 16, 2014

Employees who pursue creative activities outside of work may find that these activities boost their performance on the job, according to a new study by San Francisco State University organizational psychologist Kevin Eschleman ...

User comments : 0

More news stories

Study finds law dramatically curbing need for speed

Almost seven years have passed since Ontario's street-racing legislation hit the books and, according to one Western researcher, it has succeeded in putting the brakes on the number of convictions and, more importantly, injuries ...

Health care site flagged in Heartbleed review

People with accounts on the enrollment website for President Barack Obama's signature health care law are being told to change their passwords following an administration-wide review of the government's vulnerability to the ...

Airbnb rental site raises $450 mn

Online lodging listings website Airbnb inked a $450 million funding deal with investors led by TPG, a source close to the matter said Friday.