Study: Double discounts confuse consumers

Sep 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: Color and texture matter most when it comes to tomatoes

add to favorites email to friend print save as pdf

Related Stories

Tablets, cars drive AT&T wireless gains—not phones

5 hours ago

AT&T says it gained 2 million wireless subscribers in the latest quarter, but most were from non-phone services such as tablets and Internet-connected cars. The company is facing pricing pressure from smaller rivals T-Mobile ...

Twitter looks to weave into more mobile apps

5 hours ago

Twitter on Wednesday set out to weave itself into mobile applications with a free "Fabric" platform to help developers build better programs and make more money.

Recommended for you

Color and texture matter most when it comes to tomatoes

Oct 21, 2014

A new study in the Journal of Food Science, published by the Institute of Food Technologists (IFT), evaluated consumers' choice in fresh tomato selection and revealed which characteristics make the red fruit most appealing.

How the lotus got its own administration

Oct 21, 2014

Actually the lotus is a very ordinary plant. Nevertheless, during the Qing dynasty (1644-1911) a complex bureaucratic structure was built up around this plant. The lotus was part of the Imperial Household, ...

What labels on textiles can tell us about society

Oct 21, 2014

Throughout Chinese history, dynastic states used labels on textiles to spread information on the maker, the commissioner, the owner or the date and site of production. Silks produced in state-owned manufacture ...

US company sells out of Ebola toys

Oct 17, 2014

They might look tasteless, but satisfied customers dub them cute and adorable. Ebola-themed toys have proved such a hit that one US-based company has sold out.

User comments : 0