Regular Price $299; Pre-order Price $199: Price Promotion for a Pre-ordered Product and the Moderating Role of Temporal Orientation
Retailers typically use the strategy of providing a discount to induce the sale of a new product at a pre-order stage. Despite the prevalence of this strategy, providing discounts might not be effective for all consumers. The present research shows that the positive effect of a discount depends on consumer temporal orientation. Results from four experimental studies reveal that a large discount positively affects present-oriented, but not future-oriented, consumers. The findings suggest that perceived financial risk and perceived product quality sequentially mediate the effect of discount size on value toward the deal and purchase intention. A third-party product quality rating boosts quality perceptions, which in turn reduces perceived financial risk and positively enhances value toward the deal along with purchase intention. Our findings demonstrate that when the brand itself acts as a reliable signal of quality, a discount has its intended effect for both present- and future-oriented consumers. Overall, the findings of this research suggest that a retailer can use quality cues along with a discount, especially for a new brand, to appeal to the broadest group, as it will attract both future- and present-oriented consumers.
Journal of Retailing
Mukherjee, A., Jha, S., & Smith, R. (2017). Regular Price $299; Pre-order Price $199: Price Promotion for a Pre-ordered Product and the Moderating Role of Temporal Orientation. Journal of Retailing, 93 (2), 201-211. https://doi.org/10.1016/j.jretai.2016.11.001