Motivation and emotion/Book/2022/Discounts and consumer purchase behaviour

Discounts and consumer purchase behaviour:
What role do discounts play in consumer purchase behaviour?

Multimedia presentation (3 min)

Overview

Shopping is the act of purchasing services and goods and services. It is broken down into steps from browsing, comparing and finally purchasing the item (Marriott, Williams & Dwivedi, 2017). The concept of shopping dates to as long as people have lived. However, they traded livestock and land to attain goods during those times. The role of currency in exchange for goods dates to 3000 BC in Mesopotamia. Shopping has changed throughout these years from having general stores to now having whole retail outlets consisting of many various retailers in one mall. Further extending shopping into e-commerce. The major retailers thriving in the retail space are Amazon, Kroger, Walmart, and Costco. Moreover, retailers have applied many tactics to stay in the market, including coupons (Susan, 2019). In 1887 Coca-Cola was the first company to introduce coupons to consumers, which showed success as a marketing strategy. Moreover, discounts have been upgraded to suit today's consumers and create the utmost sales possible for retailers (Argyros, 2022). This chapter explains how retailers utilise discounts by understanding the psychology of consumers to sell their products.

Consumer Shopping styles

Sensory and Cognitive style

Consumer shopping styles are explored in the study done by (Eun Park, Yu & Xin Zhou 2010). It investigated two consumer styles, sensory and cognitive styles, while shopping. Consumer decision-making style is the mental characteristics that force the consumer to purchase goods. The study was conducted on 451 Chinese university students who were asked to complete a consumer decision-making style questionnaire. The results highlighted that consumers who have cognitive innovativeness while shopping are the thinkers who take the time to do their research regarding the purchase. They enjoy learning and understanding the products and how to use them. They are also more price-conscious and more prone to shop for quality products. In comparison, people with sensory innovativeness for shopping are more inclined to shop impulsively and are more fashionable and brand conscious.

Hedonic and Utilitarian shopping style

Consumers' decision-making styles play a major role in whether customers intend to purchase the item and are satisfied with their purchase. This study was done by (Alavi, Valaei & Wan, 2016) and it examined 327 papers on the satisfaction and intention of customers through hedonic and utilitarian decision-making styles. Hedonic style shoppers are more conscious of brand and fashion, whereas utilitarian shopping style consumers focus on high-quality products and are price conscious. The results revealed that satisfaction is the strongest factor contributing to brand loyalty and purchase intention. Hedonic shopping style consumers had a lower level of satisfaction with products, whereas utilitarian shopping style consumers had a higher level of satisfaction from purchasing. Therefore, understanding the decision-making style leads to how retailers can factor into the shopping styles of people to ensure that they are focusing on products and convenience to grow their retail store in the market (Carpenter, 2008).   

Determinants of shopping in a mall

Figure 1. Shopping malls

A study examined factors that customers want while shopping to ensure that customers have a favourable time during their shopping experience. The study done by (Singh & Sahay, 2012) was conducted in Delhi, and the sample size consisted of 200 respondents. The participants completed a survey to attain the results. The results highlighted that five factors improve the shopping mall experience: the ambience, physical infrastructure, convenience, marketing focus and safety and security.

Discounts

Framing effects

There are many factors that are taken into place when a consumer decides to purchase an item, including the price, consumer attitude towards the product, expertise of consumer and previous experience of products. However, to change consumers' perception, retailers apply a framing effect, simply changing the way information is presented to lure the person into buying the products (Isabella, Pozzani, & Chen et al., 2012). The role of discounts was evaluated in a study done by (Chen & Lou, 1998), which looked at the framing effects of percentages, dollar signs and reward programs to provide an overview regarding the role of discounts and consumer perception in purchasing those items. The results found that high-price products, framed in dollar terms, had a more significant effect than low-price products. For low-price products, the percentage framing was more effective in the advertisement. Moreover, the study also highlighted how customers more favoured coupon promotions in purchase intention instead of discount promotions.

Novel discounts

Novel discounts is framed in writing as paying 60% of regular price compared to the equivalent discount presentation of 40% off the regular price. Novel discount presentations are perceived as a better deal, and novel discounts are better at catching consumer attention and increasing deeper processing and purchase intention (Kim & Kramer, 2006).

Reward programs

Reward programs are a great tool that many retailers use to provide consumers with some reward from purchasing for future purchases. This study done by (Jalili & Pangburn, 2021) evaluated the reward program structure and found the benefits of using a reward program. Reward programs usually benefit retailers as well as customers. This is because retailers only need to pay for the discount in the future and can guarantee that the consumer will stimulate additional shopping behaviours to earn the points to gain the discount in the end. Consumers benefit from the discount, whereas retailers benefit long-term through sales.

Role of discounts on consumer's purchasing behaviour

Discounts overall play a major role in convincing consumers to purchase the retailers' items. This is because it enables consumers to believe that they are benefiting more from the discount than not having a discount. This, in the end, leads towards increased consumer purchase intention. Consumers who save more money through the discount are more likely to purchase that specific item. Moreover, discounts lead to customer loyalty if the item satisfies the consumer. Discounts end up persuading consumers to purchase more (Büyükdağ, Soysal, & Ki̇tapci, 2020). Furthermore, if a retailer has high monetary discounts and discount frequency, it also increases its value. Moreover, discounts also serve customers, so they can claim the best deal by comparing prices from different retailers and getting the best deal (Haghighatnia, Abdolvand, & Rajaee, 2018). Overall, discounts benefit retailers and consumers positively. Discounts are more appealing to consumers leading to a higher purchase intention, playing an essential role in producing more sales for retailers.

Online shopping

Figure 2. represents shopping online

Online shopping is becoming a robust space where we have seen e-commerce booming in the past ten years. In 2020, the e-commerce market was expected to exceed 4 trillion dollars and has increased 18% more over the last year. However, to understand why we tend to shop online, this study {{awkward{{ found that shopping online is done because of congruence, impulsive buying behaviour, value consciousness, risk, local shopping, shopping enjoyment and browsing behaviour (Venkatesh, Speier-Pero & Schuetz, 2022).

Theory of planned behaviour applied to online shopping

The theory of planned behaviour has a famous practical framework that has explained many behaviours over the years and is focused on the motivation of behaviour from intention to action. Furthermore, shopping will be explained by its four factors:

Attitude:	the belief of the outcome and attitude to do the act, predicting a person's intention to engage in that behaviour.
Subjective norms:	the belief about whether other people accept or reject the behaviour.
Percieved behaviour control:	ease or difficulty in performing the task.
Behavioural intention:	motivational factors which influence the individual's behaviour.

The study done by (Redda, 2019) , which incorporated the online shopping model and theory of planned behaviour, found that a person's trustworthiness, privacy, and security build a person's attitude towards online shopping. Perceived behaviour control was influenced by the person's self-efficacy to do the task and influenced the online shopping behaviour of consumers. Moreover, attitude, subjective norms, and perceived behaviour control act as antecedents for the consumers to perform online shopping behaviour.

The following fictional case study aims to assist readers with theory-in-action.

Case study

Case study: Theory of planned behaviour Elizabeth was enjoying her Sunday evening when her friend Milly rang her up. Milly told Elizabeth about her favourite store Supre having a flash sale, and she went to locate her laptop. Elizabeth really likes the clothes from this site, Supre and thought about whether they would have those jeans on sale that she has wanted for a long time. She thought to herself how her sister had brought a similar pair of the jeans she had wanted and how perfect they looked on her and hoped even more that those jeans were available. She was able to locate her laptop and head straight to the website. Elizabeth could easily locate the jeans she wanted because she casually shops from there. Moreover, when she could quickly browse for the jean she wanted, she was pleased to know that it was on sale. The jeans were usually $80, but they were 20% off their original price, making it $64. After finding out about the discount, she quickly added the jeans to the cart and quickly proceeded to the checkout to purchase the jeans.

Consumer reactions to discounts while online shopping

Online shopping websites rely on discounts to sell their products which is why the research on how discounts should display or appear, whether at the start or end of the transaction, is vital in selling products online. A study examined price discount's magnitude on consumer purchasing behaviourTemplate:Factx. The study found that a person's expectations are not known at the start of shopping and are built by the discounts they encounter. Therefore, discounts become a more predictive factor in a consumer's purchasing intentions. However, some factors that still influence purchasing behaviour are product type, knowledge, discount framing and individual differences (Sheehan, Hardesty & Ziegler et al., 2019).

Figure 3. Represents why people had to shop online to purchase goods.

Another study that looked at online shopping and discounts had four major findings. These include that discounts are stronger online, the brand reputation and online retail context matters. Thirdly people are more likely to have a higher purchase intention on high-reputation brands in comparison to low-reputation brands. Lastly, is that consumers expect that there should always be a discount, especially on low-reputation brands in comparison to high brands (Kukar-Kinney & Carlson, 2015).

COVID-19 and online shopping

Online shopping has become highly apparent in response to COVID-19, which led to the growth of a booming e-commerce space. This is highlighted by a study done by (Halik & Nugroho, 2022) which looked at the effects of COVID-19, content marketing and price discounts on consumer purchasing behaviour. This study was conducted on 100 students who have used online shopping sites three times before. The results found some astonishing findings stating that price discounts positively influence consumers to shop online. The retailers can ensure more products are sold by ensuring that they have different discount offers, discounted products and price competitions to attract consumers. It must also ensure that online content marketing should be improved to the current conditions of the world, so consumers continue to visit that store online. In terms of consumers, they can benefit from having discounts, cashback, and easy online payments. Furthermore, the result shows that consumers can have all the information they need from their device, so they feel they are treated fairly by the retailer when purchasing. Lastly, price discounts have a positive and significant effect on purchasing behaviour.

Conclusion

Discounts play a major role in influencing consumers to purchase goods by going to the mall and shopping online. The shopping styles were explored to provide a basic understanding of shopping styles and how retailers can consider those factors to influence consumers to purchase more. This chapter highlighted that having discounts for consumers makes them feel they have more savings and increase their purchase likelihood. Discounts also ensure that they expand a person's shopping choices through reward programs, increasing customer loyalty. Furthermore, discounts are expected from retailers in the online space and have hence been linked to higher purchasing intention. Retailers and consumers benefit by having discounts as retailers ensure that they attain the customers and customers feel that they are getting the best deal.

Quiz

1 Coca-cola was the first company to introduce coupons?

	True
	False

2 What motivational discount is used in Elizabeth's case study?

	Rewards program
	Novel discount

3 Is convenience a determinant of shopping in a mall?

	Yes
	No

References

Alavi, Rezaei, S., Valaei, N., & Wan Ismail, W. K. (2016). Examining shopping mall consumer decision-making styles, satisfaction and purchase intention. The International Review of Retail, Distribution and Consumer Research, 26(3), 272–303. https://doi.org/10.1080/09593969.2015.1096808

Argyros, T. (2022). A Brief History Of The Coupon — And Its Future - Retail TouchPoints. Retail TouchPoints.https://www.retailtouchpoints.com/blog/a-brief-history-of-the-coupon-and-its-future.

Büyükdağ, Soysal, A. N., & Ki̇tapci, O. (2020). The effect of specific discount pattern in terms of price promotions on perceived price attractiveness and purchase intention: An experimental research. Journal of Retailing and Consumer Services, 55, 102112–. https://doi.org/10.1016/j.jretconser.2020.102112

Carpenter. (2008). Consumer shopping value, satisfaction and loyalty in discount retailing. Journal of Retailing and Consumer Services, 15(5), 358–363. https://doi.org/10.1016/j.jretconser.2007.08.003

Chen, Monroe, K. B., & Lou, Y.-C. (1998). The effects of framing price promotion messages on consumers’ perceptions and purchase intentions. Journal of Retailing, 74(3), 353–372. https://doi.org/10.1016/S0022-4359(99)80100-6

Eun Park, Yu, J., & Xin Zhou, J. (2010). Consumer innovativeness and shopping styles. The Journal of Consumer Marketing, 27(5), 437–446. https://doi.org/10.1108/07363761011063330

Haghighatnia, Abdolvand, N., & Rajaee Harandi, S. (2018). Evaluating discounts as a dimension of customer behavior analysis. Journal of Marketing Communications, 24(4), 321–336. https://doi.org/10.1080/13527266.2017.1410210

Halik, & Nugroho, M. (2022). The Role of Consumer Pleasure Moderating the Effect of Content Marketing and Price Discount on Online Shopping Decision and Loyalty of Generation Z. Media Ekonomi Dan Manajemen, 27(1), 35–54. https://doi.org/10.24856/mem.v27i01.2259

Isabella, Pozzani, A. I., Chen, V. A., & Gomes, M. B. P. (2012). Influence of discount price announcements on consumer’s behavior. Revista de Administração de Emprêsas, 52(6), 657–671. https://doi.org/10.1590/S0034-75902012000600007

Jalili, & Pangburn, M. S. (2021). Understanding the Value of Delayed Discounts in Retail Rewards Programs. Decision Sciences, 52(4), 952–985. https://doi.org/10.1111/deci.12474

Kim, & Kramer, T. (2006). “Pay 80%” Versus “Get 20% off”: The Effect of Novel Discount Presentation on Consumers’ Deal Perceptions. Marketing Letters, 17(4), 311–321. https://doi.org/10.1007/s11002-006-9309-7

Kukar-Kinney, & Carlson, J. R. (2015). A fresh look at consumers’ discounting of discounts in online and bricks-and-mortar shopping contexts. International Journal of Research in Marketing, 32(4), 442–444. https://doi.org/10.1016/j.ijresmar.2015.09.001

Marriott, Williams, M. D., & Dwivedi, Y. K. (2017). What do we know about consumer m-shopping behaviour? International Journal of Retail & Distribution Management, 45(6), 568–586. https://doi.org/10.1108/IJRDM-09-2016-0164

Redda. (2019). Attitudes towards Online Shopping: Application of the Theory of Planned Behaviour. Acta Universitatis Danubius. Œconomica, 15(2), 148–159.

Sheehan, Hardesty, D. M., Ziegler, A. H., & Chen, H. (Allan). (2019). Consumer reactions to price discounts across online shopping experiences. Journal of Retailing and Consumer Services, 51, 129–138. https://doi.org/10.1016/j.jretconser.2019.06.001

Singh, & Sahay, V. (2012). Determinants of shopping experience: Exploring the mall shoppers of national capital region (NCR) of India. International Journal of Retail & Distribution Management, 40(3), 235–248. https://doi.org/10.1108/09590551211207184

Susan. M. (2019). The History and Evolution of Retail Stores (From 1700s to 2022). The BigCommerce. https://www.bigcommerce.com.au/blog/retail/.

Venkatesh, Speier-Pero, C., & Schuetz, S. (2022). Why do people shop online? A comprehensive framework of consumers’ online shopping intentions and behaviors. Information Technology & People (West Linn, Or.), 35(5), 1590–1620. https://doi.org/10.1108/ITP-12-2020-0867

See also

Motivation and emotion/Book/2016/Online shopping motivation - Book chapter 2016

External links

Why Online Retailers Should Hide Their Best Discounts(Michael, 2018)

The behavioural economics of discounting, and why Kogan would profit from discount deception