The effects and mechanism of discounting unit price

Abstract

Purpose

Supermarket promotions typically use a standard label, which displays the regular price, discounted price and discounted unit price. Visits to supermarkets across multiple countries found that none used a price label that also contains the regular (i.e. pre-discounted) unit price. This study aims to investigate the effectiveness of a dual unit-price label that includes the regular unit price as a reference price, and what underpins its efficacy in enhancing promotion attractiveness.

Design/methodology/approach

The authors executed four studies, supported by three supplemental studies. Study 1 established external validity through a natural instore experiment. Studies 2 and 3 tested the dual unit-price label with different pack sizes and assortment sizes, respectively. Finally, Study 4 tested the underpinning mechanism of the efficacy of the dual unit-price label.

Findings

In Study 1, daily sales records over four weeks showed that dual unit-price label promotions had larger sales volume than standard-label promotions. Study 2 showed a larger pack size, a heuristic cue for greater economy and increased preference for dual unit-price label promotions. Study 3 similarly found that the dual unit-price label was preferred more as cognitive load was increased by assortment size. Finally, Study 4 demonstrated the dual processing of the dual unit-price label, using a conscious preference measure (information provided) and an unconscious implicit attitude test.

Research limitations/implications

Unit-price research has mainly considered a cognitive process. The authors demonstrated the importance of considering a heuristic process.

Practical implications

Supermarkets can use this simple and yet effective tool to improve promotion effectiveness.

Originality/value

This study demonstrates that the dual unit-price label is a new and easy tool to enhance sales promotions, which academic research and managerial practice had never considered previously.

Citation

Khan, H., Saeed, M.R., Bellman, S. and Lee, R. (2024), "The effects and mechanism of discounting unit price", European Journal of Marketing, Vol. 58 No. 8, pp. 1941-1967. https://doi.org/10.1108/EJM-12-2022-0878