Search results

This paper reports the results of an experimental study where four characteristics of premium‐based sales promotions were manipulated in the context of a computer purchase: the attractiveness of the premium, the extent to which it fits the product category, the reception delay of the premium, and the mention of its value. The results show that these factors had interactive effects on consumer reactions. Thus, although the attractiveness of the premium generally had a positive impact on consumer appreciation of the promotional offer, a promotion including an unattractive premium was nevertheless positively evaluated if the premium was a good fit to the product category. Sales promotions, including a premium that fits well the product category, were less likely to be perceived as manipulative. However, if the product‐premium fit was poor and the premium was not attractive, mentioning the value of the premium helped to reduce the perceptions of manipulation intent. It is concluded that more research is needed on this managerially relevant topic in light of the complex dynamics that appear to underlie the relationships between the characteristics of premium‐based promotions and consumer reactions.

This paper aims to try to investigate how consumers respond to precise versus imprecise promotional rewards at varied probabilities, including small ones and whether the effect is contingent on purchase value and promotion budget.

Based on reviewing the literature on the ambiguity effect, the certainty effect and small probabilities, the hypotheses are tested by three experimental studies.

The experiments show that at a small winning probability, promotion with imprecise reward is more attractive than with precise reward. For high value purchases, a small‐probability promotion with imprecise reward performs better than an equally costly 100 percent‐probability promotion with precise reward. However, the difference is shortened for low value purchases. Furthermore, as the promotion budget increases, the ambiguity effect becomes stronger. As a result, the small‐probability promotion with imprecise reward is preferred to the 100 percent‐probability promotion with precise reward at both low and high budget levels.

The present study provides a starting‐point for further research on how to design an effective marketing promotion program with precise or imprecise promotional rewards at varied probabilities.

This research extends previous research on tensile versus precise prices to the region of very low or small probabilities, enriches the literature on “overweighting of small probabilities,” and also significantly enriches the existing theories on decision making under ambiguity.