Abstract

This article extends existing research on the effect of discount retraction on consumers’ subsequent brand choices by also including a new key moderator variable: discount size. The results indicate that as far as moderate discounts are concerned, the phenomenon of price salience is apparent. When high- or low-level discounts are introduced, the phenomenon of price salience is not significant and discount retraction does not induce a brand preference shift in a consumers’ post promotional choice. Retracting a moderate discount on the low- or high-end (in terms of quality and price) brand reduces high-end brand preference of a consumer whose initial preference is high-end brand. However, for consumers whose initial choices are low-end brands, the effect of retracting a moderate discount on subsequent choices depends on the promoted brand. These results therefore suggest that discount size must be taken into account when designing a temporary discount promotion program.

Key words: Discount size, discount retraction, price salience, brand preference, brand positioning.