African Journal of
Business Management

  • Abbreviation: Afr. J. Bus. Manage.
  • Language: English
  • ISSN: 1993-8233
  • DOI: 10.5897/AJBM
  • Start Year: 2007
  • Published Articles: 4154

Full Length Research Paper

Effects of discount retraction on consumers’ subsequent brand choice: Moderating role of discount size

Rui-feng Yu1* and Ping Zhao2
1Department of Industrial Engineering, Tsinghua University, Beijing, China. 2Department of Marketing, School of Economics and Management, Tsinghua University, Beijing, China.
Email: [email protected]

  •  Accepted: 03 August 2011
  •  Published: 30 September 2011

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.