Discounts backfire if the consumer has to wait, researchers from the universities of Columbia and Toronto reported in the Journal of Consumer Research.
Consumers want to reap the benefits of discounts straight away and not later. If they are made to wait the commercial benefits of offering a discount seem to evaporate.
Study authors Leonard Lee and Claire I. Tsai said:
“Price promotions are common in the marketplace. For consumers, these promotions translate into real economic savings, guide buying decisions, encourage trial of new products, and make consumers feel smart and good about themselves.”
The researchers set out to determine how discounts impact on people’s pleasure-related consumption experiences. Overall, they reported that providing discounts makes consumers happier.
However, paying less for a product reduces a consumer’s need to justify having spent the money. This results in people paying less attention during consumption, which reduces their enjoyment.
How those two opposing forces balance out depends mainly on when the product is consumed after payment has been made – immediately or after a delay.
The investigators carried out four experiments involving real spending and consumption. They used a range of products, including orange juice, music and chocolate.
Consumption of the products occurred with different durations of delay.
Chocolate truffles at full price or 50% discount
In one of the experiments, volunteers bought chocolate truffles either at their $1 regular price, or a discount of 50 cents.
Half of them consumed the chocolates immediately, while the other half waited one week.
Those who waited one week enjoyed their chocolate much less compared to those who consumed them straight away, the researchers reported.
The investigators concluded:
“Our research provides new insight for better understanding the mixed effects of discounts on sales and loyalty, offering an explanation for why discounts may increase sales in the short run, but could have negative long-term effects on customer satisfaction and brand loyalty.