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Purchase decision regret: Negative consequences of the Steadily Increasing Discount strategy

Colin B. Gabler, V. Myles Landers and Kristy E. Reynolds

Journal of Business Research, 2017, vol. 76, issue C, 201-208

Abstract: The Steadily Increasing Discount pricing strategy pits product scarcity against a future discount and forces consumers to make a choice between cost savings and the potential risk of missing the purchase opportunity. Dual non-student samples provide insight into the regret associated with this decision. The first study finds that product scarcity increases both action regret (purchase) and inaction regret (non-purchase) while the level of discount only influences inaction regret. In study two, the individual characteristics of materialism and price consciousness both impact the decision to buy, only materialism influences purchase decision regret. Theoretically, the results reverse the omission bias, demonstrating that regret from inaction is more salient than regret from action in this purchase situation. The studies underscore the high-risk, high-reward nature of multi-period pricing for managers. While firms control product availability and discount levels, they cannot control their customers' personality traits. Therefore, they should make every effort to understand their customers before embarking on such a strategy.

Keywords: Regret; Scarcity; Discount; Omission bias; Expected utility; Retail (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:eee:jbrese:v:76:y:2017:i:c:p:201-208