The impact of different price promotions on customer retention

Jungkeun Kim

Journal of Retailing and Consumer Services, 2019, vol. 46, issue C, 95-102

Abstract: This paper investigates the impact of different price promotion effects regarding two different types of service cost (i.e., a joining fee vs. a monthly fee) on retention intentions for new customers in the long-term service industry. Based on the depreciation curve, mental accounting, and the escalation of commitment theory, we predict that customers’ retention intentions will be higher when they start using a service with a free monthly fee promotion rather than when they start it with a free joining fee promotion. This expectation was confirmed by five studies; experiments, customer survey, and secondary data. The theoretical and managerial implications are also discussed.

Keywords: Price promotion; Service retention; Price framing; Depreciation; Long-term service (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (19)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:joreco:v:46:y:2019:i:c:p:95-102

DOI: 10.1016/j.jretconser.2017.10.007

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