When More is Less: The Impact of Base Value Neglect on Consumer Preferences for Bonus Packs Over Price Discounts

Chen, Allan, Howard Marmorstein, Michael Tsiros, and Akshay Rao (2012), “When More is Less: The Impact of Base Value Neglect on Consumer Preferences for Bonus Packs over Price Discounts,” Journal of Marketing, 76 (4), 64-77.

Mays Business School Research Paper 2763213

Posted: 13 Apr 2016

See all articles by Haipeng (Allan) Chen

Haipeng (Allan) Chen

University of Kentucky - Gatton College of Business and Economics

Howard Marmorstein

University of Miami - Department of Marketing

Michael Tsiros

University of Miami - Department of Marketing

Akshay R. Rao

University of Minnesota - Twin Cities - Carlson School of Management

Date Written: April 11, 2016

Abstract

The interpretation of a percentage change often hinges on the base value to which it is attached. The authors identify a tendency among consumers to neglect base values when processing percentage change information and investigate the implications of such base value neglect for how consumers evaluate economically equivalent offers presented in percentage terms, such as bonus packs and price discounts. The authors first document a substantial advantage in sales volume for a bonus pack over an economically equivalent price discount in a field experiment conducted in a retail store. Furthermore, in a mall-intercept survey and multiple lab studies, the authors provide additional evidence in support of the effect and identify managerially useful boundary conditions for when the effect is likely to manifest. The article concludes with a discussion of the theoretical and managerial implications of the findings.

Suggested Citation

Chen, Haipeng (Allan) and Marmorstein, Howard and Tsiros, Michael and Rao, Akshay R., When More is Less: The Impact of Base Value Neglect on Consumer Preferences for Bonus Packs Over Price Discounts (April 11, 2016). Chen, Allan, Howard Marmorstein, Michael Tsiros, and Akshay Rao (2012), “When More is Less: The Impact of Base Value Neglect on Consumer Preferences for Bonus Packs over Price Discounts,” Journal of Marketing, 76 (4), 64-77.; Mays Business School Research Paper 2763213. Available at SSRN: https://ssrn.com/abstract=2763213

Haipeng (Allan) Chen

University of Kentucky - Gatton College of Business and Economics ( email )

550 South Limestone
Lexington, KY 40506
United States

Howard Marmorstein

University of Miami - Department of Marketing ( email )

P.O. Box 248126
Florida
Coral Gables, FL 33124
United States

Michael Tsiros (Contact Author)

University of Miami - Department of Marketing ( email )

United States

Akshay R. Rao

University of Minnesota - Twin Cities - Carlson School of Management ( email )

19th Avenue South
Minneapolis, MN 55455
United States
612-624-8049 (Phone)

Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
385
PlumX Metrics