But the discount magnitude made little difference in perceptions of fairness for discount amounts ranging between NOK 50 and NOK 150 (equivalent to about $5 to $15). The researchers conclude that managers can adapt discount levels based on their price optimization models without major concerns about how the discount level will affect the perceived fairness. In my email exchange about the study with Per Kristian Alnes, the lead researcher, he points out that this does not necessarily mean setting small discount amounts.
The researchers then analyzed the effects of discounts for advance purchasing on perceptions of fairness. To what extent would a customer of ski slope use consider it fair or unfair if someone who purchased the pass 30 days in advance pays less than does someone who purchases their pass the same day as they use it? For this survey, the intervals presented to the participants ranged from 0 to 30 days and the discounts ranged from NOK 100 to NOK 300.
The study participants’ responses showed a trend in which a greater discount for a greater number of days of advance purchase is considered fair. This was true both for survey respondents asked to imagine they’d gotten the early bird discount and those asked to imagine they’d not gotten it. However, the differences between same-day and 7-days-advance were noticeably larger than the differences between 14-days-advance and 30-days-advance. And for the 30-days-advance, a discount of NOK 300 was not rated as significantly fairer than a discount of NOK 100. Based on this finding, the researchers recommend that service providers set small discounts for early bird purchases.
This set of studies did not directly explore how perceptions of unfairness impact shoppers’ purchase likelihood. The researchers do note prior studies showing how perceptions of a retailer’s unfairness can reduce customers’ subsequent buying intentions and can increase customers’ criticism to others about the retailer.
Are these recommendations valid only for ski area proprietors serving alpine skiers and snowboarders living in the eastern part of Norway? Almost surely not. Discount amounts and pre-order intervals might differ, but the general conclusions are supported by other studies. The amount of a promotional discount has less consumer impact than does the discount’s availability.
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Image at top of post based on photo by Victor Rodvang from Unsplash
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