The Impact of Discount Format, Discount Presentations and the Complexity of Calculations on Consumers Perceptions

Abstract

A widespread practice in analyzing price-making strategies has been made to identify how different kinds of discount methods influence consumers perception. However, in reality, several ways of discount tactics are combined together and presented in on and offline stores. Therefore, identifying the interaction between different discount tactics on consumers perceived savings seem to be necessary. Through this study, the effect of 3 independent variables on consumer price perception regarding discounts was explored. These are：discount formats (many discounts with relatively small discount rate vs. relatively few discounts but with large discount rate), price discount presentations (percentage-based vs dollar-based) and the complexity of discount calculations on consumer price perception. And it was found that, percent of deal has more impact compared to amount of deal. And if the price is easy to compute, consumers tend to evaluate the savings close to the exact amount of discount. But under the hardly-calculated condition (frequency, percentage, complex), consumers perceived savings were always overestimated (higher than 485). So inaccuracy of calculation led to overestimation according to this study, which is different from previous study. In the second analysis, the result demonstrated that under dollar-based condition, depth clue became more dominant than frequent one. And under percentage-based condition, frequency effect can become dominant on consumers perception and magnitude store was regarded to be less favorable. These findings hold important implications in the real-life contexts and it would provide a new perspective in making marketing strategies.