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Unformatted text preview: 158 Journal of Marketing Vol. 71 (July 2007), 158–170 © 2007, American Marketing Association ISSN: 0022-2429 (print), 1547-7185 (electronic) Devon DelVecchio, H. Shanker Krishnan, & Daniel C. Smith Cents or Percent? The Effects of Promotion Framing on Price Expectations and Choice Previous research has shown that the monetary value of a promotion (promotion depth) affects choice during the promotion period. However, as promotion depth increases, consumers might lower their expectations of future price, which in turn may threaten future choice when prices return to normal levels. This research examines how promotion frame (percentage off versus cents off) moderates the effect of promotion depth on postpromotion price expectations and choice. The findings indicate that compared with cents-off promotions, high-depth percentage-off promotions lead to higher postpromotion price expectations. Likewise, postpromotion choice is higher when high- depth promotions are framed in percentage-off than cents-off terms. The authors examine the process underlying the effect of promotion frame on price expectations and find that frame affects (1) consumers’ perceptions of the promoted price and (2) the weight they place on the promoted price. Devon DelVecchio is Assistant Professor of Marketing, Richard T. Farmer School of Business, Miami University (e-mail: [email protected]). H. Shanker Krishnan is Associate Professor of Marketing (e-mail: [email protected]) and Daniel C. Smith is Clare W. Barker Chair of Marketing and Dean (e-mail: [email protected]), Kelley School of Business, Indiana University. The authors thank Scott MacKenzie and Shelly Jain of the Marketing Department and Edward Hirt of the Psychol- ogy Department at Indiana University, Joe Alba at the University of Florida, Tim Silk at the University of South Carolina, and the three anony- mous JM reviewers for their helpful comments on previous drafts of this article. To read and contribute to reader and author dialogue on JM , visit http://www.marketingpower.com/jmblog. A s a result of their ability to stimulate sales in the short run, the use of price-based promotions has risen steadily (Kahn and McAlister 1997; Mela, Gupta, and Lehman 1997). In addition to offering more pro- motions, manufacturers are deepening price discounts. Between 2001 and 2006, the average value of coupons increased by approximately 8% annually (Montaldo 2007). Moreover, the depth of the discount offered by manufactur- ers is often magnified by retailers that offer additional price incentives in an effort to maintain store loyalty. Increasing the depth of a promotion is attractive because choice is positively related to the face value of a promotion (e.g., Leone and Srinivasan 1996). However, discounts may come with a downside because promotions can reduce post- promotion choice. Price promotions may undermine future choice by lowering consumers’ perceptions of brand quality (e.g., Dodson, Tybout, and Sternthal 1978), by training con-(e....
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