The expected benefit as determinant of deal-prone consumers’ response to sales promotions Mariola Palazon n , Elena Delgado-Ballester Marketing Department, Faculty of Economics and Business, Campus de Espinardo, University of Murcia, 30100 Murcia, Spain article info Available online 30 July 2011 Keywords: Deal proneness Price discounts Premiums abstract This study proposes that the responses of more and less deal-prone consumers to price discounts and premiums depend on the promotional benefit level. At low and moderate benefit levels, low deal-prone consumers show a higher evaluation for price discounts than for premiums but if the benefit is high, deal proneness does not bias the higher evaluation of price discounts. An experimental study shows that low deal-prone consumers are concerned with obtaining price discounts. Taken together, these findings suggest that consumers more concerned with obtaining promotions do not always prefer price discounts. & 2011 Elsevier Ltd. All rights reserved. 1. Introduction As a consequence of the current economic situation, many retailers have seen their income reduced during the last year. To compensate for some of this lost, ground promotional strategies have been strengthening to attract consumers to the retailer point of purchase. However, most of sales promotions launched in the last years have had a negative ROI because they have been focused on price discounts, which have decreased retailers and manufactures margins. It seems that these campaigns have been launched in a general basis without a proper understanding of how consumers react to a particular promotional action. There- fore, developing and monitoring appropriate promotional strate- gies require analyzing how consumers react to different expected savings or benefits. To appeal to specific segments with sales promotions, retailers need to identify those consumers’ characteristics that influence their responses. Deal proneness offers a traditional approach to analyze the promotions-related behavior of individuals (Pechtl, 2004) because it is the psychological propensity to buy, not the actual purchase of, goods on promotion (DelVecchio, 2005). There- fore, deal-prone consumers show an enduring propensity to respond to promotional deals. Past research on deal proneness has followed a consumer segmentation approach to identify those demographic, psycho- graphic, economic and shopping related variables that characterize more and less deal-prone consumer segments (Alford and Biswas, 2002; Blattberg and Neslin, 1990; Lichtenstein et al., 1990, 1995). Specifically, academic studies have been mainly focused on how deal proneness correlates with the use of coupons (Swaminathan and Bawa, 2005), rebates, or two different kinds of price promotions in retailing: the high-low strategy (HILO) and the every-day-low- price (EDLP) strategy (Pechtl, 2004). The general conclusion has been that deal-prone consumers seem to be concerned with immediate savings from reduced prices (Blattberg and Neslin, 1990) and they react positively to promotional tools based on price reductions. Nowadays, given the increasing use of nonmonetary promotions (i.e., premiums), it appears that many consumers attracted to sales promotions may seek other benefits beyond price savings (i.e., entertainment and fun; Garretson and Burton, 2003). Due to the absence of research studying how deal-prone consumers respond to nonmonetary promotions, the purpose of the present study is to provide answers to the following research questions: (1) are always price discounts the best tool to attract deal-prone consumers?, (2) are there conditions under which deal-prone consumers evaluate better other type of promotions (i.e., premiums)? To fill this gap, the current research incorporates deal prone- ness as a variable that may moderate the effectiveness of price discounts and premium promotions. To accomplish this objective, we analyze the responses of more and less deal-prone consumers to price discounts and premiums across different promotional benefit levels. The paper is organized as follows: The next section elaborates a theoretical conceptualization about the information processing conducted by high and low deal-prone consumers. As a result a set of hypotheses is set about how the level of deal proneness influences the evaluation of price discounts and premium at different promotional benefit levels. Section 3 presents the methodology used in the empirical part of our study to further Contents lists available at ScienceDirect journal homepage: www.elsevier.com/locate/jretconser Journal of Retailing and Consumer Services 0969-6989/$ - see front matter & 2011 Elsevier Ltd. All rights reserved. doi:10.1016/j.jretconser.2011.07.004 n Corresponding author. E-mail addresses: mariolap@um.es (M. Palazon), elenadel@um.es (E. Delgado-Ballester). Journal of Retailing and Consumer Services 18 (2011) 542–547