Pricing strategy & practice A study of time limited price promotions James Devlin, Christine Ennew, Sally McKechnie and Andrew Smith Nottingham University Business School, Nottingham, UK Abstract Purpose – This paper seeks to provide a detailed study of the impact of offers incorporating a time-limit restriction on consumers in the context of price promotions. Time limited offers are those where a pricing offer is only available for a specified, normally relatively short, period of time. Although price promotions have been the subject of much previous research, a detailed study of the effects of time limit restrictions on consumer behavior is warranted. Design/methodology/approach – The study incorporates an experimental approach whereby the impact of time-limited and non time-limited offers on consumers’ assessments of value and search and purchase intentions are isolated. Findings – Findings show that the presence of a time limit does not impact directly on perceptions of value or search and purchase behavior. A marginally significant interaction effect between time limit and discount size is present, impacting in particular on search behavior. Research limitations/implications – The research was carried out in the context of a consumer durable good (TV) and it is recommended that the study is replicated in other contexts, such as services and packaged goods, to ensure that the results reported here are generalisable. Practical implications – The results suggest that policy makers should not assign significant time and resources to investigating influences of alleged false time limit promotion, as the findings would lead to the conclusion that such resources would be better used controlling other forms of misleading advertising and promotion. Marketing managers should note that time limited offers have no significant impact on consumer perceptions or purchase intentions. Originality/value – The paper is of value to both the policy making community and practitioners and provides important and original insights into the minimal impact of time limit restrictions on consumers’ evaluation of price promotion offers and subsequent behavioral intentions. Keywords Pricing, Experimentation, Promotional methods, Time measurement Paper type Research paper Introduction Price promotions are a commonplace promotional activity (Chandrashekaran and Grewal, 2003), normally aimed at enhancing consumers perceptions of value and increasing the likelihood of purchase (Grewal et al., 1998). Some aspects of pricing promotion have proved controversial from a public policy perspective (Urbany et al., 1988), not least due to the potential for such advertising to deceive consumers due to inaccurate or misleading pricing information being provided (Grewal and Compeau, 1992). One way in which consumers may be misled in price promotions is through the use of a time limit restriction in an offer. An example would be a store which has sale reductions marked “for one week only” or for a “one day spectacular”. If such time limits are genuine, then they represent additional information which may be useful to consumers as they make purchasing decisions. However, if such time limits are spurious and are not enforced by sellers, then there is the potential for customers to be deceived and make purchases under false pretences. Although Grewal and Compeau (1992) speculated as to the impact on consumers of semantic cues indicating a time limit, a detailed study of the effects of time limited pricing promotions on consumer behavior is warranted. Thus, the primary objective of the current study is to investigate whether the presence of a time limit restriction in pricing promotions influences consumer perceptions of value associated with the offer and their search and purchase intentions. Such an investigation is timely for there has recently been an increasing recognition amongst researchers of the need for marketers to have a deeper understanding of the effects of contextual variables such as time pressure or time constraints in influencing consumer perceptions of value (Vermeir and Van Kenhove, 2005; Suri and Monroe, 2003; Dhar and Nowlis, 1999; Kumar et al., 1998). The paper proceeds as follows: in section two, the potential impact of time limit restrictions is discussed; section three develops hypotheses and section four details the methodology employed in the study. In section five results are analyzed. Section six presents discussion and implications and finally in section seven conclusions are offered. The current issue and full text archive of this journal is available at www.emeraldinsight.com/1061-0421.htm Journal of Product & Brand Management 16/4 (2007) 280–285 q Emerald Group Publishing Limited [ISSN 1061-0421] [DOI 10.1108/10610420710763967] The authors would like to thank the Editor and two anonymous reviewers for their valuable and constructive comments and suggestions and the Office of Fair Trading, UK for funding this research project. 280