Effect of price discount frames and levels on consumers' perceptions in low‐end service industries

Abstract

Purpose

The purpose of this study is to investigate the effects of price discount frames and price discount levels on consumer perceptions about the quality of the service product, the value of the discount, their purchase intentions and their willingness to spread the word of mouth about the discount savings across different types of services.

Design/methodology/approach

The study uses an experiment design method using three interesting variables: discount format, discount level and service industry type. The experiment included four different types of low‐end price service levels: restaurants, hotels, mailing services, and retail services.

Findings

The findings indicate that price discount frames and discount levels do affect consumers' perceptions on the value of the discount, the quality of the service, their intention to purchase and their willingness to engage in WOM advertising.

Practical implications

The practical implication for service firms that want to use price discount promotions to encourage sales and increase revenue is that they should carefully consider the price range and the value or quality of image they intend to signal when using these different price discount frames and the service they are selling to determine the discount level to use.

Originality/value

This paper is valuable to low‐end service marketers that seek to use price discount promotions to encourage sales and increase revenue.

Citation

Nusair, K., Jin Yoon, H., Naipaul, S. and Parsa, H.G. (2010), "Effect of price discount frames and levels on consumers' perceptions in low‐end service industries", International Journal of Contemporary Hospitality Management, Vol. 22 No. 6, pp. 814-835. https://doi.org/10.1108/09596111011063106