Playing When Paying and What Happens Next: Customer Satisfaction and Word-of-Mouth Intention in Gambled Price Promotions

Abstract

Gambled price promotions, i.e., discounts in which the customers’ savings depend on the outcome of a game, have recently gained increasing attention from research and practice. This type of promotion is often framed as an in-store event, and consumers experience two properties inherent in gambling: entertainment and varied financial payoffs. Depending on the consumers’ assessments of these two elements, these experiences might drive two postpurchase consequences of such campaigns: customer satisfaction with the retailer and word-of-mouth intention. To assess these effects, two field quasi-experiments with gambled price promotions were conducted: one in a candy store and the other in a retail furniture store. Two main findings emerge from these studies: (1) The customers in both studies endorse gambled price promotions and are more willing to engage in word-of-mouth when participating in such a campaign. The effect of gambled price promotions on customer satisfaction is positive in the low-stakes setting of the candy store but insignificant in the furniture store. (2) The positive effects of such promotions are mediated by their entertainment value and moderated by the consumers’ assessments of the discount. The implication of these results is that, in addition to the already known revenue-increasing prepurchase effects, gambled price promotions can also result in positive postpurchase effects and should represent a valuable addition to the seller’s promotion toolbox.