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Abstract
In a recent study, subjects were asked to make indifference judgments between different types of sales promotions. Given a potential purchase of a $4 container of liquid laundry detergent, each of 20 subjects was asked to determine the amounts of extra product that were equivalent in desirability to several different levels of discount. Most indiviuals approximate a Nominal Value model when trying to determine how much extra product is equivalent to a given discount. A product manager would expect that 50 cents worth of free extra product is approximately equal to a 50 cent discount in the mind of consumers. In a 2nd study, consumers rated promotions over a wide range of nominal values. The study used a direct rating technique to clearly define value functions for sales promotions. Forty shoppers volunteered to participate. Over the entire range of promotions, discounts are slightly, and nonsignificantly, favored over extra product promotions presented in monetary units.