Keller real payment. Hence, the reference price perceived by

Keller
defined the benefits of sales promotions as the additional value linked to the
sales promotions using experience that may be comprised of promotion exposure
(e.g., recognizing a promotion) and practice (e.g., attend a sweepstake or
purchase a promoted product)1.  This definition suggests that consumers
respond to promotions due to the positive using experience or, consistent with
Holbrook’s definition, due to their customer value2.

While Diamond, Johnson and Campbell explained the extra value of sales
promotions by relating the reference price to sales promotions. According to
their studies, some promotions increase the value of the product (such as free
gifts, sweepstakes, bonus packs, samples), whereas others (such as price cuts) purely
decrease the real payment. Hence, the reference price perceived by consumers
will result in different attitudes towards sales promotions such as money
savings or gain3.

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Liao
also claimed that price promotions rewards can be perceived as monetary savings
or loss reduction. Whereas non-price promotions without association with money
(e.g., free gifts), its benefits are hardly converted into reference price.

Therefore, this kind of promotions is framed as gain. Benefits of promotions
seen as gains are separated from the reference price, while promotions
constructed as reduced loss are considered as simply decreasing the purchase
price4.

Additionally, if hedonic promotions are not related to reference prices, they
may not be seen as eroding the perception of the quality or brand equity of the
companies5.

 

According
to Simonson, Carmon, and O’Curry, a new product attribute or promotion type
could make customers go away if they perceived little value attached to the
sales promotion experience in comparison to other choices. The most common
explanation for this was the implication of additional value and the quality of
the product itself. “Customers may misunderstood that they are going to pay for
the unnecessary thing, and hence assume that they receive no value”6.

                                   

This
phenomenon could be explained by the attitude of people. When it comes to
evaluation of sales promotions benefits, customers assess three hedonic
benefits (self-expression, amusement, and exploration) and three utilitarian
benefits (savings, enhanced product quality, and improved shopping experience).

It is sometimes very hard for consumers to rationally evaluate options with redundant
features. At this point, non-price promotions not only noticeably differ from price
promotions, but also have a greater scope of acceptability than price
promotions7.

                                   

According
to the study of Lowe and Barnes in 2012, non-price promotions appeared more
appealing to customers when it came to introduction of new products as people
perceived that they offer more gains and reduce the loss for trying a new
product. Nevertheless, for the next generation products involve a high degree
of innovation, preference for price promotions is higher than non-price ones
due to the reduction of financial risk, thus moderate the effect of non-price
promotions8. Moreover,
Yi and Yoo discovered that non-price promotions hardly have detrimental impact
on the brand attitude9.