Framing effects on evaluation of coupon offers: assessing the ...

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making (Puto 1987; Qualls & Puto, 1989), donations to non-profit organizations (Smith & Berger, 1995), and new or innovative product adoption (Grewal et al, 1994). The application of framing to discount promotions has been the focus of several studies (Berkowitz & Walton, 1980; Das, 1992; Della Bitta et al, 1981; Del Veccio et al, 2007; Gendall et al, 2006; Gourville,1998; Kim & Kramer, 2006; Lichtenstein et al, 1991; Liefeld & Heslop, 1985; Ramanathan & Dhar, 2010), which addressed the presentation of the savings of promotional offers, also known as deal semantics. Coupon framing literature on the other hand appears quite scanty. Diamond (1992) and Diamond and Sanyal (1990) studied different coupon face value frames but in the former case only in an effort to discover the latent decision rules used and in the latter for a combined offer between spaghetti sauce and rice soup. More recently, Kramer and Kim (2007) proved that processing fluency enhanced evaluations for gain-framed face values (don’t pay 20 % of the final price) and not novelty <strong>effects</strong>. The present study considers framing <strong>effects</strong> of three common alternative monetary face value frames, “€ off”, “% off” and “reduced price”. It is based but also considerably extends the work of Chen, Monroe, and Lou (1998). These researchers relied on the findings that consumers tend to process expected price reductions relatively rather than in absolute monetary amounts (Grewal & Marmorstein, 1994) and that the psychological pleasure derived from a discount depends not only on the absolute amount of the monetary savings but also on the price level of the promoted product (Grewal et, 1998; Heath et al, 1995) and proposed that for high-price products consumers will perceive a price reduction framed in monetary terms as more significant than the same price reduction framed in percentage terms and the exact opposite for a low price product. Their hypothesis was supported only for the perceived savings and not for purchase intention, probably because of the small incentive (10%). Gendall et al (2006) reached similar conclusions in a replication study. The present study attempts to resolve this issue, by testing this hypothesis for a medium and for a high discount size, both capable to overcome the problem. A third frame, the “reduced price” one, is also tested along its two other counterparts. This frame has a different logic since it stresses the money left to pay for the product and not the one saved. The consumer has to perform a mental accounting (Thaler, 1985) to realize the savings, making unavoidably miscalculations, or use an assimilation-contrast process (Monroe, 1979) and never calculate the savings. Either of these, will make this frame to underperform relative to the “€ off” frame. Primary dependent variables of the study are three interrelated antecedents of behavior (Fishbein & Ajzen, 1975): perceptions (transaction value which is stipulated in terms of perceptions of savings), deal evaluations (attitude towards the offer) and redemption intention. Thus we state the following hypothesis: H1.: For high price products the ordering of the three face value frames according to their impact on transaction value, attitude towards the offer and redemption intention, will be from the highest to the lowest: “€ off”, “reduced price” and “% off”. For the low price product the order will be: “% off”, “€ off” and “reduced price”. The discount level has also been found to significantly influence buying behavior (Gupta & Cooper, 1992). In addition, if the discount level is maintained in a reasonably high level it is also expected that it will not dilute the framing <strong>effects</strong> because of low processing (Grewal et al, 1996) or credibility issues (Gupta & Cooper, 1992). Thus: H2.: The discount level will significantly influence all the dependent variables but it will not affect the observed framing <strong>effects</strong>. The interrelationships among perceptions, attitudes and intentions and their traits as antecedents of actual behavior are well established theoretically and validated empirically in consumer research (Bagozzi, 1982; Fishbein & Ajzen, 1975). It is expected that the same pattern will appear in this coupon face value framing setting. More specifically:
H3.: The formation of redemption intention from the perceived transaction value will be mediated by the existing attitudes towards the offer. The conceptual model formed by the hypotheses is presented in the Appendix (Figure 1). 3. Methodology 3.1 Pretests,Method & Participants Before performing the main experiment, two pretests were conducted. Firstly, five high priced product categories and 5 low priced ones were presented in alphabetical order to 30 respondents asking them to report their familiarity and involvement with them, their price level perception and the probability to purchase them in the near future. Paired-t comparisons revealed that a laptop was perceived as the most familiar, involving, likely to purchase high priced product of all and a USB memory stick was the low priced one with the same traits.Then, an internet and market search revealed that the best seller laptop during the period of the study was a Toshiba Tecra with median market price 1099 €, while the 4 GB Transcend USB with median retail price 8.99 € was the best seller USB. So, these two branded products were included in the study. Brand names were used because of the need to make the whole task more realistic and to overcome the frequent criticism that when price and price discount are the only information available, subjects naturally overemphasize their importance (Gendall et al, 2006). Secondly, 30 different student subjects verified that the 25 % discount was considered mediumand the 40 % one as plausibly high for these high-tech products. After conducting the pretests, a 3 (€ off, % off, reduced price) X 2 (Laptop, USB) X 2 (25%, 40 % discount) full factorial between subjects experimental design was applied. Two hundred forty seven business students from two large Business Schools were randomly assigned in the experimental conditions resulting in at least 20 observations per cell. All participants were volunteers. Subjects were administered a booklet consisted of a distraction task where they indicated their brand attitudes towards various high-tech brands, including the chosen ones, then there was an introduction, a cover story, the stimulus (simulated real coupon) and a questionnaire. The entire process took approximately 10-15 minutes to complete. Thus, participants’ fatigue was avoided and the reliability and validity of the provided responses was increased. Neither institution nor class session exerted any significant effect on any of the dependent variables (p >.05) and as a result the data from each session and institution could be pooled. From respondents’ answers on an open–ended question, it was obvious that no one surmised the real purpose of the study. So, none of them was excluded from the analyses because of courtesy bias and self-generated validity (Sawyer, 1975). Age and gender had no significant <strong>effects</strong> on any of the dependent variables (p > .05), validating once more the notion that simple individual demographics are poor predictors of coupon behavior (Bawa, Srinivasan, &Srivastava, 1997; Mittal, 1994). As a result, these variables were excluded from the subsequent analyses. 3.2 Measures Redemption intention was measured by using a semantic differential scale anchored “Not at all Likely” and “Very Likely”. Attitude towards the coupon offer was measured by employing a 3-item semantic differential scale adapted from Lichtenstein, Burton and Karson (1991) (α = .95). Transaction value was measured by utilizing a 4-item scale adapted from Yadav and Monroe (1993) (α = .92). Moreover, because Kim and Kramer (2006) had found that novel discount presentations have more favorable perceived savings and purchase likelihood than conventional ones, respondents assessed the novelty of the coupon face value frame they saw by employing the 3-item bipolar scale devised by the previous authors (α = .84). Coupon proneness was measured by the 8-item Likert style construct developed by Lichtenstein et al (1990) (α = .87) and price consciousness by utilizing the 5-item scale of Lichtestein et al (1993)(α = .78).Brand attitudes were captured by using a 3-item bipolar scale
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