Hidden price promotions: Could retailer price promotions backfire?

• Published in: Journal of retailing and consumer services Vol. 64; p. 102797
• Main Authors: Li, Wenjing, Hardesty, David M., Craig, Adam W., Song, Lei
• Format: Journal Article
• Language: English
• Published: Elsevier Ltd 01-01-2022
• Subjects: Affective purchase; Cognitive purchase; Discount expectations; Discount levels; Hidden-price promotions; Hidden-price promotions; Discount expectations; Discount levels; Cognitive purchase; Affective purchase
• ISSN: 0969-6989; 1873-1384
• DOI: 10.1016/j.jretconser.2021.102797

Hidden-price promotions, a type of uncertain price promotion in which the final price is not revealed when consumers first encounter the product, have been recently adopted by retailers. However, current research suggests that hidden-price promotions have the potential to backfire and result in reduced consumer purchase intention. Across seven studies, we reveal that hidden-price promotions can be effective but risk increasing discount expectations, as consumers expect a large discount. Only when the discount level meets or exceeds inflated expectations does the excitement built by the promotion positively impact purchase intention. For cognitive purchases, even without providing a high discount, hidden-price promotions are as effective as traditional ones. This research provides guidelines for retailers that want to employ hidden-price promotions.