How consumers respond to missing a quantity discount with multiple price breaks

This study investigates how consumers evaluate and respond to different discount schemes (i.e., one versus multiple price breaks) in the wake of a missed quantity discount. Two field experiments are conducted. The results demonstrate that promotions with multiple price breaks (e.g., 2 for 30% off and 3 for 40% off) will result in a higher likelihood of purchasing one item at the regular price than promotions with only a single price break (e.g., 2 for 30% off) when a quantity discount is missed. The results of Experiment 2 reveal that increasing the number of price breaks (i.e., from two to three) can strengthen the assimilation of the advertised regular price into consumers' internal reference price range when there is a greater interval between the two price breaks (e.g., 2 for 30% off, 5 for 40% off, and 8 for 50% off) and that subsequently raises consumers' purchase likelihood if they are not able to take advantage of the promotional price. Finally, the effect of the discount scheme on purchase likelihood is shown to be mediated by the internal reference price. These observations have important implications for retailers. Copyright © 2016 John Wiley & Sons, Ltd.