Tiered Discounts As Multiple Numeric Reference Points

Tiered discounts introduce multiple dollar thresholds with increasing discount percentages. We find that tiered discounts with smaller increments between thresholds encourage higher consumer spending compared to those with larger increments. This effect is driven by consumers' increased motivation to reach higher thresholds when the increment size between thresholds is smaller. We find that tiered discounts with small increments between thresholds lead to higher consumer spending than those with large increments. This effect occurs because the close spacing of the thresholds lead consumers to feel more motivated to reach higher tier thresholds. We find that threshold levels within a tiered discount can guide consumer spending and choices. This effect is driven by motivation to reach a higher goal and moderated by maximizing. This paper begins a conversation on how promotions that present multiple dollar reference points affects spending.