Michael Barone and Tirthanker Roy mention in their 2010 article that “the notion that targeted deals are more efficient than across-the-board sales promotions, that provide unnecessary discounts to price-insensitive consumers, has prompted a dramatic growth in customized pricing and sales promotions. Recently, however, questions have been raised regarding the efficacy of targeted offers in general (Homburg, Droll, and Totzek 2008) and customized price promotions in particular (Acquisti and Varian 2005; Feinberg, Krishna, and Zhang 2002)” (p.121).
One might be tempted to assume, without checking the research, that targeted deals will always be the better way to go, both for the customer and the organisation. Yet, Barone and Roy highlight how “equity theory suggests that evaluations of a targeted offer will depend not only on the relative outcomes associated with the offer (i.e., whether the consumer is a recipient or non-recipient) but also on the inputs or costs associated with receipt of the promotion,” (p.122).
In a world where we’re often told it’s every man for himself the theme adds further credence to the logic that any exclusive price promotion must be beneficial to those receiving it and the offer ‘bought’ with appreciation and thanks.
What’s interesting is how Barone and Roy highlight that “research on self-construal suggests that recipient gender can influence how deal exclusivity affects the evaluations of customized offers. Specifically, Western men are often characterized as possessing independent self-views, while Western women more typically adopt interdependent self-construal’s (Markus and Kitayama 1991). Men’s independent self views should prompt them to value unique (i.e., exclusive) offers that provide them with the basis for self-enhancement to a greater extent than women, whose interdependent self views should result in less favourable evaluations of targeted deals,” (p. 123).
The research by Barone and Roy addresses an important theoretical void in the current literature by establishing the presence of ‘deal exclusivity effects’. Across their three different studies, they demonstrate that some consumers (e.g., male participants and those with independent self views) favour exclusive deals over inclusive ones. The findings further show that under certain conditions (e.g., when the level of relationship equity consumers have built with a marketer through their past patronage is low), both types of offers are evaluated equally favourably.
Perhaps most intriguing are the results indicating that certain consumers (e.g., female participants and those with interdependent construal’s) react negatively to receiving a targeted offer that is exclusive, instead preferring discounts that are more widely available, (Barone, M.J. and Roy, T.; 2010, p.129).
There can be a temptation at times like this to think of the women we know who don’t fall into this category – but that is often the natural inclination when one finds that the conclusions and answers to the research don’t meet our previous expectations. We also have to be honest with ourselves in respect of how much information we had prior to the research becoming available.
Bayone and Roy mention how “these results indicate that consumers who prefer more exclusive deals do so because receiving selective offers provides them with a basis for self-enhancement (e.g., by helping them attain values related to autonomy). In contrast, the negative reactions of participants exhibiting an aversion to exclusive promotions were driven by the superiority of inclusive offers to allow them to self-enhance (e.g., by confirming their desires to maintain harmony with others),” (p.129).
Barone and Roy conclude by highlighting how “evidence documenting the moderating effects of self-construal and gender on deal exclusivity underscores the need for marketers to judiciously consider the use of targeted offers on a segment-by-segment basis. Although gender has long been employed as a segmentation variable, note that self-construal is correlated with several demographic variables that represent market segmentation bases, such as country and ethnic group (Ahluwalia 2008). For example, consumers in the United States tend to have independent self-views, while those in other countries (e.g., Mediterranean nations) typically exhibit interdependent self-construal’s (Oyserman, Coon, and Kemmelmeier 2002),” (p.130).
Maybe it’s worth evaluating your customer base again and looking at how you can optimise your marketing and promotional strategies with your current target markets. Getting the strategy right will add value directly to your bottom-line; where as getting it wrong not only gives you a sub-optimal bottom-line, but can seriously upset some of your current customers. It’s worth giving your strategy another look.
References.
Barone, M.J. and Roy, T. (2010). Does Exclusivity Always Pay Off? Exclusive Price Promotions and Consumer Response. Journal of Marketing; Vol. 74 Issue 2, p.121-132.
One might be tempted to assume, without checking the research, that targeted deals will always be the better way to go, both for the customer and the organisation. Yet, Barone and Roy highlight how “equity theory suggests that evaluations of a targeted offer will depend not only on the relative outcomes associated with the offer (i.e., whether the consumer is a recipient or non-recipient) but also on the inputs or costs associated with receipt of the promotion,” (p.122).
In a world where we’re often told it’s every man for himself the theme adds further credence to the logic that any exclusive price promotion must be beneficial to those receiving it and the offer ‘bought’ with appreciation and thanks.
What’s interesting is how Barone and Roy highlight that “research on self-construal suggests that recipient gender can influence how deal exclusivity affects the evaluations of customized offers. Specifically, Western men are often characterized as possessing independent self-views, while Western women more typically adopt interdependent self-construal’s (Markus and Kitayama 1991). Men’s independent self views should prompt them to value unique (i.e., exclusive) offers that provide them with the basis for self-enhancement to a greater extent than women, whose interdependent self views should result in less favourable evaluations of targeted deals,” (p. 123).
The research by Barone and Roy addresses an important theoretical void in the current literature by establishing the presence of ‘deal exclusivity effects’. Across their three different studies, they demonstrate that some consumers (e.g., male participants and those with independent self views) favour exclusive deals over inclusive ones. The findings further show that under certain conditions (e.g., when the level of relationship equity consumers have built with a marketer through their past patronage is low), both types of offers are evaluated equally favourably.
Perhaps most intriguing are the results indicating that certain consumers (e.g., female participants and those with interdependent construal’s) react negatively to receiving a targeted offer that is exclusive, instead preferring discounts that are more widely available, (Barone, M.J. and Roy, T.; 2010, p.129).
There can be a temptation at times like this to think of the women we know who don’t fall into this category – but that is often the natural inclination when one finds that the conclusions and answers to the research don’t meet our previous expectations. We also have to be honest with ourselves in respect of how much information we had prior to the research becoming available.
Bayone and Roy mention how “these results indicate that consumers who prefer more exclusive deals do so because receiving selective offers provides them with a basis for self-enhancement (e.g., by helping them attain values related to autonomy). In contrast, the negative reactions of participants exhibiting an aversion to exclusive promotions were driven by the superiority of inclusive offers to allow them to self-enhance (e.g., by confirming their desires to maintain harmony with others),” (p.129).
Barone and Roy conclude by highlighting how “evidence documenting the moderating effects of self-construal and gender on deal exclusivity underscores the need for marketers to judiciously consider the use of targeted offers on a segment-by-segment basis. Although gender has long been employed as a segmentation variable, note that self-construal is correlated with several demographic variables that represent market segmentation bases, such as country and ethnic group (Ahluwalia 2008). For example, consumers in the United States tend to have independent self-views, while those in other countries (e.g., Mediterranean nations) typically exhibit interdependent self-construal’s (Oyserman, Coon, and Kemmelmeier 2002),” (p.130).
Maybe it’s worth evaluating your customer base again and looking at how you can optimise your marketing and promotional strategies with your current target markets. Getting the strategy right will add value directly to your bottom-line; where as getting it wrong not only gives you a sub-optimal bottom-line, but can seriously upset some of your current customers. It’s worth giving your strategy another look.
References.
Barone, M.J. and Roy, T. (2010). Does Exclusivity Always Pay Off? Exclusive Price Promotions and Consumer Response. Journal of Marketing; Vol. 74 Issue 2, p.121-132.
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