Abstract
This paper shows that imprecisely stated discounts in brand promotions offered in the form of a low-probability lottery can lead to higher sales (purchase intentions) and consequently profits than equally costly conventional promotions offering a precise discount on the entire stock. Results from two different experimental studies support our findings. For high-probability lottery-like promotions, imprecise discounts lead to a lower performance for the brand than conventional promotions. We attempt to explain the findings by drawing on the behavioral decision theory literature.
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Dhar, S.K., González-Vallejo, C. & Soman, D. Brand promotions as a lottery. Marketing Letters 6, 221–233 (1995). https://doi.org/10.1007/BF00995113
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DOI: https://doi.org/10.1007/BF00995113