Consumer’s response to conditional promotions in retailing: An empirical inquiry

Abstract

Both offline and online retailers use conditional promotions (CPs) to increase the value of a customer’s shopping cart. At times, the value of the cart falls short of the threshold order value to avail a CP. If a customer wants to avail the CP, he or she needs to add more products to the cart to reach the threshold order value. In this paper, we try to find how the mode of payment, relative distance to reach the threshold order value, and the initial cart orientation interact to determine the likelihood of Indian customers to avail CP and choices they make to add new products to reach the threshold order value. We conducted two quantitative experiments. Experiment 1 was a 2 × 2 × 2 design in an offline retail setup while Experiment 2 was a 2 × 2 design in an online retail setup. Results show that the likelihood of Indian customers in availing a CP offer increases with lesser pain of paying, lower relative distance to the threshold order value, and hedonic items in the pre-threshold value cart. Moreover, the products added to the cart to reach the threshold order value are also more hedonic in such conditions. On the other hand, the likelihood is lower and the products added are more utilitarian, when reverse conditions exist. We mention theoretical as well as managerial implications of our findings, limitations of the research and future directions for further research.