Document Type
Preprint
Publication Date
5-2021
Journal / Book Title
International Journal of Hospitality Management
Abstract
How can the business maximize revenue while providing discounts? This research suggests that hospitality operators may stimulate add-on purchases with the adoption of surprise discounts. Two experiments investigated factors that influence hospitality consumers’ ancillary spending. Study 1 tested the discount and product type effects on additional spending intentions for a cruise booking. Study 2 identified how the depth of surprise discount and add-on product type influence consumers’ add-on purchase decisions for an online hotel booking. The findings indicate that a surprise discount and hedonic items induce consumers’ unplanned purchases. A hedonic add-on item is preferred over a utilitarian item when a low discount is offered. Impulse buying mediates the effect of surprise discount and product type on unplanned purchase intentions. This research extends the traditional discount role, by demonstrating that a discount promotion can induce consumers’ additional purchases. The findings provide guidance for effective pricing strategies and add-on marketing mix.
DOI
10.1016/j.ijhm.2021.102918
MSU Digital Commons Citation
Kim, Esther and Tanford, Sarah, "The Windfall Gain Effect: Using a Surprise Discount to Stimulate Add-on Purchases" (2021). Department of Hospitality and Tourism Faculty Scholarship and Creative Works. 23.
https://digitalcommons.montclair.edu/hospitality-tourism-facpubs/23