The windfall gain effect: Using a surprise discount to stimulate add-on purchases

Authors

Esther Kim, Montclair State UniversityFollow
Sarah Tanford, University of Nevada, Las Vegas

Document Type

Article

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

https://doi.org/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