When implementing a price reduction, retailers tend to favor one practice over the other. Yet how different implementations of a price promotion influence consumers' perceptions and purchase intentions has been insufficiently studied. In this study, we framed a price reduction in percentage versus dollar terms on either a high-price or a low-price product. For the high-price product, our subjects indicated that a price reduction framed in dollar terms seemed more significant than the same price reduction framed in percentage terms, and the opposite was true for the low-price product. We also offered the same savings in either coupon or discount promotions and found that coupon promotions were evaluated more favorably and were more effective in changing subjects' purchase intentions. These results provide implications for when retailers should stress the absolute versus the relative magnitude of discounts to advertise price promotions.
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