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Ideas for Leaders #693

Why Promotions Work Better for Luxury and Hedonic Purchases

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Key Concept

New research reveals that promotions are more effective with luxury and hedonic products (think Godiva chocolates or that vacation by the sea) than for more utilitarian products. The reason: they help reduce consumer guilt about the purchase. 

Idea Summary

Many consumers find it more difficult to justify buying frivolous, hedonic purchases — in other words, purchases from fine chocolates and DVDs to vacations that are motivated by fun and are often frivolous or luxurious — than to spend money on utilitarian purchases, such as food or gas. 

New research from Columbia University and Tsinghua University in Beijing shows that because of this consumer guilt, promotions are even more effective for hedonic products than utilitarian products: the promotions reduce consumer guilt by giving them some justification for the purchase (e.g. “It was such a great deal that it’s smart to buy it now!”).

A series of studies that included price promotions vs. no promotions and hedonic purchases vs. utilitarian purchases confirmed the core concept of the research: price promotions are more effective for hedonic products than for utilitarian products. 

One study showed that price promotions are more effective when the same product is framed as more hedonic rather than less hedonic. Specifically this study tested participants’ desire to purchase a London city guide magazine (the participants, all U.S. college students, had been told to imagine that they would be spending a semester in London.) The description of the magazine presented to the participants either framed the magazine as a hedonic purchase (by emphasizing its coverage of the hedonic pleasures of London) or as a utilitarian purchase (by emphasizing the ‘useful’ information it contained). Some of the participants were offered a 50% discount coupon off the £25 price of the magazine, others were not.

The results of the study were clear: when given the hedonic frame, participants were more likely to purchase the subscription if the discount promotion was available. On the other hand, the discount had no impact when the magazine was framed as more utilitarian. 

Another study tested whether the power of promotions on hedonic purchasing extended to non-price promotions; it also tested whether this effect would be observed even when the same product was involved, only with a hedonic consumption goal vs. a utilitarian consumption goal.

Specifically, this study asked a group of Chinese college students to imagine they were buying a pair of earphones. Some were told they would be buying the earphones to listen to music and movies (a hedonic consumption goal). Others were told they would be buying the earphones to listen to English language tapes to improve their English (a utilitarian consumption goal). The promotion, when offered, involved credit card reward points awarded through a deal between the online merchant selling the earphones and the credit card company.

The results of the study showed that the promotion was more effective when the participants were buying the earphones for pleasure than to better learn English.

The hedonic vs. the utilitarian factor did not seem to apply to all promotions, however. Specifically, the research showed that quantity promotions (for example, buy 10 to get 50% off) were not more effective for hedonic than utilitarian purchases.

In addition, the researchers found that even non-quantity promotions, such as the price and non-price promotions described above, do not have the same impact on hedonic purchasing

  • if the purchase is intended as a gift;
  • if consumers can find justifications for the purchase ahead of time; and
  • if consumers are not accountable for their decisions.

The research team tested the accountability factor through a clever study in which participants were asked to choose between buying a “rich, delicious chocolate cake” and a “low-calorie, healthy seasonal fruit salad.” Some participants were told that “to better understand your decisions, you may be invited to meet with the researchers conducting the study to explain and justify your choices.” Their decisions would also be used in a booklet for class discussion… and they were asked to put their names on the questionnaire. Other participants were not burdened with this accountability condition; they were told, on the contrary, that their answers would remain confidential. In this study, even promotions could not generate more purchases of the chocolate cake by those who were going to be publicly grilled on their choices.

Business Application

While marketers use a variety of promotions to generate sales, little has been known in the past on how promotions affected hedonic purchases as opposed to utilitarian purchases. This research reveals that price and other non-quantity promotions can be even more effective for hedonic vs. utilitarian purchasing because of the guilt involved in purchasing frivolous or luxurious products. 

However, marketing leaders will have to be careful when applying this research. The researchers note that purchasing hedonic and luxurious products is often associated with “exclusivity, elegance and prestige.” Aggressive discounting and other promotions could backfire by taking the shine off of this elegance and prestige. 

Nevertheless, if your company is in the hedonic and luxury markets, the right promotions can be even more powerful than for companies dealing with utilitarian products.

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Authors

Institutions

Source

Idea conceived

  • January 2017

Idea posted

  • March 2018

DOI number

10.13007/693

Subject

Real Time Analytics