Promotion matters

Abstract

Three different types of promotions - the monetary benefit (price discount), the conditional monetary benefit (trade-in discount), and the non-monetary benefit (bundle) are being widely used in the smartphone market. We examine how each promotion type impacts consumer’s smartphone purchase intent and brand evaluation by using the context of purchasing a Samsung smartphone. We hypothesize that the promotion type may have varying effects on the consumer’s response, and this effect can be moderated by consumer’s brand loyalty. Our findings from the survey experiment with consumers in the U.S. indicate that all promotion types have a positive impact on purchase intent but the bundle promotion of a wearable device does not have an effect on Samsung users with low brand loyalty. More interestingly, doing promotion does not decrease brand evaluation of consumers, which is a counterintuitive outcome. For respondents who are currently Samsung users, we even observe a positive and significant relationship between brand evaluation and promotion activities. This study aims to provide both managerial and theoretical implications by identifying the varying effects of smartphone promotion types in the highly penetrated and competitive U.S. smartphone market.