(The) truth behind items on sales: effects of adjusting consumption on transaction utility

Abstract

Price discount promotion has been the most popular marketing strategy adopted by business managers and scholarly works have examined the subject to figure out the effectiveness of the price discount promotion. Thaler(1985)’s transaction utility theory is one of the measures detecting consumer benefit generated from the purchase of discounted product. However, there still remains a possibility to extend the discussion into the realized transaction utility through adjusting the actual consumption amount. By capturing the implicit assumption of the transaction utility (TU) theory that it assumes 100% consumption amount, this research aims to measure the actual consumer benefit through consumption-adjusted transaction utility (CATU). To compare the prediction power of the two models, survival analysis was conducted to predict the time taken until the next purchase. This research also figures out the factors which have significant impact on CATU. This research found out that CATU has more prediction power than TU for the repurchase. Also, discount through point redemption rather than price discount promotion from the firm has more significant impact on CATU and individuals who have point stockpiling behaviors tend to experience higher CATU than their counterparts who have immediate point redemption behaviors.