(The) effect of price level and promotion on the usage of points

Abstract

Today, consumers are increasingly able to pay for goods and services in various combinations of currencies (traditional paper money and points) due to the introduction of several new exchange media by marketing promotions and loyalty programs. With the immense popularity of these programs, consumers have become more knowledgeable and accustomed to the new currencies and are increasingly using them as payment for the goods and services. However, despite the ubiquity and omnipresence of the new currencies, there has been little research on how consumers use the new exchange media. This research identifies certain conditions in which consumers’ willingness to use points increases. Through a single experiment, the hypothesis that consumers have a higher intention of using points when purchasing relatively expensive products in the absence of a price discount and when purchasing relatively inexpensive products in the presence of a price discount is tested and supported.