Author(s): Zhuofan Zhang
Purpose: Price discounts are a popular pricing strategy because discounts increase the perceived economic value of a purchase. However, social, rather than economic value is the primary concern in gift choice. Little research examines the interplay between economic and social value in gift choice. This study fills this gap by investigating how price discounts affect gift choice. Design/Methodology: To test the proposed hypotheses, two 2×2 between-subjects experimental designs were conducted. In Study 1, eighty-one undergraduate students participated in the study conducted in a controlled lab setting. A two-way ANOVA was run with purchase intention as the dependent variable, and goal salience and discount as the independent variables. In Study 2, one hundred and fifty undergraduate students participated in the controlled in-laboratory study. A two-way ANOVA was run with purchase intention as the dependent variable, and social cue and economic cue as the independent variables. Findings: The results show that price discounts increase purchase intention when the social value of a gift is not salient (Study 1), and when social environmental cues are not available (Study 2). The findings suggest that consumers prioritize social over economic value in gift choice. However, when social value cannot be determined, consumers choose a gift based on price. Practical Implications: The current study suggests that managers should make social value salient to elicit a higher wiliness to pay from customers especially during gift-giving holidays when the act of gift-giving is considered to enhance the social value between gift giver and recipient. Moreover, the findings suggest that marketers should help consumers assess the appropriateness of a gift based on recipient’s preferences. Originality/Value: The current research shed light on understanding the impact of price discounts on gift choice, as well as the interplay between economic and social value in gift choice.