Consumer Evaluations of Price and Promotional Restrictions—A Public Policy Perspective

Abstract

The authors investigate the effect of price and promotional restrictions on consumer perceptions of deal value and show empirically how such evaluations can be affected adversely when deal qualifications become excessively restrictive. They examine the reasons for the pervasive use of restrictions by marketers to limit their offers, discuss the Federal Trade Commission guidelines that govern this practice, and develop a typology of deal restrictions. The authors also propose a framework explicating the mechanism by which consumers process restrictions in conjunction with varying deal sizes and test its salient hypotheses through afield experiment. Results show that consumers negatively evaluate restrictions that they view as causing excessive inconvenience, that they perceive as misleading, and/or that lock them into binding commitments. In addition, such restrictive stipulations aggravate consumers’ evaluations even when paired with relatively attractive deal offers. Finally, the authors discuss several important public policy implications resulting from this study and illustrate with some recent examples.