Buyers often depend on emotions to make purchase decisions. Omnichannel retailers should consider this fact while designing cross-channel price promotions. Higher-than-expected discounts on subsequent purchases across channels can increase surprise (a positive emotion) and reduce discontent (a negative emotion). Higher discounts can lead to increased patronage intention and omnichannel usage but can eat into profits, especially for high-involvement products. So, their offers need to balance discounts with non-price factors.
Omnichannel retailing refers to the harmonious integration of multiple channels (physical, online, mobile, social) to serve shoppers. The success of omnichannel retailing depends on
buyers utilising these channels seamlessly. To encourage buyers to purchase from more than one channel, omnichannel retailers use customer data from one channel to customise price promotions across channels. However, whether buyers respond to this strategy depends on cognitive processes as well as emotions evoked by the offers. To better understand the role of emotions in this process, a study tries to answer the question: How do buyers’ emotions affect their response to omnichannel price promotions?
Beyond promotions, other marketing efforts also need to be considered for maximising benefits for omnichannel retailers. Here’s a discussion on how to do so.
The study found that the level of discount offered on subsequent purchases affected buyers’ emotional responses. When buyers purchase via one channel and receive a price promotion
for a purchase on a separate channel, they feel both surprise or delight (at the unexpected offer) and discontent (when the offered discount is less than expected). For example, if a person buys a book from a store and gets a discount on the online purchase of another book by the same author, they will feel surprised. If the discount is less than expected, they will feel discontent. The higher the discount offered in the promotion, the higher the surprise and the lower the discontent. For example, a discount of 25% will cause more surprise and less discontent than a discount of 15%.
Surprise and discontent also affect buyers’ patronage intention and omnichannel usage.
Patronage intention refers to a buyer’s possibility of continuing to purchase from a particular retailer. Omnichannel usage implies a buyer’s willingness to buy from different channels of the same retailer. A higher level of surprise and lower discontent lead to increased patronage intention and omnichannel usage. Therefore, higher discounts can lead to greater omnichannel usage and continued patronage by buyers. Taking the earlier example, a discount of 25% is likely to encourage the customer to buy from that store again. It can also encourage them to buy a book online to avail the offer.
Discounts can be percentage discounts or amount-off discounts. To find out when amount-off discounts work better, check out this post.
The study also found that emotions affect purchase decisions more strongly in the case of high-involvement products. High-involvement products are those whose purchase requires the buyer to put in more time and effort to gather information before buying—for example, a washing machine. Low-involvement products like groceries are bought more quickly and with less effort. Therefore, the role of emotions in their purchase is also less.
The study has insights for omnichannel retailers vis-à-vis their promotional strategies. In the case of high-involvement products, a bigger discount can trigger more surprise and less discontent, leading to increased sales. However, bigger discounts may eat into the margin, so despite the incremental sales, retailers might not make enough profits. Therefore, they need to find the right balance between price promotions and non-price factors (e.g., service, ambience, or ease of transaction) to encourage sales without cutting profits.
On the other hand, for low-involvement products, even a smaller discount can lead to higher
cross-channel sales. Since the emotional involvement is low, even for a lower discount value, customers would feel less discontent. Keeping emotional responses to price promotions in mind while designing cross-channel offers can help omnichannel retailers to strike the right balance between profitability and increased sales, patronage, and omnichannel usage by buyers.