Consumer Reactance to Promotional Favors

Abstract

A common practice in business is to condition the receipt of a discount on specific actions by consumers — anything from buying a minimum quantity to registering for direct debit. The tactic is often justified as a means for price discrimination, but it is also possible that promotional restrictions frustrate consumers and, as a result, provoke behaviors that harm the firm. Critically, conditional discounts that do not control what consumers purchase, which are increasingly popular, run the risk that such “psychological reactance” manifests precisely as a cut in spending. We report evidence from the field and laboratory that supports this prediction and highlights factors at the discretion of the firm or inherent to consumers that play a moderating role. The concluding section considers implications and lays out opportunities for future research.