Can mobile promotion automation decrease overall purchases? The role of promotion pattern predictability in customer habit formation

Abstract

Automating mobile promotions facilitates customization through geo-location and temporal targeting; however, this can lead the geographic and temporal patterns of promotions to become predictable. We argue that this predictability enables customer habit formation as the promotion, the context in which it is received, and the purchase behavior become associated in the customer's memory through repeated co-occurrence. This results in the customer purchasing only when promotions are expected to occur, decreasing their overall purchase likelihood. Across four studies, including empirical data from two different industries in different global regions and two controlled laboratory experiments focused on different purchase scenarios, we find that customers exposed to predictable promotion patterns shift their purchases to when promotions are expected, decreasing overall purchase probability. These effects are stronger for customers with consistent past purchase patterns or low involvement with the product, and predictability of promotion patterns does not impact customer attitudes, providing evidence that they are driven by customer habit formation.