One of a kind: How stacked discounts make customers feel smart

Abstract

This research investigates the effectiveness of stacked discounts, which allow consumers to combine multiple discounts into a single deal. In a series of studies using both secondary data and experiments, we identified a positive effect of stacked discounts over a single discount of the same face value. Computational errors do not account for the observed effect. We further demonstrate that stacked (vs. single) discounts are perceived as more unique, which elicits smart-shopper feelings and increases the likelihood of purchase. However, stacked discounts are also perceived as more complex than a single discount, which can negatively impact smart-shopper feelings and purchase intentions. The effects are generalizable to stacked discounts with various characteristics (e.g., same vs. different discount format; simultaneous vs. sequential presentation, offered by retailers vs. mixed with third parties; consumer self-compiled vs. shared by other customers). We also found that the stacked discount effect is more pronounced for a smaller discount magnitude (e.g., 25 % off) than for a substantial one (e.g., 65 % off).