Abstract

Sales promotion is a widely-used tool in marketing, and billions of dollars are spent every year to promote both products and services. Much research has been done on the effectiveness of different types of promotions. However, there is limited research on how consumers reciprocate when they are given deep discounts or unexpected promotional rewards. Consequently, this paper explored the effectiveness of promotional offers in a retail setting through the lens of reciprocity norm, appreciation, and indebtedness borrowed from the gift-giving literature in social psychology. The findings of three studies reveal that consumer appreciation and indebtedness facilitate different reciprocal responses (additional purchase likelihood, word of mouth, loyalty, and attitude towards store) in the context of discounts and rewards. Results also showed that situational factors such as staff helpfulness, purchase expectation, social presence, and promotion depth of certain promotion format significantly influence the likelihood of consumer purchase. Additionally, there are cultural differences in how consumers react towards certain promotion format.