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Double Mental Discounting: Reward Points


Double Mental Discounting: Reward Points

Rabey, Tyler (2020) Double Mental Discounting: Reward Points. Masters thesis, Concordia University.

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Previous research has shown that when receiving a promotional credit (e.g., a gift card with a primary purchase), consumers mentally deduct the value of the promotion from the cost both when receiving the promotional credit, and when redeeming it, resulting in lower perceived costs than what was truly spent (Cheng & Cryder, 2018). The authors refer to this as “double mental discounting”, which occurred with promotional credit in the form of dollars, but not points. In two between-subjects design experiments, this research broadens our understanding of double mental discounting. Study 1 of this research partially replicates the findings of Cheng & Cryder (2018) and further investigates complexity of the points program as potential moderator to double mental discounting. Study 2 investigates how the payment transparency of the payment method (e.g., cash = high, credit card = low) and the promotion salience of the promotional credit method (e.g., gift card = high, account credit in points = low) affect double mental discounting. Study 1 did not find statistical evidence that complexity moderates double mental discounting, but the findings offer partial support for the theory. Study 2 found that paying with cash decreases double mental discounting compared to paying by credit card, and that receiving a gift card feels more like a discount during the initial purchase, but also more like a payment when being redeemed towards a subsequent purchase. This paper contributes to marketing theory and body of literature regarding price promotions, mental accounting, coupling, and double mental discounting, and puts forth strategic recommendations for the use of promotional credit and customer loyalty programs in the marketplace. The discussion of this research concludes with limitations, and future research ideas.

Divisions:Concordia University > John Molson School of Business > Marketing
Item Type:Thesis (Masters)
Authors:Rabey, Tyler
Institution:Concordia University
Degree Name:M. Sc.
Date:8 June 2020
Thesis Supervisor(s):Thakor, Mrugank V.
Keywords:Double Mental Discounting, price promotions, promotional credit, customer loyalty programs, reward points, perceived cost
ID Code:987120
Deposited By: Tyler Rabey
Deposited On:25 Nov 2020 16:23
Last Modified:25 Nov 2020 16:23


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