A STUDY ON THE IMPACT OF DISCOUNT ON CONSUMER BEHAVIOUR Section A-Research paper

ISSN 2063-5346 A STUDY ON THE IMPACT OF DISCOUNT

ON CONSUMER BEHAVIOUR

M. S. ANAND KATHIR 1, Dr DENIS AMIRTHARAJ 2

Article History: Received: 01.02.2023 Revised: 07.03.2023 Accepted: 10.04.2023
Abstract
Discounts are commonly used by businesses as a marketing tool to increase sales and attract
customers. This study examines the impact of discounts on consumer behaviour, with a
particular focus on how discounts affect consumer decision-making processes. The literature
suggests that discounts can be an effective means of increasing sales and encouraging
customers to purchase a product. Consumers are often motivated by the perceived value of a
product, and discounts can increase this perceived value by making the product more
affordable. In addition, discounts can create a sense of urgency and scarcity, which can further
motivate consumers to make a purchase. However, discounts can also have negative effects on
consumer behaviour. The researcher conducted a quantitative study with 130 sample data by
spreading out to respondents a structured questionnaire, using convenience sampling method.
The research results provide valuable insights into the impact of discounts on consumer
behaviour in the Indian retail industry, which can be used to enhance the effectiveness of
marketing strategies and improve sales performance.

Keywords: Discount, Consumer behaviour, Consumer Decision-Making Processes.

1 nd
II year MBA, School of Management, Hindustan Institute of Technology and Science
(Deemed to be University), Chennai.
2
Associate Professor, School of Management, Hindustan Institute of Technology and Science
(Deemed to be University), Chennai.

DOI:10.31838/ecb/2023.12.s1-B.405

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1.1 Introduction Overall, the discount industry is a complex

The discount industry is a large and and dynamic sector of the retail industry,
growing sector of the retail industry, with a with both positive and negative impacts on
significant impact on consumer behaviour. consumer behaviour. Understanding the
Discounts are a common marketing tactic psychology of discounts and their effects on
used by retailers to attract customers, consumer behaviour is essential for retailers
increase sales, and clear out excess looking to optimize their pricing strategies
inventory. The discount industry and attract and retain customers.
encompasses a wide range of retailers,
including department stores, specialty 1.2 Research Review
stores, online retailers, and discount stores.
Discount stores, in particular, have Zeithaml (1988) examined the relationships
experienced significant growth in recent between price, quality, and value in
years, with companies like Walmart, consumer decision-making. It emphasizes
Target, and Amazon dominating the that discounts can alter consumers'
market. perceptions of value and quality, affecting
their purchasing behavior.

Discounts can take many forms, including

percentage-off sales, buy-one-get-one-free Keller (1993) discussed the concept of
promotions, clearance sales, and loyalty brand equity and its relationship with
rewards programs. These tactics are consumer behavior. It highlights that
designed to create a sense of urgency and discounts can affect consumers' perception
scarcity, encouraging customers to make a of a brand's quality and value, which, in
purchase before the deal expires or the turn, influences their purchasing decisions.
product sells out. Discounts can have a
significant impact on consumer behaviour.
Nunes & Drèze (2006) explored the
For example, consumers may feel a sense of
endowed progress effect, which suggests
satisfaction and excitement from finding a
that offering discounts that create a sense of
good deal, which can create a positive
progress or advancement toward a goal can
association with the retailer and increase
increase consumers' motivation and effort
their likelihood of returning in the future.
to complete the purchase.
Additionally, discounts can create a sense
of social proof, with consumers feeling Wadhwa & Zhang (2018) examined the
validated in their purchase decision if they effects of price promotions, including
see others taking advantage of the same discounts, on consumer behaviour. It
deal. explores various factors that moderate the
impact of discounts on consumer decision-
making, such as product type, deal
However, discounts can also lead to magnitude, and consumers' price
negative consequences, such as a decrease sensitivity.
in perceived product value, lower profit
margins for retailers, and a potential
increase in price sensitivity among Tamilselvi (2019) observed that sales
consumers. Additionally, frequent promotion, one of the fundamental aspects
discounting can create a "discount of the promotional mix, is commonly
addiction" among consumers, where they utilised by marketers to compete and
may be less likely to purchase products at maintain a competitive edge, and so
full price and instead wait for the next sale. increase sales by driving consumers' buy
decisions. The study attempted to discover

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the various sales promotion strategies and  To identify the different types of
the order in which they influence discounts and their impact on
consumers' purchasing decisions for consumer behaviour.
clothes. The study takes into account five  To explore how the perception of
main sales promotion techniques: rebate discount pricing influences consumer
and discount offer, coupons, loyalty behaviour.
programmes, price packs, and contests.

1.4 Limitations of the study

Agmeka et al (2019) studied that numerous
implementations of discount framing in the  The study may not be representative of
e-commerce context that have an impact on the general population if the sample
both brand reputation and brand image. The used is biased or not diverse enough.
latter two constructs have been shown to  The study may be influenced by
influence consumer purchasing intent and participants' responses to surveys or
behaviour. There are, however, few studies questionnaires, which may be subject
that investigate the relationship between to bias or inaccuracies.
discount framing consumer buying
 The study may not be applicable to
intention and actual activity. The study
other settings or contexts due to
investigated the impact of discount framing
differences in cultural, economic, or
on consumer purchase intention and actual
social factors
behaviour, which may be mediated by
brand reputation and brand image.
1.5 Research methodology
Huber et al (2022) evaluated the demand This includes surveys and fact-finding
impacts of discounts on Swiss Federal enquiries of different kinds. The major
Railways train tickets, known as'supersaver purpose of descriptive research is
tickets,' using machine learning, a subfield description of state of affairs as it exists at
of artificial intelligence. Using a survey- present. The main characteristic of the
based sample of supersaver ticket buyers, a methods is that the researcher has no
causal machine learning model was control over the variables. Research can
developed to analyse the influence of the only report what has happened or what is
discount rate on rescheduling a trip, which happening.
is significant in light of capacity restrictions
during rush hours. Based on survey, which
The primary data is gathered from 20th
asks about customer behaviour in the
February to 15th March 2023, by
absence of discounts assume that (i) the
disseminating the structured questionnaires
discount rate is quasirandom conditional on
virtually to know the impact of discount on
our rich set of characteristics, and (ii) the
consumer behaviour.
buying decision increases weakly
monotonically in the discount rate. The secondary data are the data in which
information is already collected and
published. There are several methods of
1.3 Objectives of the study collecting the data Such as books, Internet,
 To analyse the impact of discount Articles, Journals and other sources.
pricing on consumer behaviour and
purchase decisions.
The sample size for the purpose of this
research is 130 respondents. Convenience
sampling method is used in this study for

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collecting the data. Convenience sampling gaining information from participants

is the most common type of non – (sample) who are convenient for the
probability sampling, which focuses on researcher to access.

1.6 Data analysis and Results:

Descriptive statistics:
A total of 130 respondents have responded to the survey. Details regarding Demographic
characteristics of the respondents are presented in the table 1.

Table 1 – Demographic characteristics of the respondents

Variables Categories N=130 Percentage
Below 25 years 66 51
Age Between 26 – 30 years 36 28
Between 31 – 35 years 20 15
36 and above 8 6
Gender Male 72 55
Female 58 45
Graduate 46 35
Educational Post graduate 64 49
Qualification Professional courses 12 9
Others 8 6
Public sector 12 9
Employment Private sector 44 34
Status Business / Entrepreneur 6 5
Student 64 49
Others 4 3
Less than 25000 28 22
Monthly Rs.25000 - Rs.40000 24 19
Family Income Rs.40001 - Rs.50000 22 17
Above Rs.50001 56 43

Chi-Square Analysis:
This study tries to test the association between age and monthly family income
The hypotheses are as follows:

Null Hypothesis (H0): There is no significant association between age and monthly family
income
Alternate Hypothesis (H1): There is a significant association between age and monthly family
income

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Table 2
Chi-Square Tests

Df Asymptotic
Value
Significance (2-sided)

Pearson Chi-Square 29.741a 9 .000

Likelihood Ratio 32.496 9 .000
Linear-by-Linear 5.745 .017
Association 1
N of Valid Cases 130
a. 7 cells (43.8%) have expected count less than 5. The minimum expected count
is 1.35.

The following result is obtained: The The hypotheses are as follows:

significant value is less than 0.05. Hence, Null Hypothesis (H0): There is no
we reject the null hypothesis and accept the significant relationship between Monthly
alternate hypothesis, so there is a significant Family Income and discounts help
association between age and monthly respondents save money in the long run.
family income.
Alternate Hypothesis (H1): There is a
Coefficient of Correlation significant relationship between Monthly
This study tries to test the relationship Family Income and discounts help
between Monthly Family Income and respondents save money in the long run.
discounts help respondents save money in
the long run.
Table 3
Correlations

Monthly Family I believe that discounts

Income help me save money in
the long run.
Monthly Family Income Pearson 1 .229**
Correlation
Sig. (2-tailed) .009
N 130 130
**
I believe that discounts help Pearson .229 1
me save money in the long Correlation
run. Sig. (2-tailed) .009
N 130 130
**. Correlation is significant at the 0.01 level (2-tailed).

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The following result is obtained: r value is impact of discounts on consumer behaviour

positive and significant 2-tailed value is and the factors that influence customer
less than 0.05, hence we reject the null loyalty in emerging markets. However, it is
hypothesis and accept the alternate important to note the limitations of the
hypothesis. Since r = 0.229, there is a weak study when interpreting the results and
positive correlation between Monthly making recommendations for future
Family Income and discounts help research. Overall, this study is expected to
respondents save money in the long run. provide valuable insights into the impact of
discounts on consumer behaviour in the
Indian retail industry, which can be used to
1.7 Direction for future research enhance the effectiveness of marketing
Investigating the impact of discounts on strategies and improve sales performance.
consumer behaviour in other emerging
markets, as the factors that influence
customer loyalty and the effectiveness of REFERENCES:
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different markets. Investigating the role of Santoso, A. S. (2019). The influence of
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marketing strategies, such as product demand effects of discounts on Swiss
bundling, price matching, and loyalty train tickets. Transportation Research
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Measuring, and Managing Customer-
Based Brand Equity. Journal of
1.8 Conclusion
Marketing, 57(1), 1-22
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