Quit playing games with your customers: the brand damaging consequences of gamblified promotions in digital retailing

Abstract

Gambled price discounts have become one of the most prevalent forms of price promotion in digital retailing and e-commerce, having been adopted by SMEs and large corporations alike. Unlike traditional price discounts which offer one singular certain outcome, gambled price discounts offer an array of potential discount outcomes, with the received discount value being contingent on a probabilistic gamble (e.g. ‘spin the wheel to win’). Although used widely online as a price promotion strategy, little attention has yet been given to understand if and how receiving undesirable outcomes from these promotions can affect customers. Through five online scenario-based role-playing experiments which integrate interactive promotion stimuli and one attempted field study which included developing a live e-commerce website and online brand, the results of this work support that implementing gambled price discounts can backfire against brands. Here it is shown that undesirable outcomes can lead to feelings of brand betrayal in consumers, which ultimately can lead to significant brand-damaging consequences. Overall, the work offers four theoretical contributions and one managerial contribution. First, the paper shifts discussions in marketing literature towards the ‘dark side’ of gambled price discounts, uncovering how worst-case discount outcomes can be perceived as morally transgressive, negatively impacting consumption and increasing retaliation behaviours against offering brands. Second, bringing in theory from betrayal literature, the research takes an alternative affective (as opposed to cognitive) approach towards understanding how consumers can emotionally appraise two equivalently valued discount outcomes differently based on the promotion type. Third, the work uncovers three moderating variables, including brand loyalty, product involvement, and product type, which can buffer or amplify the negative effects of gambled price discounts on betrayal and downstream behaviours. Fourth, the present work brings in discussions of heuristics to gambled price discount literature, showing how the visual design of a promotion can alter how consumers heuristically judge expected outcomes from gambled price discounts prior to interaction. These heuristic adjustments can lead to reduced negative consumer responses when receiving an undesirable discount outcome. Last, the research offers practical guidance to e-commerce marketing practitioners on designing effective price promotions.