New study into how consumers weigh the costs and benefits of promotions and rewards

We’ve all been there. At the car sales lot, being simultaneously wooed by big-numbered rebates rolling off the tongue of a fast-talking salesperson. The experience is both tantalizing and worrisome. Promotions are so common in the marketplace that they are basically a ubiquitous part of our buying experience. An article in the March 2005 issue of the Journal of Consumer Research taps into this marketplace phenomenon, explaining how consumers react to and are affected by promotions. It seems that while promotions can be a good thing, consumers also construe them negatively as well.

“Marketing promotions and incentives can be a double-edged sword. On the one hand, as prior research and common wisdom suggest, consumers are enticed by the proffered benefits and rewards. On the other hand, this article assumes that consumers may perceive the incentives as intended to influence their consumption behavior and limit their brand choice. Such threats to consumers’ perceived freedom arouse promotion reactance,” explains author Ran Kivetz (Columbia University School of Business).

While many previous studies have examined promotions, Kivetz asserts this is the first wholesale study of how consumers react to promotions, particularly their skepticism of incentives.

“Despite voluminous research on promotions, the basic notion that they can evoke reactance has not yet been studied,” writes Kivetz. “It is further proposed that consumers reduce such reactance and reaffirm their autonomy by selecting promotions and incentives that foster a consistency between the reward and the reinforced behavior.”