06.10.2021

When Resources Are Scarce, Range Pricing Offers Will Be More Attractive

范林瑩 | LI, Xueni Shirley | JIANG, Yuwei

“Save from 30% to 50% today!” Range offers like this—advertising flexible price options within a fixed range—are a popular marketing strategy. Surprisingly, however, we know little about how customers react to such offers. Shedding light on this underexplored topic, HKUST’s Prof. Linying (Sophie) Fan and her colleagues propose and test a novel theory: the attractiveness of a range offer may depend on whether consumers are experiencing resource scarcity or not.

 “Consumers often confront cues that emphasize the limited nature of products and resources,” say the researchers, “from ‘sold out’ labels on store shelves to the ‘last minute sale’ used in marketing promotion.” Facing such undesirable reminders of resource scarcity, people tend to react in a specific way. “People who fall into scarcity situations,” explain the researchers, “usually exhibit a desire to change their current state to a more desirable state.” This is known as a “promotion orientation.”

When products are in short supply, consumers may be more attracted to range offers, the researchers theorized. Unlike the single fixed price or discount provided by a point offer, a range of price options offers the chance to get a better deal than expected—such as the higher end of a discount range. This may appeal to buyers with a promotion orientation triggered by resource scarcity, as they hope for potential better-than-reference outcomes.

To test this theory, the researchers conducted eight comprehensive studies assessing the effects of resource scarcity—such as, resource exhaustion and financial crisis—on consumers’ attitudes towards range pricing offers. They presented consumers with an assortment of imagined scenarios, including purchasing a vacuum cleaner, visiting a pharmacy, buying an airline ticket, being offered a salary, and choosing a hotel.

As anticipated, a general sense of scarcity made range offers more attractive to consumers by heightening their promotion orientation. This was “driven by participants’ hope, but not their optimism, of reaching better-than-reference outcomes.” Where optimism is the “estimated likelihood” of positive outcomes, hope is more a “general yearning” for something absent. The observed effect was stronger when the price range was wider. “Wider ranges provide more opportunities for potential better-than-reference outcomes,” say the authors, “and thus they appear more attractive to participants in the scarcity condition.”

These exciting new findings show how promotion orientation – a novel motivational consequence of resource scarcity – can be used to steer consumers’ attitudes towards pricing strategies. “This research offers tactics that companies can use to potentially increase the acceptance and effectiveness of range marketing offers,” the researchers explain. For instance, businesses could attract bargain hunters by highlighting the “scarce supply of the available items or reminding consumers of the harsh environment.” This is particularly important in today’s era of dwindling resources, the researchers observe, “given the scarcity of resources as a pervasive aspect of our lives.”

范林瑩

Assistant Professor
Marketing