2.3. Price-Related Promotions
Price rapidly obtains consumer response compared with other marketing activities. Price is a concept that opposes benefits that companies provide to consumers and monetary costs, a factor that requires customer sacrifice [
10,
11]. Therefore, if price decreases, the required customer sacrifice to obtain the product reduces. As a result, market demand increases, resulting in rapid rise in sales. However, as mentioned above, companies should carefully develop promotional pricing because price reduction leads to negative effects [
13]. Price-related promotions can be classified into direct price discount and value-added promotion [
31]. Direct price discount is a strategy that allows consumers to recognize the purchase costs reduced by temporarily lowering the original price to increase consumer demand and sales [
31,
32,
33]. Direct price discount refers to providing price discounts based on the original price at the time of purchase, for example, 30% and 50% discounts from the original price for a certain period [
31].
In contrast, value-added promotion is an indirect price discount that provides benefits to consumers through additional value at the same price. Examples of value-added promotion are free-gift, bonus pack, and buy one, get one free, etc. [
31]. Direct price discount provides monetary benefits, whereas value-added promotion provides non-monetary benefits that focus on the additional value that consumers obtain [
33]. When a monetary discount is provided, consumers perceive the promotion as reduced loss, whereas when a non-monetary discount, such as value-added promotion, is provided, consumers perceive the promotion as increased benefits [
33]. Prior studies found that consumers prefer direct price discount compared with value-added promotion [
34,
35] as people are more sensitive to losses than gains [
36]. If the price-related promotion period is short, then the effect of direct price discount is higher than that of value-added promotion. However, if the promotion period extends, then the product’s value can be negatively affected. Therefore, if the promotion period is long or if companies conduct a promotion repeatedly, the negative effects of value-added promotion reduce compared with direct price discount [
13,
31].
2.4. Prior Studies on the Effects of Quality Uncertainty, Price-Related Promotions, and Regulatory Focus on Consumer Behavior
Prior studies on the effects of quality uncertainty, price-related promotions, and regulatory focus on consumer behavior are available. Earlier studies [
11,
18,
37] suggested that when consumers have insufficient product quality information, they tend to perceive high prices, which indicate high product quality. Consumers with limited product information use price as an important determinant of product quality. Snoj, Korda, and Mumel [
19] investigated the relationship between perceived quality, value, and risk. They found that perceived quality positively affects perceived value, and perceived risk decreases as perceived value increases. Nguyen, Jeong, and Chung [
20] studied how price, price discount rate, and quality uncertainty influence consumers’ purchase intention. They found that if consumers’ perceived quality uncertainty is low, their purchase intention is high, and when price discount rate is high and the price is low. On the contrary, if consumers’ perceived quality uncertainty is high, their purchase intention is high when the price discount rate is low and the price is high.
Prior studies have investigated consumer behavior influenced by regulatory focus. Aaker and Lee [
14] investigated the impacts of regulatory focus on consumers’ perceptions of promotional strategies. They found that when consumers are promotion-focused, advertising messages that emphasize product benefits (i.e., gain) are more effective than those that emphasize loss prevention. Conversely, when consumers are prevention-focused, advertising messages that emphasize loss prevention have more positive effects on brand attitude than those that emphasize product benefits. Similarly, Ramanathan and Dhar [
38] found an interaction effect between saving message and regulatory focus, that is, promotion-focused consumers are more sensitive to “get” whereas prevention-focused consumers are more sensitive to “save.” Promotional messages relating to gain are more persuasive to promotion-focused consumers, whereas messages relating to loss are more persuasive to prevention-focused consumers [
39]. Kim and Cheong [
15] investigated the impacts of the type of advertising message and quality uncertainty on promotional effects. They found that value-added promotion has higher purchase intention when the advertising message is gain-focused. By contrast, direct price discount has higher purchase intention when the advertising message is loss prevention-focused. In addition, when quality uncertainty is low, consumers express higher purchase intention for value-added promotion. In contrast, when quality uncertainty is high, consumers show higher purchase intention for direct price discount. Their research structure is similar to that of this study. However, they used advertising message direction (promotion vs. prevention) as a moderating variable, while consumers’ regulatory focus was not used as a variable.
Kim and Ryu [
16] studied the effects of tensile pricing strategy and regulatory focus on consumers’ perceived savings. They compared maximal (e.g., up to 40%) and minimal price claims (e.g., at least 10%) and found that promotion-focused consumers expressed higher perceived savings for maximal price claims, whereas prevention-focused consumers showed higher perceived savings for minimal price claims. Although uncertainty and risk are high, promotion-focused consumers prefer maximal price claims because of potentially large success [
40]. Furthermore, the effect of promotion-based process can be influenced by consumers’ regulatory focus. Promotion-focused consumers showed higher purchase intention for partitioned pricing compared with all-in-one pricing. Conversely, prevention-focused consumers showed higher purchase intention for all-in-one pricing compared with partitioned pricing [
41]. Nam, Kim, and Suh [
42] found that purchase intentions for private brand (PB) and national brand (NB) are higher for promotion-focused and prevention-focused consumers, respectively. The higher the price discount rate of PB, the higher the purchase intention of promotion-focused consumers compared with prevention-focused consumers. Quality uncertainty can be higher for PB compared with NB. Therefore, when quality uncertainty is high and as discount rate increases, promotion-focused consumers show higher purchase intention. Ryu [
22] found that consumers are more likely to prefer price discount to value-added promotion. The study found that purchase attitude for value-added promotion is higher for promotion-focused consumers than prevention-focused consumers. However, consumers’ purchase attitude for direct-price discount was not influenced by their regulatory focus.
As discussed, product quality uncertainty and consumer personality, such as regulatory focus, affect consumers’ reactions to promotional strategies. Consumer perception for product quality uncertainty may be higher when insufficient information is provided or when they have no experience of using the product [
27]. When consumers’ perception for quality uncertainty is high due to insufficient product information, price-related promotions, such as price discount and value-added promotion, may stimulate consumer purchases [
10,
11]. This condition can be achieved because price-related promotions can reduce consumer sacrifice and risk, hence increasing demand [
33]. The positive impacts of price-related promotions vary depending on consumers’ regulatory focus [
14,
16]. When consumers have insufficient product knowledge (i.e., uncertainty is high), they tend to judge the product based on price [
18]. According to regulatory focus theory, prevention-focused consumers tend to emphasize safety, prevent loss and risk, and avoid negative results [
21,
25]. On the contrary, promotion-focused consumers seek pleasure by focusing on positive results that they can achieve [
21,
25]. Therefore, when product quality uncertainty is high, prevention-focused consumers would feel suspicious about price-related promotions. They may perceive that pricing promotions are unnecessary if the company is confident about the product’s quality. Conversely, promotion-focused consumers would seek positive outcomes through price-related promotions by challenging the risks associated with product quality uncertainty. This effect may be applied to direct price discount and value-added promotions.
Regulatory focus theory states that prevention-focused consumers tend to avoid negative results [
21,
23,
30]. When the quality uncertainty is low, consumers’ suspicions about a product can be reduced, leading to more confidence in the product. With a low level of quality uncertainty, prevention-focused consumers may perceive price-related promotions as extra savings that further reduce their sacrifices due to the low risk. Conversely, promotion-focused consumers have active and challenging attitudes, which lead to creative thinking and may lead to a high tendency to solve problems via their feelings [
21,
23,
30]. Quality uncertainty can be reduced by having more information about a product, such as consumer reviews. Therefore, the lower the quality uncertainty, the easier it is to judge the results based on other people’s opinions rather than actively predicting the results based on creative thinking. Therefore, it is predicted that, when quality uncertainty is low, promotion-focused consumers may show less interest in price-related promotions compared to prevention-focused consumers. Thus, this study hypothesizes as follows:
Hypothesis 1. When product quality uncertainty is high, perceived savings for price discount are higher for promotion-focused consumers compared with prevention-focused consumers.
Hypothesis 2. When product quality uncertainty is low, perceived savings for price discount are higher for prevention-focused consumers compared with promotion-focused consumers.
Hypothesis 3. When product quality uncertainty is high, perceived savings for value-added promotion are higher for promotion-focused consumers compared with prevention-focused consumers.
Hypothesis 4. When product quality uncertainty is low, perceived savings for value-added promotion are higher for prevention-focused consumers compared with promotion-focused consumers.
Two studies were conducted to verify hypotheses 1 and 2 and hypotheses 3 and 4, respectively. A laptop and juice products were chosen as sample products for study 1 and 2, respectively. A laptop is considered a high-involvement product that consumers sensitively react to perceive risk due to product purchase. Therefore, the product’s importance is high and thus a careful purchase approach is necessary. In contrast, a juice product is considered a low-involvement product in which consumers are likely to be less sensitive to product purchase risks and importance is lower [
43]. Prior studies have shown that consumers’ perception of price promotions vary depending on products’ involvement level. For high-involvement product, acceptance of prices, and perceived price reductions were higher when a high discount rate is proposed [
43,
44]. However, this high discount reduces high-involvement products’ perceived value and increases perceived risk. Contrarily, a high discount increases low-involvement products’ perceived value and reduces consumers’ perceived sacrifice [
43]. For high-involvement products, consumers are more enthusiastic about information search activities compared with low-involvement products [
43,
45]. Therefore, exploring whether results vary depending on promotion types and involvement level is helpful for this study.