$1.00 fruit with $0.50 discount being limited. Limit of 1 or 9 is correct, but limit of 3 is wrong
Limit Bulk Discounts By Small or Large Amounts
Promotions

Limit Bulk Discounts By Small or Large Amounts

Moderate limits can anchor customers to the lower end of their purchase range.

Imagine a $0.50 discount on peaches.

Retailers could limit this discount:

  • Limit of 1 peach
  • Limit of 3 peaches
  • Limit of 9 peaches

Be careful with moderate limits.

Maybe a customer plans to buy 5 peaches, but they'll be happy with any quantity from 3–7 peaches. Well, a moderate limit of 3 peaches can anchor them to the lowest endpoint in their acceptable range.

A $0.50 discount is limited to 3 per item. Given a purchase range from 3 to 7 items, this discount will anchor customers to only buy 3 items when they would have bought more items otherwise

Customers buy 3 peaches instead of 5 peaches like they planned.

...if the grocery store allows him to buy six muffins at a discount, he will buy six. But, if the store allows him to buy only five muffins at a discount, he may buy just five (Zhang et al., 2021, p. 774)

If a bulk discount is limited to 1 peach, customers still buy 4 more peaches at the regular price to reach their planned quantity of 5.

Researchers confirmed this effect in a real fruit shop: A limit of 3 sold the fewest peaches (Zhang et al., 2021).

No Discount sold an average of 4.37 peaches, Limit of 1 peach sold an average of 5.14 peaches, Limit of 3 peaches sold the least at 3.38 peaches

Unsure which limit to impose? Try a high limit.

In another study, high limits (e.g., 8 for $8) performed better than low limits (e.g., 2 for $2, 4 for $4) because they anchored purchases upward (Manning, & Sprott, 2007).

Caveats

  • Bhatt, S., Swaminathan, S., & Suri, R. (2024). Restrictively framed promotions hurt retailers: The role of promotion induced reactance. Journal of Promotion Management, 30(1), 77-109.
  • Inman, J. J., Peter, A. C., & Raghubir, P. (1997). Framing the deal: The role of restrictions in accentuating deal value. Journal of Consumer research, 24(1), 68-79.
  • Manning, K. C., & Sprott, D. E. (2007). Multiple unit price promotions and their effects on quantity purchase intentions. Journal of Retailing, 83(4), 411-421.
  • Wansink, B., Kent, R. J., & Hoch, S. J. (1998). An anchoring and adjustment model of purchase quantity decisions. Journal of Marketing Research, 35(1), 71-81.
  • Zhang, S., Sussman, A. B., & Hsee, C. K. (2021). A dragging-down Effect: Consumer decisions in response to price increases. Journal of Consumer Research, 47(5), 772-786.

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