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egular Price $299; Pre-order Price $199: Price Promotion for a Pre-orderedProduct and the Moderating Role of Temporal Orientation

Amaradri Mukherjee a, Subhash Jha b, Ronn J. Smith a,∗a Department of Marketing, Walton College of Business, University of Arkansas, 302 Business Building, Fayetteville, AR 72701, United States

b Department of Marketing, Indian Institute of Management, MLSU Campus, Udaipur 313001, India

bstract

Retailers typically use the strategy of providing a discount to induce the sale of a new product at a pre-order stage. Despite the prevalence of thistrategy, providing discounts might not be effective for all consumers. The present research shows that the positive effect of a discount dependsn consumer temporal orientation. Results from four experimental studies reveal that a large discount positively affects present-oriented, but notuture-oriented, consumers. The findings suggest that perceived financial risk and perceived product quality sequentially mediate the effect ofiscount size on value toward the deal and purchase intention. A third-party product quality rating boosts quality perceptions, which in turn reduceserceived financial risk and positively enhances value toward the deal along with purchase intention. Our findings demonstrate that when the brandtself acts as a reliable signal of quality, a discount has its intended effect for both present- and future-oriented consumers. Overall, the findings

f this research suggest that a retailer can use quality cues along with a discount, especially for a new brand, to appeal to the broadest group, as itill attract both future- and present-oriented consumers.2016 New York University. Published by Elsevier Inc. All rights reserved.

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eywords: Pre-order; Discount size; Temporal orientation; Perceived financial

“Regular Price: $299; Pre-order Price: $199. One Week toGo, Order Now!”

Consider the above headline from a recent, retail advertise-ent. It features a discount, with the help of advertised reference

ricing, in which the actual retail price is compared to a spe-ial pre-order price. With this type of promotion, retailers try tontice consumers to place an order with a price discount beforehe product is released. For instance, the ASUS Eee-book laptopas available at the discounted price of $139.99 two weeks prior

o its release date, with an advertised regular price of $179.99Broida 2014). Pre-order price discounts range from as low asix percent (e.g., Google Nexus 10) to as high as 63% (e.g., Callf Duty: Modern Warfare 3) and cut across a broad range ofroduct categories such as books, movie DVDs, video games,

Please cite this article in press as: Mukherjee, Amaradri, et al, Regular PProduct and the Moderating Role of Temporal Orientation, Journal of Ret

martphones, and computer operating systems.Retailers and manufacturers use pre-order price discounts

o induce consumers to purchase a new product (Nair 2007).

∗ Corresponding author. Fax: +1 479 575 8407.E-mail addresses: amukherjee@walton.uark.edu (A. Mukherjee),

ubhash.jha@iimu.ac.in (S. Jha), rjsmith@walton.uark.edu (R.J. Smith).

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ttp://dx.doi.org/10.1016/j.jretai.2016.11.001022-4359/© 2016 New York University. Published by Elsevier Inc. All rights reserv

erceived product quality; Purchase intentions

his assumption aligns with classical economics in that tem-orary price reductions, such as through pre-order discounts,hould entice consumers to purchase the product (Leavitt 1954).xtant research, however, suggests that consumers’ perceptionsf discounts are contingent on other factors, such as beliefsnd expectations (Chandran and Morwitz 2006; Shiv, Carmon,nd Ariely 2005) which may make pre-order discounts differen-ially effective. Additionally, some prior research demonstrateshat consumers’ specific traits, such as price consciousness,an elicit varying consumer responses from price reductionsLichtenstein, Burton, and Netemeyer 1997). Given the likelyixed responses to these price promotions, a clear understand-

ng of the impact of pre-order discounts is both theoretically andractically valuable.

The essence of pre-ordering revolves around a temporalhoice because consumers are enticed into an exchange beforehe product is available and ready for consumption. Therefore,n an effort to advance our understanding of pre-order price pro-

otions, we postulate that consumers’ temporal orientation is

rice $299; Pre-order Price $199: Price Promotion for a Pre-orderedailing (xxx, 2016), http://dx.doi.org/10.1016/j.jretai.2016.11.001

driving factor in how they respond to elements of a pre-orderrice promotion. In particular, we examine the moderating rolef consumer temporal orientation in the effect of discount size

ed.

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A. Mukherjee et al. / Journal o

n value towards the deal and purchase intentions. Additionally,e investigate the psychological mechanisms of perceived prod-ct quality and perceived financial risk in the aforementionedelationships.

To investigate the role of a consumer specific trait in thealue perception of discounts, we conduct four experimentaltudies that provide convergent evidence regarding the moderat-ng role of consumer temporal orientation in quality perceptions,erceived financial risk, value perceptions as well as purchasentention. Thus, we provide a new understanding of the reachf introductory discount promotions. This research contributeso price promotion literature by showing that a high discount

ay not always have a positive effect on deal perceptions,hich is contrary to classical economics. Our findings add to

he price–quality and financial risk literature by identifying aew moderator, temporal orientation, which determines for whatype of individual quality and risk inferences are more likely toe influenced by price.

Conceptual Framework and Hypotheses

Immediate gains are mostly driven by discount size, andxtant pricing literature shows that a majority of consumers per-eive price promotion as real economic savings and an incentiveo try a new product (Chandon, Wansink, and Laurent 2000;hiv, Carmon, and Ariely 2005). However, uncertain future out-omes are inherent with the pre-ordering of a new product sincehe product is unproven by the market, which can impact aonsumer’s risk perceptions. Therefore, in a pre-ordering con-ext, consumers face a dilemma between anticipated immediateains and possible future losses. Due to the temporal choicesetween immediate gains and possible future losses in prod-ct pre-ordering, consumers’ temporal orientation becomes aelevant factor in the decision making process.

Literature on temporal orientation suggests that people dif-er in their behavioral goals and actions (Joireman et al. 2008;ees, Burton, and Tangari 2010). Individual differences in tem-oral orientation toward the present versus the future has beenhown to influence attitudes and choices (Joireman, Sprott, andpangenberg 2005; Kees, Burton, and Tangari 2010). Those whore future-oriented, compared to present-oriented, tend to havetemporal bias towards future consequences of present actions

Zimbardo and Boyd 1999). Specifically, consumers who areore focused on the future tend to be more fiscally responsi-

le and delay gratification when compared to present-orientedonsumers (Joireman, Sprott, and Spangenberg 2005).

Applying these findings to the current situation suggests thatresent-oriented consumers should be more attracted to imme-iate financial gains provided by the pre-order price promotion,s it aligns well with their goal of instant gratification. In con-rast, for future-oriented consumers, who tend to focus on futureoncerns, the transient benefit of immediate savings is coun-erbalanced by uncertain quality concerns that are inherent in

Please cite this article in press as: Mukherjee, Amaradri, et al, Regular PProduct and the Moderating Role of Temporal Orientation, Journal of Ret

re-ordering a new product. Hence, product quality is likely toe the most important concern for future-oriented individualsecause it directly relates to the longevity of a product and mayffect future product related issues. As a result, discount size

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cts as a cue for both present- and future-oriented individuals,ut for very different reasons. For present-oriented individuals,iscount size signals immediate financial gains whereas future-riented individuals will use discount size to form a qualityerception.

Consumers tend to rely on price to form quality perceptionsDing, Ross, and Rao 2010; Dodds, Monroe, and Grewal 1991;ardes et al. 2004; Miyazaki, Grewal, and Goodstein 2005;ölckner and Hofmann 2007; Zeithaml 1988) and sometimesdiscounted product has a negative effect on product quality

erceptions (Chandran and Morwitz 2006; Shiv, Carmon, andriely 2005). Specifically, higher compared to lower discountsill induce lower quality perceptions. Therefore, we postulate

hat as future-, compared to present-, oriented consumers areore inclined to consider product quality, they will have a more

egative perception about product quality in a large discountondition. Due to this, it is worth noting that mere discount wille unable to affect future-oriented consumers’ financial risk per-eption, which has been defined as the economic costs that maye lost if a product does not perform to a certain expectationGrewal, Gottlieb, and Marmorstein 1994; Sweeney, Soutar, andohnson 1999). In contrast, for present-oriented consumers, whoend to have a temporal bias toward instant gains, discounts willot be able to induce any negative quality perceptions as they areore likely to use price discount as a cue for providing imme-

iate financial gain. As a result, discount size in a pre-orderromotion will have differential effects on overall perceptionsf financial risk, value perceptions and purchase intention foruture-, compared to present-, oriented consumers.

Thus, we posit that a consumer’s temporal orientation willoderate the role of discount size in a pre-order context, such

hat present-oriented consumers are likely to perceive less finan-ial risk, more value toward the deal, and demonstrate higherurchase intention with discounted products at the pre-ordertage relative to future-oriented consumers. On the other hand,uture-oriented consumers will have a more negative perceptionbout product quality in a large versus small discount conditiont the pre-order stage relative to present-oriented individuals.ore formally, we present:

1. In the presence of a large discount compared to a smalliscount, present-oriented consumers will report (a) lower per-eived financial risk, (b) higher value towards the deal, and (c)igher purchase intentions, whereas future-oriented consumersill report (d) lower perceived product quality.

ediating Roles of Perceived Financial Risk and Perceivedroduct Quality

Past literature suggests that perceived product quality actss an antecedent to financial risk perceptions (Sweeney, Soutar,nd Johnson 1999). More specifically, perceived product qual-ty is negatively related to financial risk perceptions. For

rice $299; Pre-order Price $199: Price Promotion for a Pre-orderedailing (xxx, 2016), http://dx.doi.org/10.1016/j.jretai.2016.11.001

uture-oriented consumers, a large discount will lead to lowererceived product quality because discounted or low price offerslicit negative quality perceptions (Dodds, Monroe, and Grewal991; Shiv, Carmon, and Ariely 2005). This, in turn, will lead

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Fig. 1. Conceptual framework

o higher perceived financial risk and will depress consequentutcomes, such as perceived value and purchase intention. Con-ersely, as present-oriented consumers place a greater emphasisn the immediate consequences of their behavior, a large dis-ount size will not lower their quality perceptions, leading toeduced financial risk perceptions and increase perceived valuend purchase intention. Drawing from this, we predict thaterceived product quality acts as an antecedent to perceivednancial risk for both present- and future-oriented individualssee Fig. 1). Therefore, we formally propose:

2. Perceived product quality and perceived financial riskequentially mediate the interacting effect of consumer temporalrientation and discount size on (a) value toward the deal, andb) purchase intention.

oderating Role of Third-Party Product Quality Rating

Various cues such as discount size, product warranty, anddditional quality ratings have been shown to influence con-umers’ quality perceptions (Miyazaki, Grewal, and Goodstein005). Specifically, past literature has shown the positive effectf additional quality cues on consumer decision making andudgment formation (Alavi, Bornemann, and Wieseke 2015;arke and Chung 2005). Moreover, quality cues provided bythird party allow the consumer to make inferences about prod-ct quality (Akdeniz, Calantone, and Voorhees 2013; De Maeyernd Estelami 2011). These findings suggest that the role of ahird-party quality rating may become very important at the pre-rder stage when consumers do not have much information abouthe product. Therefore, we chose third-party product quality,

Please cite this article in press as: Mukherjee, Amaradri, et al, Regular PProduct and the Moderating Role of Temporal Orientation, Journal of Ret

hich is not under the control of a retailer, to demonstrate annteresting boundary condition of the interactive effect of tem-oral orientation and discount size on perceptions of quality,nancial risk, value, and purchase intention.

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osed process, and hypothesis.

We argue that a product quality rating from a third party willelp mitigate product quality concerns for future-oriented con-umers. Only when this motivation is satisfied will they utilizeues, such as a discount, to evaluate the overall lucrativenessf the offer. Thus, a quality rating from a third party shouldositively influence overall perceived product quality, fulfillingong-term goals of future-oriented consumers. This, in turn, sig-ificantly reduces perceived financial risk for future-orientedonsumers in the presence of a large discount. Hence, in theresence of a third-party product quality rating, discounts willave a positive effect regardless of consumers’ temporal orien-ation, attenuating the interaction effect of temporal orientationnd discount size. Therefore, we formally propose:

3. In the absence, compared to the presence, of a third-partyroduct quality rating, individual temporal orientation will mod-rate the effect of discount size on (a) perceived financial risk, (b)alue towards the deal, (c) purchase intentions, and (d) perceivedroduct quality.

Overview of the Studies

Study 1 tests the interaction effect of consumer temporal ori-ntation × discount size on perceivedfinancial risk, value towardhe deal, and purchase intention (H1a, b, and c). Study 2 tests thenteraction effect of consumer temporal orientation × discountize on perceived product quality (H1d) and tests conditionalequential mediation of perceived product quality and perceivednancial risk (H2). Study 3 tests the role of a third-party product

rice $299; Pre-order Price $199: Price Promotion for a Pre-orderedailing (xxx, 2016), http://dx.doi.org/10.1016/j.jretai.2016.11.001

uality rating as a boundary condition of the interactive effectf temporal orientation and discount size (H3). Study 4 expandsur understanding by testing the moderating effect of temporalrientation on discount size in the context of familiar brands.

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Study 1: Interactive Effect of Temporal Orientation andDiscount Size on Perceived Financial Risk

ethodology

ample, Design, and ProcedureSeventy-seven participants were recruited through MTurk.

he sample had a median household income of $30,000-39,999, 41.2% were female, and the mean age was 34.1SD = 12.1) years. Participants were randomly assigned to theonditions of either a (1) small discount (ten percent off originalrice $499.99) or a (2) large discount (50% off original price499.991). They saw copies of a mock print advertisement fornew Tablet PC, which was to be launched in one week. After

valuating the advertisement, participants completed a struc-ured questionnaire measuring perceived financial risk, valueowards the deal, and purchase intention (see Appendix A forll measures). Next, they completed the twelve-item considera-ion of future consequences (CFC) scale (Strathman et al. 1994),hich measured their temporal orientation. Finally, participants

ompleted questions related to discount size manipulation checknd demographics.

esults

nteraction Effect of Temporal Orientation and Discountize

Independent sample t-test results suggest that the discountize manipulation was successful, as a significant difference wasound between the small (M = 3.3, SD = 1.98) and large discountonditions (M = 6.2, SD = 0.93; t (75) = −8.54, p < .01). To testur prediction that temporal orientation (CFC2) moderates theffect of discount size on perceived financial risk, value towardhe deal and purchase intention (H1a, b, c), we conducted multi-le regression analysis. The results presented in Table 1, Panelshows that CFC moderates the effect of discount size on pur-

hase intention (b = −.53, t = −2.58, p = .01), value toward theeal (b = −.59, t = −2.93, p < .01), and perceived financial riskb = .51, t = 2.46, p < .05). Further, a floodlight analysis (Spillert al. 2013) reveals that when consumers are lower (MCFC < 4.3)n CFC score (i.e., present-oriented), they report significantlyower perceived financial risk, higher value towards the deal,nd higher purchase intention for a large discount versus amall discount (all p’s < .05). Specifically, a planned contrast

Please cite this article in press as: Mukherjee, Amaradri, et al, Regular PProduct and the Moderating Role of Temporal Orientation, Journal of Ret

eveals that consumers very low on CFC (MCFC = 1.3) reportignificantly lower financial risk (M = 1.54) for a large discountompared to small discount (M = 4.00 t = −3.38,p < .01). In con-

1 The original price of $499.99 was close to average price for actual tabletsith similar features. Drawing from previous pricing literature, we use 10% and0% as low and high discount sizes, respectively (Chu and Zhang 2011; Grewal,armorstein, and Sharma 1996; Hardesty and Bearden 2003; Kalwani and Yim

992).2 Confirmatory factor analysis on CFC revealed that the one-factor model’st indices provide adequate fit to the data, χ2 (54) = 154.6, p < .01 (comparativet index = .92, standardized root mean square residual = .04, average variancextracted (AVE) = .72, and α = .96).

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rast, these effects are attenuated for consumers who are higherMCFC > 5.5) (i.e., future-oriented) on CFC score (all p’s > .05).ence, these results lend support to H1a, b, and c.

tudy 1 Discussion

Findings from Study 1 suggest that in the case of pre-ordering,iscount size has a positive effect only on those consumersho are present-oriented, or have a low CFC, but not to thoseho are future-oriented. Although these results are informative,

hey leave some questions unanswered. For example, why ishe positive effect of discount size nullified for future-orientedonsumers? Does this mean that future-oriented consumers areore concerned about the long-term consequences (e.g., prod-

ct quality) rather than just the immediate gain through discountize? In addition, one can argue that future-oriented consumersill not be willing to buy a product ‘unseen’ as they are uncer-

ain about the product quality. If this is the case, then similaresults should show in a non-pre-order discount context, suchs online discounts.3 Therefore, we conduct Study 2 in an efforto shed light on these questions by testing H1d and use a largerample size compared to the sample size of Study 1.

Study 2: Interactive Effect of Temporal Orientation andDiscount Size on Perceived Product Quality

ethodology

ample, Design, and ProcedureA sample of three hundred and fifty-six participants was

btained using MTurk. The sample had a median householdncome of $40,000–$49,999, 49.7% of the participants wereemale, and the mean age was 36.4 (SD = 11.6) years. The studyas a 2 (Discount Size: small vs. large) × 3 (Buying Situation:ffline, online, and pre-ordering) between-subjects experiment.he data collection procedure for this study was identical totudy 1, with the following differences. First, an advertisementor a DSLR camera, with basic features of popular DSLR cam-ras currently available in the market, was designed (see Webppendix for stimuli). Second, we created offline and onlineuying situations in addition to a pre-ordering condition. Third,e measured the twelve-item CFC scale before participantsere randomly assigned to experimental conditions. Fourth, weeasured perceived product quality using a four-item scale.

esults

nteraction Effect of Temporal Orientation and Discountize

Similar to Study 1, the manipulation of discount size was

rice $299; Pre-order Price $199: Price Promotion for a Pre-orderedailing (xxx, 2016), http://dx.doi.org/10.1016/j.jretai.2016.11.001

uccessful. To test our prediction that temporal orientation mod-rates the effect of discount size on perceived product quality weonducted a regression analysis. As predicted in H1d, we found

3 We thank an anonymous reviewer and the journal editor for triggering theseuestions.

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Table 1Results for Studies 1–3: effects of discount size, CFC & quality rating on product quality, financial risk, value toward the deal, & PI.

Panel A. Study 1: effect on PI, value toward the deal, & financial risk

Independent variables PI VTD FRCoefficient Coefficient Coefficient

DS 3.75*** 3.25*** −3.13**

CFC −0.31* −0.22 0.14DS × CFC −0.53* −0.59** 0.51*

Panel B. Study 2: effect on PI, VTD, FR, & PQ in pre-order condition

Independent variables PI VTD FR PQCoefficient Coefficient Coefficient Coefficient

DS 3.63* 4.94*** −3.96** 1.97CFC −0.12 0.12 0.09 0.01DS × CFC −0.59* −0.85** 0.62* −0.75**

Panel C. Study 3: effect of third-party product quality rating

Independent variables PI VTD FR PQCoefficient Coefficient Coefficient Coefficient

DS 3.56*** 3.02*** −3.79*** 1.74CFC 0.29 0.18 −0.09 0.09PQR 2.75* 1.72 −2.79* 2.14DS × CFC −0.59** −0.45* 0.65*** −0.76***

DS × PQR −2.79 −1.43 3.39* −4.73**

PQR × CFC −0.36 −0.16 0.35 −0.32DS × CFC × PQR 0.71* 0.34 −0.82** 1.22***

Notes: PI = purchase intention, VTD = value toward the deal, FR = perceived financial risk, PQ = perceived product quality, DS = discount size, CFC = considerationof future consequences, and PQR = product quality rating.

* p < .05.

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hat CFC moderates the effect of discount size on perceived prod-ct quality (b = −.75; t = −2.70, p < .01) (see Table 1, Panel B).lso we find that the moderating effect of CFC on perceivedroduct quality, value toward deal, and purchase intentions ispecific to the pre-order buying situation.4

Specifically, H1d, predicts that future-oriented consumersill report lower perceived product quality, in presence of a

arge discount size. Providing further support for H1d, a flood-ight analysis (Spiller et al. 2013) reveals that when consumersre higher (MCFC > 5.5) on CFC score (i.e., future-oriented),hey report significantly lower perceived product quality for

large discount versus a small discount (p < .05). This effects attenuated for consumers lower (MCFC < 4.2) on CFC (i.e.,resent-oriented) (p < .05).

onditional Serial Mediation on Value Toward the Deal and

Please cite this article in press as: Mukherjee, Amaradri, et al, Regular PProduct and the Moderating Role of Temporal Orientation, Journal of Ret

urchase IntentionPROCESS Model 6 (Hayes 2013, 2015) with 10,000 boot-

trap samples was used to test H2. A significant sequential

4 Multiple regression revealed a significant three-way interaction effect ofuying situations × CFC × discount size on PI (b = .81; t = 2.11, p < .05), valueowards the deal (b = .93; t = 2.68,p < .01), and perceived product quality (b = .63;= 2.13, p < .05), suggesting that the moderating influence of CFC on discountize is specific to a pre-ordering situation.

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ediation effect of CFC × discount size on value toward theeal (Indirect effect = −.05, 95% bootstrap CI [−.16, −.03])nd purchase intention (Indirect effect = −.03, 95% bootstrapI [−.12, −.01]) is observed, lending support to H2a and b.urthermore, this significant serial mediation effect suggests

hat CFC moderates the effect of discount size on perceivedroduct quality (b = −.75; t = −2.70, p < .01), such that aigh discount leads to lower perceived quality for future-riented consumers. As quality is negatively related to perceivednancial risk (Sweeney, Soutar, and Johnson 1999), a lowuality perception increases perceived financial risk (b = −.25;= −2.77, p < .01) despite a large discount for future-orientedonsumers. This helps to explain why future-oriented consumersemain insensitive toward price promotions in a pre-orderingituation.

tudy 2 Discussion

In summary, Study 2 suggests that perceived product qual-ty and perceived financial risk are key mediators that influencealue towards the deal and purchase intention in a pre-orderingontext. In addition, the moderating effect of individual temporal

rice $299; Pre-order Price $199: Price Promotion for a Pre-orderedailing (xxx, 2016), http://dx.doi.org/10.1016/j.jretai.2016.11.001

rientation on discount size occurs only in a pre-ordering con-ext. Consistent with past literature (Dodds, Monroe, and Grewal991; Shiv, Carmon, and Ariely 2005), findings indicate that foruture-oriented consumers, product quality perception is signif-

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Sample, Design, and ProcedureThree hundred and eight participants were recruited through

MTurk. The sample had a median household income of

A. Mukherjee et al. / Journal o

cantly reduced in the presence of a large discount compared tosmall discount. This reduced quality perception counterbal-

nces any positive impact of discount size on financial risk foruture-oriented consumers. Although these results are informa-ive, they made us question if other promotional techniques canositively affect product quality perceptions for future-orientedonsumers. If this is the case, then providing quality ratings canositively impact quality perceptions. Therefore, we conducttudy 3 to address this question, by examining the potential mod-rating role of a third-party product quality rating at enhancinguality perceptions for future-oriented consumers.

Study 3: Third-Party Product Quality Rating as aBoundary Condition

ethodology

ample, Design, and ProcedureTwo hundred and ten participants were recruited through

Turk. The sample had a median household income of30,000–$39,999, 43.8% were female, and a mean age of 38.2SD = 13.5) years. They participated in a 2 (Discount Size: smalls. large) × 2 (Third-Party Product Quality Rating: present vs.bsent) between-subjects experiment. We followed the samerocedure of data collection and used the same set of mea-ures as in Study 2 with the following differences. First, weanipulated the third-party quality rating by providing a four

tars out of five stars rating in the present condition. Second, weesigned a mock advertisement for a new smartphone that waso be released to the market in one week (see Web Appendix fortimuli). Third, we measured the helpfulness of product qualityating as a manipulation check for third-party product qualityatings.

esults

oundary Effect of Third Party Product Quality RatingBefore testing the hypotheses, we performed the manipula-

ion check using full factorial ANOVA and found that both theiscount size and third-party quality rating manipulations wereuccessful. The hypotheses advanced in H3 predicts that theresence of a third-party quality rating diminishes the otherwisebserved significant interaction effect of consumers’ temporalrientation and discount size on all dependent variables.

As shown in Table 1, Panel C, we find that the three-waynteraction (quality rating × discount size × temporal orienta-ion) is significant on all dependent variables (all p’s < .05),xcept value towards the deal. In the absence of product qualityating, the interaction effect of temporal orientation and dis-ount size is observed. Further, planned contrast tests reveal thatresent-oriented (i.e., MCFC = 2.3) individuals, in the absencef product quality rating, reported lower perceived financial riskM = 2.82 vs. M = 5.32), higher value toward the deal (M = 5.58

Please cite this article in press as: Mukherjee, Amaradri, et al, Regular PProduct and the Moderating Role of Temporal Orientation, Journal of Ret

s. M = 3.46), and higher PI (M = 4.93 vs. M = 2.46) for largeersus small discount size (p’s < .001 for all). Future-orientedi.e., MCFC = 6.58) consumers, in the absence of third-partyroduct quality rating, reported significantly higher perceived l

iling xxx (xxx, 2016) xxx–xxx

roduct quality (M = 5.37 vs. M = 2.09) for small discount versusarge discount size (t = −6.27, p < .01, see Fig. 2).

Conversely, when third-party product quality rating is presenthe interaction effect of CFC and discount size is attenu-ted as both types of consumers report similar perceptionsnd intention. Specifically, high (MCFC = 6.58), as well as lowMCFC = 2.3) CFC consumers report similar perceived finan-ial risk (M = 2.62 and M = 2.00), similar value toward theeal (M = 5.68 and M = 6.21), and similar purchase intentionM = 5.48 and M = 6.14) for large discount size (all p’s > .10).imilar pattern of effects is observed for small discount size.

In addition, we test the sequential mediation effect of per-eived product quality and perceived financial risk on valueowards the deal and purchase intention. We find a signifi-ant positive serial mediation effect on value towards the dealbias-corrected 95% CI [.05, .28]) and purchase intention (bias-orrected 95% bootstrap CI [.01, .21]). In contrast to the negativeerial mediation observed in Study 2, in Study 3 we uncover aositive effect suggesting that as consumers receive a productuality rating, they then report greater purchase intention andreater value towards the deal for large versus small discountize regardless of their temporal orientation (i.e., CFC).

tudy 3 Discussion

Study 3 tests the boundary condition of the interaction effectf temporal orientation × discount size via third-party prod-ct quality rating. By providing consumers with a third-partyroduct quality rating, the product quality perception for future-riented consumers improves. Thus, using a third-party productuality rating along with a discount allows a retailer to bestppeal to both present- and future-oriented consumers at there-order stage.

When controlling for brand effects by using unknown brands,tudies 1–3 show very consistent results for the interactionetween temporal orientation and discount size; however, weannot rule out the possibility that the results may not be repli-able for familiar brands. In fact, the theoretical mediatorsf perceived product quality, perceived financial risk, and theoderating effect of third-party product quality rating, could

otentially be limited to unfamiliar brands.5 Thus, we conducttudy 4 to test whether the pattern related to the interaction of

emporal orientation and discount size observed with unfamiliarrands applies to familiar brands.

Study 4: Brand Familiarity and Moderating Role ofTemporal Orientation

ethodology

rice $299; Pre-order Price $199: Price Promotion for a Pre-orderedailing (xxx, 2016), http://dx.doi.org/10.1016/j.jretai.2016.11.001

5 We thank an anonymous reviewer and the journal editor for highlighting thisimitation.

Please cite this article in press as: Mukherjee, Amaradri, et al, Regular Price $299; Pre-order Price $199: Price Promotion for a Pre-orderedProduct and the Moderating Role of Temporal Orientation, Journal of Retailing (xxx, 2016), http://dx.doi.org/10.1016/j.jretai.2016.11.001

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Fig. 2. Study 3: 3-way interaction of DS, CFC, & product quality rating.Notes: SDS = small discount size, LDS = large discount size.

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30,000–$39,999, 51.3% were female, and a mean age of 37.1SD = 12.4) years. Participants were randomly assigned to one ofhe conditions of a 2 (Discount Size: small vs. large) × 2 (Third-arty Product Quality Rating: present vs. absent) × 2 (Brandmage: high vs. low) between-subjects experiment. The stimuli,uestionnaire, and procedure were similar to previous studiesith the following differences. First, we conducted a pretestith 40 respondents (47% female, mean age = 39 years) to select

wo familiar brands of tablet computers with different levels ofrand image. Independent sample t-test suggested that AppleM = 5.7) was significantly higher in brand image compared toell (M = 4.7; t = 3.01, p < .01). Second, we included measuresf brand familiarity and brand image as additional manipulationhecks.

esults

Manipulations checks for discount size, quality rating, andrand image were successful. In addition, we find that there waso significant difference in terms of familiarity between the cho-en brands (Dell vs. Apple). For the familiar brand with lowermage (i.e., Dell), the hypotheses test results replicate the find-ngs in the previous studies. Planned contrasts reveal that whenarticipants view an advertisement from Dell with the absencef a third-party product quality rating, low (Mean = −1 SD)FC (i.e., present-oriented) consumers reported lower perceivednancial risk (M = 3.33 vs. M = 5.19) and higher purchase inten-

ion (M = 6.44 vs. M = 3.39) for a large versus small discountize (p’s < .01 for all). We do not find a significant interactionffect of CFC × discount size on value toward the deal (p > .10).hen viewing the advertisement from Dell, high (Mean = +1

D) CFC (i.e., future-oriented) consumers reported significantlyigher perceived product quality (M = 5.85 vs. M = 3.18) forsmall versus large discount size (t = −2.7, p < .01). In addi-

ion, in the absence of a product quality rating, high CFC (i.e.,uture-oriented) consumers reported similar value toward theeal, purchase intention, and perceived financial risk regardlessf discount size (p’s > .10 for all). However, in the presence ofroduct quality rating, the interaction effect of temporal ori-ntation and discount size on all dependent variables was notignificant (all p’s > .10).

Next, we performed the same analyses for the familiar brandith higher image (i.e., Apple). In the absence of a productuality rating, the interaction effects of temporal orientation andiscount size were not significant on the dependent variables (all’s > .10). Similarly, in the presence of a product quality rating,he interaction effects of temporal orientation and discount sizeere attenuated on the dependent variables (all p’s > .10).

tudy 4 Discussion

In summary, the findings of Study 4 suggest that the interac-

Please cite this article in press as: Mukherjee, Amaradri, et al, Regular PProduct and the Moderating Role of Temporal Orientation, Journal of Ret

ion effect of temporal orientation and discount size, observed intudies 1–3, is replicated when using a familiar brand. The find-

ngs indicate that for brands with a lower image, in the absencef third party quality rating, deep discounts do not appeal to

berp

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he entire population of consumers. Further, Study 4 results alsouggest that when higher brand image acts as a reliable signal ofuality, the promotional tool of discounting is effective for bothresent- and future-oriented consumers.

General Discussion

Pre-ordering is a unique marketing strategy that is increas-ngly being used by various online and offline retailers (Burkus013). Yet, there is no research that looks into the effect ofre-order price promotions and how individuals with differentemporal orientations react to them. While previous studiesave shown the positive effect of large discount size on priceerception (Hardesty and Bearden 2003; Krishnan, Dutta, andha 2013), we conduct four studies to show that the positiveffect of a large discount is attenuated for future-oriented con-umers. We demonstrate a way to mitigate the risk of buying are-ordered product by providing a quality cue (i.e., third-partyroduct quality rating) before a launch. Additionally, we showhat the interaction effect of temporal orientation and discountize holds even for a familiar brand with a low brand image.ur findings indicate that in a pre-order offer, the promotional

ool of a discount has a differential reach based on individualemporal orientation and using a third-party quality rating canelp a promotion appeal to the broadest consumer market.

anagerial Implications

Our findings provide several key managerial insights that areikely to be useful for retailers, manufacturers, and brand man-gers. First, retailers considering pre-order promotions shouldot expect deep discounts to appeal to the entire population ofonsumers, which is contrary to classical economic theory. Ourndings demonstrate that large discounts have a positive impactnly for present-oriented consumers and that future-orientedonsumers do not find a large discount to be attractive. This sug-ests that retailers have to be careful when designing a pre-orderromotion. Retailers should not limit their focus to discount size,s it only appeals to present-oriented consumers, but retailershould also consider quality cues in order to attract future-riented consumers. Our findings will allow marketers to deviseore effective promotional communications, thereby minimiz-

ng negative exposure of exaggerated discounts in promotionalessages to future-oriented consumers.Second, when considering future-oriented consumers, retail-

rs should provide third-party product quality ratings in are-order context in order to help mitigate uncertainty relatedo long-term concerns. Given that we have used both unfamiliarnd familiar brands in our experiments, our results suggest thatsimple third-party product quality rating can be an adequate

ncentive to appeal to future-oriented consumers, even thoughhere might not be any other market information regarding a newrand or new product. This has tremendous implications for new

rice $299; Pre-order Price $199: Price Promotion for a Pre-orderedailing (xxx, 2016), http://dx.doi.org/10.1016/j.jretai.2016.11.001

rands that might try to incentivize consumers only through anxaggerated discount. Thus, retailers should realize that solelyelying on an exaggerated discount size might not be an effectivericing strategy in all cases.

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Third, while examining the relative impact of discount sizend third-party product quality rating, we find that product qual-ty rating has a greater impact on quality and risk perceptionshan the effect of discount size alone, for both present- anduture-oriented consumers. These findings highlight the impor-ance of providing a third-party product quality rating at there-order stage in order to maximize the number of consumersilling to pre-order the new product. For example, Honda has

lready implemented quality cue information through experteviews before the launch of new models (e.g., Civic Type R)n the United States market (Marriage 2016). It also seems toe a cost effective pre-order strategy for a retailer to entice con-umers by providing a product quality rating and minimizingiscount size because exaggerated discounts have an occasionalnintended consequence of generating skepticism towards theeal (Krishnan, Dutta, and Jha 2013).

heoretical Implications

This paper expands our understanding of discount size inpre-ordered product context using temporal orientation as aoderating variable. Thus, this research makes several substan-

ive theoretical contributions. Past price promotion research hasound that an exaggerated discount size has a positive effectn value towards the deal and purchase intention (Ding, Ross,nd Rao 2010; Dodds, Monroe, and Grewal 1991; Krishnan,utta, and Jha 2013). The findings from our studies imply that

his relationship is more complex in a pre-ordering context thanriginally posited and suggests that the positive effect of a largeiscount is attenuated for some people (i.e., future-oriented con-umers). Specifically, our findings suggest that future-orientedeople do not perceive value towards the deal to be attractive,ven with a large discount size, due to low product quality per-eption.

The current research also contributes to the rich body ofrice-quality heuristic research by identifying an important andelevant moderator, namely individual temporal orientation. Ouresults suggest that only future-oriented consumers are likelyo use discounts as a cue to shape product quality perceptions.rior research in price-quality relationships have reported mixedndings (e.g., Jacoby, Olson, and Haddock 1971; Kardes et al.004). Our findings can help inform some of the inconsistencieshat can be related to individual traits (i.e., temporal orienta-ion). Further, we show that perceived product quality acts asn underlying mechanism between the interactive effects of dis-ount size and temporal orientation on perceived financial risk ofpre-ordered product. Our results show that enhancing qualityerceptions tends to significantly reduce the financial risk of are-order for future-oriented people. As a result, future-orientedonsumers find value towards the deal to be attractive and indi-ate a favorable disposition to purchase a pre-ordered producthen there is a large, versus small, discount.

imitations and Suggestions for Future Research

Please cite this article in press as: Mukherjee, Amaradri, et al, Regular PProduct and the Moderating Role of Temporal Orientation, Journal of Ret

Although this study expands our knowledge about the rolef discount size and temporal orientation in price promotionor a pre-ordered product, we acknowledge limitations of this

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esearch and note the need for further research. First, it ismportant to examine whether a pre-order strategy presentedn different temporal frames (e.g., days, weeks, months) accen-uates or attenuates the current findings. It is possible that aimilar pre-order offer presented over either days or monthsay elicit different responses because people construe time-

rames differently (Monga and Bagchi 2012). Second, it wille interesting to test how varying time of release (such as oneeek versus five weeks) impacts consumer responses. Third,e held constant the two levels of discount size (10% vs. 50%)

cross all studies. It will be worthwhile to enhance the gener-lizability of our findings by using different levels of discountize as prior research indicates that a moderate level of dis-ount has the potential to affect a price promotion differentlyhan other levels of discount (Grewal, Marmorstein, and Sharma996; Hardesty and Bearden 2003). Furthermore, it might benteresting to understand how small of a discount a retailer canse in conjunction with a third-party rating to enhance valuef the deal and purchase intentions. Fourth, it is importanto examine other potential moderators and mediating mecha-isms such as impulsivity, discount proneness, willingness toelay gratification, and goal type. This is important because oneay argue that discount proneness, for example, can influence

ertain consumers more than others when considering a newroduct. Fifth, while the complex mediation models were testedsing PROCESS, these regression-based models do not accountirectly for measurement error (Hayes 2013). For this reason,uture researchers may consider using structural equation mod-ling to assess relationships while accounting for measurementrror.

onclusion

Our empirical findings indicate that the use of a qualityue, along with a price promotion, appeals to both present-nd future-oriented consumers. Thus, the traditional practicef only using a price promotion in a pre-order offer might note attracting the most consumers possible. This suggests thatncluding a third-party quality rating in addition to a price dis-ount might be the way to move forward for a successful andfficient pre-ordering marketing strategy that resonates with theargest number of consumers.

Acknowledgments

The authors thank Sujay Dutta and Scot Burton for theiraluable comments during the revision process. The authorscknowledge helpful input from the editor and the reviewers.

Appendix A.

ependent Measures and Reliability Values

erceived financial risk (DelVecchio and Smith 2005) (1 = Strongly

rice $299; Pre-order Price $199: Price Promotion for a Pre-orderedailing (xxx, 2016), http://dx.doi.org/10.1016/j.jretai.2016.11.001

Disagree, 7 = Strongly Agree)

iven the financial commitment, I may regret purchasing the advertisedproduct

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think that the advertised product has the possibility of highermaintenance, repair costs or both.

would worry about the cost of purchasing the advertised productonsidering the investment involved, purchasing the advertised productwould be risky

could lose a significant amount of money if advertised product did notwork

ronbach alpha—Study 1 = .87, Study 2 = .91, Study 3 = .86, Study 4 = .82

alue toward the deal (Krishnan, Dutta, and Jha 2013) (1 = StronglyDisagree, 7 = Strongly Agree)

would consider the advertised product to be a good buyt the sale price, the advertised product is probably worth the moneyhe advertised product appears to be a great dealhis advertised product is a good value for the moneyhe advertised product offered by the advertising merchant will be

1 = Not a Good Value for Money, 7 = An Extremely Good Value forMoney)

ronbach alpha—Study 1 = .96, Study 2 = .95, Study 3 = .97, Study 4 = .91

urchase intention (Kozup, Elizabeth, and Burton, 2003; Berry, Mukherjee,Burton, and Howlett, 2015) (1 = Very Unlikely, 7 = Very Likely)

ow likely would you be to purchase the advertised product, given theinformation shown?

1 = Less Likely, 7 = More Likely)ould you be more likely or less likely to purchase the product, given theinformation shown?

1 = Not probable, 7 = Very probable)iven the information shown, how probable is it that you would considerthe purchase of the product?

ronbach alpha—Study 1 = .96, Study 2 = .95, Study 3 = .97, Study 4 = .92

erceived product quality (Grewal, Monroe, and Krishnan 1998)(1 = Strongly Disagree, 7 = Strongly Agree)

he advertised product appears to be of good qualityhe advertised product appears to be durablehe advertised product appears to be reliablehe advertised product appears to be dependableronbach alpha—Study 2 = .92, Study 3 = .79, Study 4 = .77

Appendix B. Supplementary data

Supplementary data associated with this arti-le can be found, in the online version, atttp://dx.doi.org/10.1016/j.jretai.2016.11.001.

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