They Framed Me! Promotional Framing in a Digital Environment

Abstract: Following the COVID-19 pandemic there has been an undeniable boom in the e-commerce industry, now accounting for nearly one fifth of all retail sales worldwide, which has accelerated the shift from physical retail to online retail by up to five years. This has forced previously physical retailers to enter the extremely competitive e-commerce environment, where consumer attention is dwindling and ever more difficult to grab, price comparison only the touch of a button away, and the overall pace is much faster. This has caused a mounting dependence on price-promotions and effective value communication, yet no research has evaluated the perception of different promotional framings in a digital environment, and therefore no framework exists for the growing number of e-commerce retailers. This thesis aims to: 1) quantitatively investigate customer preference and valuation of the most prevalent price-promotion framings on the Swedish e-commerce market moderated for exposure time, as e-retailers have mere seconds to communicate value to potential customers, and 2) confirm or refute the relevance of existing price-promotion literature for e-retailers. Previous literature indicates that customers prefer price-promotion framings in absolute terms at high price levels ($100+), percentage terms at low price levels (less than $100) and generally undervalue the discount depth in a given promotion. This study relies on a quantitative experimental design utilizing a between-subjects design to evaluate the effect of exposure time and a within-subjects design to evaluate the effects of price level. The study consisted of two parts, first part exploring respondent preference for either absolute, percentage or sale price / reference price framings at both high and low-price levels with different degrees of exposure time limitations, and the second part exploring respondents' tendency to over or under value the discount depth of price-promotions framed in absolute or percentage terms. The findings from the first part are in direct opposition of previous literature, where respondents under time constraints preferred percentage framings at high price levels and absolute framings at low price levels. The second part supports previous literature, where respondents generally undervalued the discount depth of a given promotion. The degree to which respondents' evaluation time was limited had no significant effects in either part of the study.