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Benefitting a few at the expense of many? Exclusive promotions and their impact on untargeted customers

  • Original Empirical Research
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Abstract

It has been a widely held notion that firms can benefit from using preferential treatment in their customer relationship management strategies. For example, many firms provide select customers (i.e., recipients) with exclusive promotional offers that they purposefully do not extend to other customers (i.e., non-recipients). However, today’s empowered consumers are more socially aware than ever of such divisive practices (via social media, deal websites, etc.), and firms must now better account for the negative backlash from non-recipients that may ensue. In this research, we conceptually define exclusive promotions and outline how they differ from other more heavily-studied customer prioritization tools. We then take a divergent approach from the majority of the extant literature by focusing primarily on how and why non-recipients (rather than recipients) respond to exclusive promotions. Study 1a findings reveal that non-recipients have negative attitudes toward exclusive promotions, as well as negative attitudes and lower patronage intentions toward the firm using them. Perceived social exclusion was shown to underlie these unfavorable responses. In Study 1b, we rule out an alternative equity-based explanation of our findings by assessing loyalty to the firm as a potential moderator. We then extend our investigation to a field setting in Studies 2 and 3. There we replicate our Study 1a results, and assess consumers’ actual purchasing behavior in response to a real exclusive offer for enhanced generalizability. Lastly, in Studies 4 and 5 we empirically test two strategies that firms can potentially use to mitigate the negative effects of exclusive promotions documented here.

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Notes

  1. While we are not the first, or only, researchers to examine exclusive promotions, we do want to more fully delineate them from other prioritization tools (both conceptually and practically) due to limited research in this area.

  2. Conversely, consumers are not contractually obligated to participate in a firm’s loyalty program. However, they must meet certain requirements if they want to incur certain program benefits (per the outlined program rules).

  3. We explore in Studies 4 and 5 whether providing such information can potentially reduce the exclusion effect.

  4. However, since exclusive promotions are non-contractual, firms can retroactively extend an offer to a non-recipient for any reason. We examine if doing so leads to more positive, restorative responses toward the firm in Study 5.

  5. “Promotional outcome” refers to whether or not a consumer was chosen by a firm to receive an exclusive offer.

  6. The order in which the mediator (exclusion) and the outcomes were measured varied across studies, though the main effects on these variables—and the mediating effects of exclusion—were highly consistent across all studies.

  7. Though the restaurant and its exclusive offer were both fictitious, the student participants were unaware that they were not real. That is, they were unaware that they were part of an experiment until it was over and all data had already been collected. Thus, the Study 2 findings reflect their responses to receiving (or not) a real exclusive promotion from a real firm (from their perspective) (see Morales et al. 2017).

  8. While we had permission to manipulate customers’ outcomes, we did not receive any assistance from the company, itself, to do so (e.g., we had to decide what the offer would be and look like, how to distribute and create awareness about it). Thus, we worked closely with the rep within the confines of the resources she had access to in order to ensure this field experiment was as realistic as possible based on Morales et al.’s (2017) criteria.

  9. The company, rather than the reps, typically makes all promotional/pricing decisions (e.g., which customers receive an exclusive offer). The company extends any offer to customers via email, and then informs reps which of their customers are eligible for it (if exclusive). Reps verify this eligibility when customers place their orders.

  10. This reflects all respondents’ spending levels; if a respondent did not make a purchase, his/her spending amount was $0.

  11. We also measured respondents’ promotion attitudes, promoter attitudes, and patronage intentions with the same items used in prior studies. Consistent with Studies 1a-2, results again revealed the same significant main effects of promotional outcomes on all three dependent measures, and exclusion again mediated all of these effects. These results are available from the authors upon request.

  12. We refer to this “second chance” as the self-correction opportunity, and the criteria as the self-correcting behavior.

  13. In line with this research, the firm has not been a realistic source of reconnection for non-recipients to this point in our studies (i.e., the ability to self-correct was absent), so we observed the predicted negative behaviors toward it.

  14. Importantly, all respondents had the option to perform the self-correcting behavior, regardless of condition (i.e., they could all order online and pick up in-store in the next three days if they desired). However, doing so only made them eligible for the promotion when the opportunity to self-correct was present/given by the retailer.

  15. As in Study 1b, we again conducted supplementary tests of conditional simultaneous mediation in which exclusion and fairness could both account for the IEs reported in Study 5. Consistent with the Study 1b results, exclusion still served as a mediator for every dependent measure in both social distance conditions, regardless of the inclusion of fairness as a rival mediator. Thus, our Study 5 results and conclusions remain the same.

  16. Firms should arguably select recipients first and foremost based on metrics they deem most important. The potential for improving the efficacy of self-correction opportunities should be viewed as a secondary (“bonus”) benefit that may or may not emerge based on firms’ initial priorities and strategies.

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Authors and Affiliations

  1. Department of Marketing, School of Business Administration, University of Mississippi, University, MS, 38677, USA

    Christopher L. Newman, Melissa D. Cinelli & Douglas Vorhies

  2. Department of Marketing, E. J. Ourso College of Business, Louisiana State University, Baton Rouge, LA, 70803, USA

    Judith Anne Garretson Folse

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  1. Christopher L. Newman
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  2. Melissa D. Cinelli
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  4. Judith Anne Garretson Folse
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Correspondence to Christopher L. Newman.

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Martin Mende served as Area Editor for this article.

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Newman, C.L., Cinelli, M.D., Vorhies, D. et al. Benefitting a few at the expense of many? Exclusive promotions and their impact on untargeted customers. J. of the Acad. Mark. Sci. 47, 76–96 (2019). https://doi.org/10.1007/s11747-018-0601-x

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