Level Promotions on Impulse Purchase : Moderating Impact of Category Familiarity and Normative Influences

Marketing literature has conceptually and empirically established the direct effects of different variables on impulse purchase. However, literature has yet to study the simultaneous interactions between variables influencing impulse purchase. In this paper, we measure the direct effects of store-level promotions, brand image and price consciousness and also examine the interactive effects of store-level promotions and the moderating influence of category familiarity and normative influences. The results demonstrate the importance of simultaneous examination of interplay between different consumer and store level variables. The results when taken collectively provide substantial segmentation opportunity for manufacturers of branded goods and retailers. INTRODUCTION Today‘s retail stores are full of in-store sensory stimuli including perfectly aligned packaging, engaging displays, creative advertising and alluring promotion offers. These in-store stimuli trigger unrecognized needs and desires and entice consumers to purchase unintended goods and, in turn, act impulsively (Inman et al. 2009). Rook and Fisher (1995) defines impulse purchases as decisions which occur when a consumer experiences a sudden, often powerful and persistent urge to buy something immediately. These decisions are in contrast to the planned purchases (Ajzen 1991) decided before entering the store. For the past few decades, researchers have observed that impulse purchase behavior is a persistent and distinctive aspect of consumers‘ lifestyles (Peck and Childers, 2006) with approximately 30% to 62% of all purchases being identified as impulsive in nature (Inman et al. 2009). Given the importance of impulsive decisions in the overall decision-making process and with the increasing number of purchase decisions being made in-store, it is critical to understand the factors driving consumers‘ in-store impulsive purchase behavior. The purpose of this paper is to investigate the direct and interactive effects of store-level promotions. Research has observed that store-level promotions are increasingly used for grabbing consumers‘ attention and also for offering a direct inducement (Ailawadi et al. 2006, 2009). While store-level promotions may help in grabbing customers‘ attention, Chandon et al. (2009) emphasize the importance of consumer consideration. Chandon et al. (2000) and Lichtenstein et al. (1993) suggest that at the instore level, consumer price consciousness and brand image act as critical determinants of consumer consideration Ailawadi et al. (2009) note that store-level promotions reflect low price positioning for many brands. Such storelevel promotions on branded products can not only act as triggers for impulse buying but also be attractive propositions to price conscious consumers. Taken together, all of the above raise some interesting questions: For example, will a well-known national brand available with store-level promotions induce consumers to buy impulsively? Similarly, will price conscious consumers let down their guard and become impulsive in the presence of an inducement like store-level promotion? While previous research (see Rook and Fisher 1995; Inman et al. 2009) has investigated individual factors impacting on impulse purchase, our study examines the simultaneous interaction effects of variables influencing impulse purchase. A second aim of our study is to examine the moderating influence of category familiarity and normative influences on consumer impulse purchase. With increasing brand proliferation, consumers find it difficult to make purchase decisions based on brand preferences and thus often focus on product categories. Moreover, extant research suggests waning brand loyalty among most consumers and an increasing preference focused at the category level (Graeff 2007). Thus, category familiarity may play a moderating role in consumer brand consideration (Rao and Monroe, 1988). Furthermore, consumers often acquire products because of what the products mean to them and to the members of their social reference groups (Shukla 2010). Extant research suggests that social norms and expectations play an important role in consumer consideration (Bearden et al. 1989). The contribution of this research is the development of a conceptual framework incorporating the direct and interactive effects of store-level promotions on the relationship between brand image, price consciousness and impulse purchase. We then empirically test the moderating effects of category familiarity and normative influences on impulse purchase. Theoretically, we believe that this simultaneous examination of various direct, interactive and moderating effects will provide a comprehensive perspective relating to impulse purchase. For retail managers and manufacturers, knowing which factors drive consumer impulse purchase at store-level is of critical importance. We believe that our framework will help retail managers and manufacturers in making informed choices about the drivers of impulse purchase at the store-level and provide an opportunity to develop integrative marketing strategies at the store-level to drive impulse purchase. CONCEPTUAL FRAMEWORK Researchers note that the presence of an attention inducing stimuli such as point of purchase displays and store-level offers, in turn, can trigger positive affective appraisal among consumers regarding the particular product being promoted (Parker and Tavassoli, 2000). Such processing can have an influence on consumers‘ brand image perceptions and consumer price consciousness (Chandon et al. 2000; Lichtenstein et al. 1993). Thus, we argue that consumer attention (i.e. store-level promotion) and consideration variables (i.e. price consciousness and brand image) can significantly increase impulse purchase decisions. Moreover, consistent with the factors that increased attention and consideration lead to unplanned purchasing, we also posit that attention inducing stimuli such as store-level promotions may moderate the relationship between consumer consideration variables. Figure 1 presents the conceptual model for the study. 260 / The Direct And Interactive Effects of Store-Level Promotions on Impulse Purchase: Moderating Impact of Category Familiarity and Normative Influences Figure. 1: Model overview Direct Effect On Impulse Purchase Store-level Promotion Despite their high fixed costs, store-level promotions (i.e. in-store point of purchase displays, in-store flyers, storelevel offers and contests) are a source of additional margins. They help reinforce a low-price positioning and are a key to performance in today‘s retail environment (Ailawadi et al. 2009). While the store-level promotions seem beneficial overall, the results relating to their impact on triggering impulse purchase is decidedly mixed. In an earlier study focusing on US consumers‘ food purchasing behavior, Cox (1970) found positive but non-significant relationship between store-level promotions and impulse purchase. However, in a study of fifteen supermarkets in South Africa, Abratt and Goodey (1990) found consistent rates of impulse purchase associated with in-store stimuli. However, Parker and Tavassoli (2000) note that little consideration has been given to consumers‘ view of storelevel promotions and how consumers incorporate stimuli such as store-level promotions into their shopping behaviour There have been calls for further research examining the impact of store-level promotions on purchase behavior (Ailawadi et al. 2009). Given that, retailers and manufacturers are diverting a growing proportion of their promotional budgets from traditional out-of-store media advertising to in-store promotions (Chandon et al. 2009), understanding their impact will assist retailers and manufacturers in making more informed decisions regarding how to influence consumer impulse purchase behavior. Thus, H1: Store-level promotions will have a significant, positive impact on impulse purchase behavior. Brand Image Firms are increasingly recognizing brands as one of their most valuable assets and therefore intensifying the level of resources directed towards building and preserving them. Keller (1993) defines brand image as a set of perceptions about a brand as reflected by the brand associations held in consumers‘ memory. A successful brand image helps differentiate the brand from its competitors and gives consumers a certain degree of familiarity and, in turn, can trigger a purchase decision (Slotegraaf and Pauwels 2008). Thus, we expect that brand image will play a pivotal role in triggering impulse purchase behavior. Researchers have observed that consumers form their preferences according to past experience with a given stimuli. Grewal et al. (1998) suggest that one of the important components of past experience is brand image. From a retailer‘s perspective, brands are highly important because they generate higher margins than their non-branded counterparts (Ailawadi and Harlam 2004), have higher promotional lift (Ailawadi et al. 2006; Slotegraaf and Pauwels 2008), are more effective in driving store performance, and help attract and retain customers (Ailawadi et al., 2009). Thus, it is hypothesized that: H2: A product‘s brand image will have a significant, positive impact on impulse purchase behavior. Price Consciousness Lichtenstein et al. (1993) define price consciousness as a buyer‘s unwillingness to pay a higher price or an exclusive focus on paying low prices. Prior research related to price consciousness suggests that consumers are price conscious in almost all their purchases and use various pricing reference points to make the final decision, including the last transaction price or the lowest and highest price (Alford and Biswas 2003). Sinha and Batra (1999) argue that price conscious consumers have a strong desire to maximize the ratio of quality received to the price paid for any product and therefore may spend more time deliberating on thei