Operating Principle

2–4 min read

Discounting Trains Customers to Wait for the Next One

Discounting Trains Customers to Wait for the Next One

Discounting Trains Customers to Wait for the Next One

Frequent discounting lowers the reference price customers use for future purchases.

Frequent discounting lowers the reference price customers use for future purchases.

Frequent discounting lowers the reference price customers use for future purchases.

Promotions can train customers to delay full-price buying.

Promotions can train customers to delay full-price buying.

Promotions can train customers to delay full-price buying.

Promotions can train customers to delay full-price buying.

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Operating Question

What reference price, alternative, or comparison context is shaping this decision?

What reference price, alternative, or comparison context is shaping this decision?

What reference price, alternative, or comparison context is shaping this decision?

Why It Matters

Promotions can train customers to delay full-price buying.

Supporting Evidence

Gurumurthy Kalyanaram and Russell Winer.

Research Notes

Test pricing changes in the actual category and customer context before generalizing the mechanism.

Practical Actions

Track promotion effects; limit predictability; weigh long-term reference-price cost.

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