Pennies-A-Day: The Effect of Temporal Reframing on Transaction Evaluation

Group 1_Session 8/9

Pennies-a-Day: The Effect of Temporal Reframing on                   Transaction Evaluation

• To increase transaction compliance across a wide variety of products, marketers sometimes frame product costs as only "pennies-a-day."
• To explain the effectiveness of this strategy, a two-step model of consumer decision making has been proposed that consists of (1) Comparison retrieval

                                                              (2) Transaction evaluation.

• In a series of pilot studies and main studies across a variety of product categories, this research has provided general support for PAD effectiveness and specific support for the two-step model.
• In three pilot studies, it was shown that PAD framing could decrease the perceived monetary magnitude of a consumer transaction relative to a more aggregate framing, thereby affecting the attractiveness of the proposed transaction.
• In study 1, PAD effectiveness at small daily dollar amounts, as well as the presence of a monetary threshold for that effectiveness, was demonstrated.
• Study 2 provided evidence that this effectiveness is tied to the nature of the expenses a consumer retrieves for the purpose of comparison.
• These results are all consistent with the two-step model. In addition, this research challenges several potential competing explanations for PAD effectiveness. Most prominently, the reversal of PAD effectiveness at large daily dollar amounts challenges explanations that hinge on temporal discounting or the systematic miscalculation of the aggregate effect of a daily expense.
• In total, these results provide evidence that PAD strategies can be effective, that this effectiveness is tied to an underlying process of comparison retrieval and transaction evaluation, and that this process leads to a systematic and predictable monetary boundary to PAD effectiveness.

Managerial Implications:

Price Promotion:

On the basis of the present research, it appears that firms can influence consumer evaluations by temporally reframing the price of goods and services. From a strategic perspective, this reframing could serve two distinct purposes.

• First, a PAD strategy could be effective at increasing primary demand for a product (or product category) by making that product seem more affordable.  
• In contrast, temporal framing could be effective at defending or stealing market share within a highly competitive product category.  

Thus, the same monetary savings can be framed as either pennies-per-minute, to defend market share, or as many billions of dollars, to steal market share.