EXPRESS: When Do Purchase Preconditions Increase Purchase Intention? The Role of External Reference Points

Retailers frequently advertise price promotions with purchase preconditions (i.e., minimum spending). This research provides a novel perspective for evaluating preconditions: treating them as external reference points (ERPs) that override consumers’ internal reference points (IRPs) and thus alter perceived discount magnitude. Specifically, consumers evaluate a discount without a precondition by comparing it with an IRP based on past experiences. Conversely, a discount with a precondition creates a new, salient benchmark (ERP) against which the discount is more likely to be evaluated. Due to this change in reference point, a precondition resets the consumer’s discount magnitude calculus, influencing their intentions to shop at the store. This can create dominance violations in which restricted discounts are preferred to their unrestricted counterparts, contingent on whether the precondition is below or above the IRP. The influence of a precondition as an ERP on discount magnitude perceptions is attenuated when the IRP is highly accessible in memory, or when the discount magnitude is already explicit in relative (e.g., percentage) terms. Additionally, similar effects can be produced with a product category restriction equivalent in value to the precondition, and the effect of adding a precondition is attenuated when the equivalent value reference is already present.