A Review of Theoretical Perspectives Applied to Sales Promotion and a New Perspective based on Mental Accounting Theory

Abstract

The paper reviews theoretical perspective applied to the study of consumer response to promotions. These include adaptation level theory, assimilation contrast theory, attribution theory, prospect theory, transaction utility theory, the elaboration likelihood model and the attitude model. It finds that these theoretical approaches have had a single product focus in evaluating consumer response to promotions. It suggests an alternative theoretical perspective to examine consumer response to promotion from a multi product perspective. This perspective is based on mental accounting theory, a behaviorally based model of choice. It is used to examine the psychological processes involved in creating a positive cross product impact of a promotion (i.e. increase in sale of regular priced products during a promotion).