Imagine you are releasing a new product in the future. You promote the launch of a new physical product, such as a tablet PC.
You plan to allow your customers to preorder those products and you think about promoting them prior to release to increase demand and to collect more preorders.
It is six weeks prior to release. Should you wait a few weeks more and kick-off the promotion then? Or should you promote your new release now?
In case you run your promotion now, which means six weeks prior to release, should you consider a low discount (e.g. let us say 7%) or a high discount (for example, 22%)? What about giving away a free gift (e.g. a wireless keyboard) instead of a discount?
Does any of those decisions make a difference at all?
Jha et al. (2019) generated interesting findings through a series of experiments:
- Whether you run a promotion six weeks or one week prior to release does not impact purchase intentions. This means, whether promoting your new release now, i.e. six weeks before the release, or waiting another five weeks does not matter.
- A higher discount (22%) instead of a lower discount (7%) increases purchase intentions. I know this is not particularly surprising. BUT – this is only the case if the release is near, e.g. one week, instead of distant, e.g. six weeks before release. This means, if you plan a promotion six weeks ahead, do not waste your promotional budget with deeper discounts as higher discounts do not raise purchase intentions compared to lower discounts if time-to-release is still quite long.
- A high-value free gift (monetary value: ~22%) raises purchase intentions compared to low-value gifts (monetary value: ~7%) if the release is near and when the release is distant. This means, if you run your promotion six weeks ahead of the release and your promotional budget is deep then consider a free gift promotion instead of a high price discount.
Jha, Subhash, Deitz George D., Hart, Phillip, Stafford, Marla B. R. (2019), “Sales promotions for preorder products: the role of time-of-release,” Psychology & Marketing, 36, 875-890.