Impact of Premium and Price Cuts on Consumer Purchase Intention: Comparison Between Taiwan and Indonesia

Abstract

This study aims to compare the price cut and premium promotion with study moderators are discount depth size, product type, premium characteristics, and country effect (Indonesia and Taiwan). The experiment was designed as (promotional discount / price cut) x 2 (discount depth size: high / low) x 2 (product type: hedonic / utilitarian) x 2 (country effect: Indonesia / Taiwan) and (promotional discount / premium promotion) x 2 (discount depth size: high / low) x 2 (product type: hedonic / utilitarian) x 2 (premium characteristics: related / unrelated) x 2 (country effect: Indonesia / Taiwan). A total of 12 groups of experimental design, verified by 808 valid questionnaires were studied (420 from Indonesia and 387 from Taiwan). The results revealed that the impact of price cut on purchase intention is systematically more than that of equivalent premium promotion between Indonesia and Taiwan. Furthermore, when the discount depth size is low and product type is hedonic, the premium promotion could lead to higher purchase intention than price cut.