NOT ALL DISCOUNTS ARE CREATED EQUAL: POWER DISTANCE BELIEF AND LOCUS-OF-DISCOUNT IN A PRODUCT BUNDLE

Abstract

**Please note that the full text is embargoed until 5/17/2024** ABSTRACT: This paper examines the relationship between power distance belief (PDB) – the tendency to accept and endorse power disparity – and preference for a discount on the focal (vs. tie-in) product in a product bundle. The findings show that high PDB consumers prefer a discount on the focal (vs. tie-in) product in a bundle, whereas low PDB consumers’ preference is not affected by the locus-of-discount. This difference is driven by the greater tendency to differentiate among high (vs. low) PDB consumers. Furthermore, contextual factor that affect consumers’ differentiation tendency, namely consumers’ prioritization tendency, set boundary condition for the impact of PDB on consumers’ locus-of-discount preference. We conduct multiple studies, including a field experiment, to provide empirical support to these predictions. Implications for theory and practice are discussed.