Crossing the Efficiency Frontier: A Framework for Understanding Consumers’ Responses to Bargains

Consumers frequently face potential opportunities, such as products on sale, loyalty programs, rebate offers, and other promotions. Opportunities are a powerful driver of action, and consumers often spend much time and effort to obtain them — sometimes more than seems justifiable by the magnitude of the saving (Blattberg and Neslin 1989; Darke and Dahl 2003; Schindler 1989; Thaler 1985). However, the mere fact that a marketing offer is presented as a potential bargain is often not enough to make consumers see the offer as representing above-normal value for them. In fact, people are usually quite selective in pursuing purported bargains and often forgo them regardless of their resource limitations. Despite the allure of apparent bargains, consumers’ perceptions of idiosyncratic value remain elusive…