Identity Discounts

It has been well established in the literature that traditional price discounts are brand destroyers as they signal inferior product quality. However, it is still unknown whether price discounts based on the consumer’s identity (such as veteran, senior citizen, student, or employee discounts) result in the same negative effects for the brand. A series of experiments – grounded in Self-Object Association and Self-Affirmation Theory – reveal that instead of acting as a brand destroyer, Identity Discounts have a positive impact on quality perceptions. Specifically, this research finds a conditional indirect effect of identity discounts on quality perceptions that is mediated by self-object association and is positive when the primed identity is congruent with individuals’ desired identity and non-significant when it is not. This research contributes to marketing theory on pricing discounts and has significant implications for managers charged with crafting brand promotions