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Retailing Hedonic Consumption:

A Model of Sales Promotion of a leisure Service

KIRK L. WAKEFIELD
The University of Mississippi

JAMES H. BARNES
The University of Mississippi

Research regarding sales promotions has focused on information processing of price discounts for rel-
atively uninvolving consumer goods. Sales promotions for leisure retail operators, on the other hand,
often emphasize somefonn of added value to patrons who are likely to be relatively involved in hedonic
consumption. We propose and test a model of sales promotion for hedonic consumption illustrating that
consumer response to sales promotions in leisure settings is a function of consumers’ variety-seeking
tendencies, loyalty to the service provider, and perceptions of the value of the service provision.

Leisure services are said to be consumed primarily for hedonic purposes, such as fun, sat-
isfaction, and enjoyment (Hirschman and Holbrook 1982). Consistent with consumers’
desires for leisure services which deliver these emotions, such providers may rely upon
sales promotions which add emotional or entertainment value to the service (Deckard,
1994; Saloman, 1995a,b). For example, sales promotions for leisure services may include
special appearances by team or firm mascots such as “The Chicken” at baseball games, spe-
cial shows such as those promoted at casinos, or entertaining contests and drawings such
as the million dollar half-court basketball shot. The objective of the present research is to
determine who is likely to respond to such sales promotions, particularly those sales pro-
motions that attempt to deliver additional hedonic experience to the leisure service.
Interestingly, past promotion research has centered upon primarily economic-based
rather than emotion-based strategies to stimulate behavior. Prior promotions research has
also focused almost exclusively upon branded goods, such as grocery items which are rel-
atively uninvolving to most consumers. Hence, we have little knowledge of what emotional
aspects motivate consumers to react to sales promotions in a leisure service environment.
From a practical perspective, learning who responds to event-oriented promotions may
help leisure retail operators to better target their sales promotions. American consumers
annually spend tens of billions of dollars at leisure retail locations (Survey of Current Busi-

Kirk L. Wakefield, The University of Mississippi, Department of Management and Marketing, University, MS
38677. James H. Barnes. The University of Mississippi, Department of Management and Marketing.

Journal of Retailing, Volume 72(4), pp, 409427, ISSN: 0022-4359


Copyright 0 1996 by New York University. All rights of reproduction in any form reserved.

409
410 Journal of Retailing Vol. 72, No. 4 1996

ness, 1990). Yet, we have little understanding of what kinds of promotions attract which
consumers to one location or another. Managers who run sales promotions to increase
patronage on a given night may be spending money to temporarily boost sales when this
money may be invested in ways to increase longer term sales and customers’ perceived
value of the event. For instance, who is likely to perceive a benefit from “Bikini Night” or
“Seance Night” at a sporting event? For those who are attracted by such event sales promo-
tions, what is the likelihood of their returning for future events?

PRIOR RESEARCH ON SALES PROMOTION

Quelch (1989) states that sales promotions are used by nearly all consumer goods and ser-
vices producers as temporary incentives aimed at changing purchase behavior. Research in
the field of sales promotion has typically focused on price-cuts of inexpensive consumable
products, for which the consumer is allocating disposable income for a primarily functional
or utilitarian purpose. Focusing heavily upon grocery products, researchers have exten-
sively investigated the effects of various frequencies and patterns of sales promotions on
consumption (Helson and Schmittlein, 1992; Gupta, 1988; Gupta and Cooper, 1992; Mori-
arity, 1985). Additional work, with grocery items, has been done regarding consumer per-
ceptions of sales promotion types and patterns (Diamond, 1992; Krishna, Currim and
Shoemaker, 1991; Krishna, 1991,1994) and deal or coupon-proneness (Lichtenstein, Nete-
meyer and Burton, 1990). Some effort has been made to characterize those individuals who
are apt to respond to sales promotions (Kahn and Louie, 1990; Mittal, 1994; Wakefield and
Inman, 1993). No effort, on the other hand, has been exerted in determining the perceptions
or characteristics of consumers responding to sales promotions for products or services for
which the consumer is allocating discretionary income for more hedonic or emotional pur-
poses. Thus, the need exists to expand our knowledge and conceptualization of sales pro-
motions to include consumer responses to leisure sales promotions.
In general, retail sales promotion expenditures have risen dramatically over the past
decade (Spethman, 1993). However, the types of sales promotions which have expanded
differ in the role they play in consumers’ buying decisions. The essential purpose of gro-
cery coupons, for example, is to provide consumers with greater value by reducing the cost
of the product. Sales promotions used in leisure services may include price discounts, but
frequently include the use of premiums, contests, drawings, and special shows or guest
appearances as temporary incentives to induce greater patronage on a given date. These
sales promotions tend to add entertainment value to the primary entertainment service,
rather than to reduce the regular price of the entertainment. As a result, consumers may per-
ceive these value-added sales promotions differently than they do price-cut promotions.
This study differs from previous sales promotion research in three ways.

1. This field study queries patrons within the retail setting regarding actual sales pro-
motions. Relatively few sales promotion studies are conducted within a field setting
with patrons at the point of sale (Wakefield and Inman, 1993);
Retailing Hedonic Consumption 411

2. This research deals with sales promotions for leisure retail locations rather than for
packaged goods. Sales promotion research has t~ditionaliy focused upon consumer
responses to price deals and coupons for consumer packaged goods (Rae, 19841, and
has continued in this vein (Lichtenstein, Ridgway and Netemeyer, 1993; Siddarth,
Bucklin and Morrison, 1995). Only recently has some attention been paid to sales
promotions offered by services of any kind (Venkatesh and Mahajan, 1993); and
3. We study a different type of sales promotion which may perform a different func-
tion in the consumer’s mind. Previous studies on consumer responses to sales pro-
motions have centered upon a variety of price deals (Gupta and Cooper, 1992; Kahn
and Schmittlein, 1992; Yadav and Monroe, 1993).

This study focuses on sales promotions which add value to an event-oriented service offer-
ing, as we discuss in the following section.

Developing a Model for Promotion of Leisure Services

Given the hedonic motive for consumption of leisure services and the purpose of sales
promotions, different factors more emotional in nature may influence consumer responses
to the promotion. Little is known regarding hedonic consumption in general (Rabin,
Darden and Griffin, 1994; Taylor, Sharland, Cronin and Bullard, 1993), and sales promo-
tions within a hedonic consumption context, in particular. Past work has found that reac-
tions to promotions and intentions to repurchase are influenced by consumers’ levels of
loyalty to the product or service in question. For example, research has found that loyalty
based upon brand preference leads to greater repurch~e~ of the preferred brand while vari-
ety-seeking among brands is mitigated (Feinberg, Kahn and McAlister, 1992; Grover and
Srinivasan, 1992; Papatla and Krishnamurthi, 1992). Kahn and Isen (1993), however,
found that offering a premium with a positive affect for grocery items leads to increased
variety-seeking behavior among consumers. In this study, we examine how such factors
influence promotions for purchases of a hedonic nature.
The focus of this study is to investigate promotion-proneness, which is a tendency to use
sales promotion information as a basis for making patronage decisions, as a function of
three primary consumer perceptions or characteristics (see Figure 1):

I. Variety-Seeking Tendency, which is the desire among individuals to seek variety


in their leisure patronage choices (Raju, 1980; McAlister and Pessemier, 1982),
2. Loyalty to the service provider, which is the degree of psychological commitment
to the service provider based upon evaluative decision-making processes (Day,
1969; Jacoby and Chestnut, 1978), and the
3. Perceived Value of the leisure service, which is the consumer’s overall evaluation
of the utility of the service provision based on perceptions of what one gets for what
one gives (withal, 19883; perceived value, in turn, is expected to be in~uen~ed
by the perceived quality of the service environment (Baker, Grewal and Parasura-
man, 1994).
412 Journal of Retailing Vol. 72, No. 4 1996

Variety-Seeking /
0.240

/,------ ----‘1
4, \\
i Promotion-

is, Service Provision


/!
0.364 ‘\___ _- /’
_,_ --- ~-----I Squared Multiple Correlations
/Perceived Qualit;\
; Promotion Proneness 17.5%
of Service
Perceived Value 17.7%
Environment
Repatronage Intention 40.7%
\..._ __N”
‘Significant atp < .05. All others at p < .Ol

Figure 1. Model of Hedonic Promotion

Specifically, variety-seekers are expected to be promotion-prone, and as a result, intend


to repatronize only infrequently. Loyal customers of the leisure service provider on the
other hand, are expected to (1) be less promotion-prone, (2) intend to repatronize the leisure
service more frequently, and (3) have more positive value perceptions regarding prices paid
for the entertainment. How consumers perceive the quality of the leisure service environ-
ment is anticipated to enhance customers’ value perceptions, which, in turn, may reduce
consumers’ reliance upon sales promotions to determine their patronage decision (i.e., their
promotion-proneness) and enhance their desire to return to the leisure establishment in the
future.
Repatronage intentions is an important end to this model, since retailers are interested in
knowing how consumer reactions to sales promotions influences other purchase behaviors
(Mulhem and Padgett, 1995). Behavioral intentions are often the subject of consumer stud-
ies, and is closely related to consumers’ intentions to try to accomplish some consumption
goal (Bagozzi and Warshaw, 1990). Understanding the relationship between consumers’
attitudes is only relevant to the extent that we can translate the effects these attitudes have
on expected behaviors.
Promotion-Proneness. In contrast to sales promotions for packaged goods, effective
sales promotions for leisure services require the consumer to be conscious of the sales pro-
motion before going to the retail location. Although prior search and planning occurs for
some packaged goods, most decisions are made in-store (Hawkins, Best and Coney, 1995).
In-store coupons, discounts and other point-of-purchase sales promotions may attract the
coupon prone or deal prone consumer (Lichtenstein et al., 1993) who tends to respond to
Retailing Hedonic Consumption 413

that form of promotion when it is present. The decision to patronize a leisure outlet, on the
other hand, is made in advance (Monroe and Guiltinan, 1975). Thus, even though all
patrons on a given day or night may receive the benefit of a sales promotion such as fire-
works at an amusement park, the sales promotion is only effective to the extent that it
induced patrons who had prior knowledge of the sales promotion to attend at that time.
In a general sense, we define promotion-proneness as a tendency to use sales promotion
information as a basis for making retail patronage decisions. Promotion-prone consumers
are apt to shift their consumption behavior to take advantage of the temporary incentive.
Within the context of leisure services, promotion-prone individuals alter their patronage
based upon the availability of sales promotions offered by various entertainment establish-
ments. Thus, promotion-prone individuals may accommodate their entertainment plans to
when sales promotions are offered or where the sales promotion is offered. In either case,
the individual is changing behavior to take advantage of a specific sales promotion at a par-
ticular time.
Similar to other promotion tendencies (coupon proneness and sale proneness; Lichten-
stein et al., 1993), these consumers may respond to the promotion because of the positive
form of the promotion. That is, they respond to the added benefit or pleasure offered as a
part of the promotion. For instance, casino resorts often stage extravagant theme parties to
attract more customers during slow seasons (Bruzzese, 1992). Patrons who respond to these
added attractions may gain pleasure from “Aussie Week” or “Enchantment Under the Sea”
beyond the normal experience at the casino resort. Promotion-prone consumers of leisure
services, then, are inclined to search for sales promotion information and use it in their deci-
sion making.
Sales promotions of consumable products often emphasize the “negative role” of prices
or how much money must be given up (Lichtenstein et al., 1993). As such, price levels are
seen as having an inverse (or negative) relationship with purchase probabilities such that
higher prices decrease the likelihood of purchase. Furthermore, coupons, rebates, and dis-
counts typically focus consumers on the reduced economic outlay required to obtain the
good or service: “Original price $5.99, with $2 coupon you pay only $3.99.” Other types
of sales promotions which are used to attract leisure service patrons, on the other hand, may
not focus on price. These types of sales promotions may play a more positive role of adding
entertainment value for what is paid, as discussed below.

HYPOTHESES

Variety-Seeking Tendency

Leisure sales promotions may have limited relevance to the primary service offered. Lei-
sure service operators may induce periodic patronage of individuals with high variety-seek-
ing tendencies with a variety of stimulating sales promotions, such as the “Dynamite Lady”
who blows herself up. These “entertainment hoppers” may patronize simply for a change
of pace, or because they perceive that the nature of the sales promotion itself offers high
414 Journal of Retailing Vol. 72, No. 4 1996

stimulation. Therefore, the target audience for these promotions may be individuals who
have high variety-seeking tendencies (Howard and Sheth, 1969; McAlister and Pessemier,
1982). Steenkamp and Baumgartner (1992) define variety-seeking as a “means of obtaining
stimulation in purchase behavior by alternating between familiar choice objects simply for
a change of pace.”
As noted, the nature of sales promotions in many leisure services may be geared toward
premiums and contests for prizes. Thus, even though these promotions may contribute to
the overall perceived value of the event, they are typically not positioned as deals or price
cuts. The benefit derived from these types of sales promotions may be emotional and
hedonic, as are the same benefits derived from the leisure services themselves, rather than
strictly a functional or utilitarian benefit derived from some form of a price discount. There-
fore, individuals with greater variety-seeking tendencies may be more interested in sales
promotions which offer stimulation and added value beyond the typical service encounter.

Hl: Variety-seeking will have a directpositive effect on promotion-prone-


ness.

Loyalty

Conversely, loyal customers already have a positive attitude toward the service provision
and are apt to patronize the service provider (Dick and Basu, 1994). Loyalty typically
implies a commitment to repeat purchases, based upon an ongoing positive evaluation or
attitude toward the brand or service provider (Day, 1969; Jacoby and Chestnut, 1978).
Loyal customers of leisure services are also likely to be relatively more involved (Zaich-
kowsky, 1985; Richins and Bloch, 1991) with the category and brand (Beatty, Kahle and
Homer, 1988) than less loyal customers. Such highly motivated customers are unlikely to
need any added incentive to patronize the leisure service and therefore may be inattentive
to sales promotions. Thus,

H2: Loyalty will have a direct negative effect on promotion-proneness.

H3: Loyalty will have a direct positive effect on repatronage intentions.

Perceived Value

Perceived value has been conceptualized as what consumers get for what they give, or
“the consumer’s overall assessment of the utility of a product based on perceptions of what
is received and what is given,” (Zeithaml, 1988, p. 14). Previous research in retail store
patronage suggests that store loyalty tends to produce a post-hoc effect on price perceptions
(Reynolds and Darden, 1975; Woodside and Bouino, 1971). Individuals strive to maintain
consistency between psychological commitments to an object and their cognitive evalua-
tions of object attributes (Beatty et al., 1988; MC&ire, 1972). Thus, individuals who are
Retailing Hedonic Consumption 415

more loyal to the service provider are more likely to perceive that they are getting a good
deal for the prices they pay than those who are less loyal. To think otherwise would produce
dissonance or tension for the loyal consumer. Therefore:

H4: Loyalty will have a direct positive effect on perceived value.

Customers’ value perceptions of services in general, and leisure services in particular, are
strongly influenced by the quality of the service environment (Baker etal., 1994; Wakefield
and Blodgett, 1994). Customers essentially pay for admission to the physical facilities of a
museum, theater, stadium, or a resort complex. Accordingly, the physical quality of the ser-
vice surroundings is expected to directly influence customers’ perceived value of the ser-
vice provision.

H5: Perceived quality of the service environment will have a direct posi-
tive e@ect on perceived value of the service.

Due to the nature of leisure services and related sales promotions, individuals who are
promotion-prone are not necessarily focusing on paying lower prices, which is characteris-
tic of individuals who are deal-prone, coupon-prone or value-conscious (Lichtenstein et al.,
1990). Rather, the payoff may also be related to getting additional entertainment value
beyond the primary service offering. From a utility theory perspective (Thaler, 1985), the
sales promotions often employed by leisure services increase acquisition utility by aug-
menting the utility derived from the expenditure, rather than decreasing the price paid for
the service. Leisure service sales promotions may take the form of a discount, but still often
emphasize some emotional or social benefit such as with Ladies’ Nights or Family Nights.
In either case, individuals who are apt to be influenced by these nonprice and price sales
promotions do not believe that what they receive is worth what they are asked to pay for it
at normal prices. From the utility perspective, promotion-prone consumers are not likely to
perceive that the utility derived from the leisure service significantly meets or exceeds the
regular purchase price. Thus, promotion-proneness is expected to have an inverse relation-
ship with perceived value.

H6: Perceived value will have a direct negative effect on promotion-


proneness.

Consumers who perceive that they are receiving a good value at normal prices are more
likely to repatronize the service provider (Chang and Wildt, 1994; Zeithaml, 1988). There-
fore,

H7: Perceived value will have a direct positive effect on repatronage


intentions.

Finally, if promotion-prone consumers are variety-seekers, less loyal, and have lower
value perceptions of the service provision, it follows that promotion-prone consumers of
416 Journal of Retailing Vol. 72, No. 4 1996

leisure services are less likely to patronize the service provider frequently in the future.
Therefore,

H8: Promotion-proneness will have a direct negative effect on repatron-


age intentions.

METHODOLOGY

Unit of Analysis

We selected minor league baseball to test the hypothesized model since it has grown dra-
matically over the past decade and the growth, particularly at the minor league levels, has
been marked by wide spread use of creative sales promotions (Euchner, 1991; Rohde,
1994). A field study method was chosen in order to gain information directly from individ-
uals at the stadium service setting. As such, their feelings and perceptions about the setting,
perceived value, and sales promotions are likely to be clearly in mind.

Measures

After first specifying the domain of each of the constructs in our model, items were gen-
erated to measure each construct. A pretest of the multiple-item scales was conducted using
a sample (i.e., after a random start, every fourth customer entering the gates was given a
survey) of subjects at a minor league (AA) baseball game, which featured fireworks after
the game. The response rate was 51.3% (600 surveys distributed, 308 returned useable).
Subsequent factor and reliability analysis revealed the need for minor item modifications.
A variety-seeking item was dropped and two promotion-prone items were clarified. The
final list of scale items is shown in Table 1.
In Table 1 we report the means, standard deviations, and Cronbach Alpha’s for each con-
struct used in our study. As one can see, the alpha values fall within acceptable levels. In
addition to the scale items shown in Table 1, it was necessary to insure that respondents
would frame their responses in terms of value added promotions. Toward that end, we
asked subjects to rate the various types of promotions that had been offered by the team
throughout the season. These promotions were predominantly value added promotions.
The promotion-proneness items were then presented and a reference was made to the pre-
vious set of promotions. As a form of manipulation check, respondents were asked else-
where on the survey to indicate the extent to which the specific sales promotion offered that
night influenced their choice to attend that game. The correlation between promotion-
proneness and this item was significant (r = .41, p < .Ol).
To test the proposed model the refined scales and value added framing questions were
administered in the same manner at two subsequent games featuring value added sales pro-
Means, Standard Deviations, Cronbach Alpha’s and List of Items for Each Construct
Mean S.D. Alpha

A. Variety-Seeking Tendency (adapted from Raju 1 980ja 4.12 1.34 .77


X, I enjoy going to different entertainment spots for the sake of comparison.
X2 If I have a choice when I go out, I’d rather try someplace new than go to the places I already know.
X, I tend to go to a lot of different entertainment spots, just for the sake of a change of pace.
B. Loyalty to Service Provisiona 5.36 1.53 .93
X4 I am a loyal [team] fan.
Xs Win or lose, I will always be a [team] fan.
X6 I like to let people know that I’m a [team] fan.
C. Perceived Quality of Service Environmentb 5.90 .91 .84
The overall quality of this stadium’s parking, architecture, decor, seating, layout, and scoreboards is:
X7 Terrible-Great
X8 Much worse than I expected-Much better than I expected
X, Not at all what it should be-just what it should be
D. Promotion-Pronenessc 3.56 1.77 .92
V, Promotions influence when I attend more than how much I attend.
I would attend just as many games if there were no promotions.*
y, If there’s a promotion I like, I just go to that game instead of another one.
Promotions don’t make me go to more games.*
Y, Promotions play a big part in my choice to attend games.
Promotions don’t influence when I plan to attend games.*
E. Perceived Value of Service Provision” 5.79 1.22 .93
Generally speaking, the regular prices are:
Y4 A bad buy-A good buy
Ys Not worth the money-Worth the money
V6 Too high for the quality of entertainment-Not too high for the quality of entertainment
F. Repatronage lntentionb 5.15 1.49 -
In the future, will your attendance of games at this stadium be:
Y7 Very infrequent-Very frequent

Notes: a. Seven point (I = strongly disagree, 7 = strongly agree) scales were employed.
b. Seven point scales with indicated endpoints were employed.
c. Seven point (1 = always false, 7 = always true) scales were employed.
* Reverse scored.
418 Journal of Retailing Vol. 72, No. 4 1996

motions (i.e., a pennant giveaway and the “Dynamite Lady”) at another minor league (AA)
baseball stadium in another city. The response rate at these games was 53% (575 distrib-
uted, 301 returned useable). Respondents who resided 50 miles outside of the market were
removed from the final analysis, since they would either be visiting with the opposing team
or otherwise have little opportunity for exposure to promotional information. Thus, the
final analysis was based upon 250 respondents.
Interestingly, nearly half (48.8%) of respondents indicated that they are to some extent
promotion prone, with, 11% expressing that they are often or always promotion prone. Sim-
ilarly, 3 1.7% indicated that they chose to attend the event in part due to the specific promo-
tion offered at the event, with, 12.3% of respondents strongly agreeing that they attended
due to the sales promotion.

RESULTS

Anderson and Gerbing (1988) suggest a two-stage approach to causal modeling, in which
the measurement model is first confirmed and then the structural model is built. The mea-
surement model allows assessment of discrirninant and convergent validity. Provided the
measurement model provides an acceptable fit to the data, the structural model then pro-
vides an “assessment of nomological validity” (Anderson and Gerbing, 1988, p. 411). We
followed this two stage approach using LISREL VII (Joreskog and S&born, 1990) with
maximum likelihood estimation.

Measures of Fit

Several measures were used to evaluate the model. The first of these is the chi-square sta-
tistic. Since the data did not violate the assumption of multivariate normality, the maximum
likelihood chi-square is appropriate. In addition, the widely used goodness-of-fit (GFI) was
also employed along with the adjusted-goodness-0~~~ (AGFI). Since the GFI is a “stand
alone” index whose value is based solely on the hypothesized model, the root-mean-
squared-residual (RMSR) was also used.

The Measurement Model

Following the recommendation of Anderson and Gerbing (1988) the measurement model
was first confirmed. The measurement model included all those items measuring both the
independent constructs listed in Table I and the dependent construct measure “repatronage
intention.” The measurement model originally included, 19 items: however, based on an
initial analysis of the data, the six items measuring “promotion-proneness” were combined
into three composite measure variables. The final measurement model produced a nonsig-
nificant maximum likelihood chi-square ( xgq 2 - 113.42, p = 0.084), a GFI of ,946, an AGFI
of .922, and a RMSR of .083, all of which indicate that the measurement model provides
an acceptable fit to the data. Modification indices did not indicate any possibility for sig-
nificant reductions in chi-square for the structural model.
Retailing Hedonic Consumption

Figure 2. Measurement Model

A measurement model consists of three parts: (1) inner relations, (2) outer relations, and
(3) weight relations (Fornell and Cha, 1994). For the current study, the inner and outer rela-
tions are shown in Figure 2.
The inner relations reflect the structural model among the latent variables as posited by
theory. Our model consists of three endogenous (vi) variables and three exogenous (&)
variables.
The relationships between the manifest or measured variables and the latent variables make
up the outer relations. In our present model, we have both reflective and formative relations
between the measured variables and their respective latent variable. The 15 measured exog-
enous and endogenous variables (Xl - X9; Y, - Y6) are reflective in that the observed phe-
nomena are a reflection of their respective underlying construct. Repatronage intention (Y7)
is considered formative in that the measured variable forms the latent variable.
The third component of the measurement model, model parameters or weights were esti-
mated using LISREL VII (Jiireskog and Sorbom, 1990). Results of model parameterization
are shown in Table 2.
After confirming the measurement model the structural model was then examined.
Model estimates are consistent with the hypothesized direction suggested in our proposed
structural model (see Figure 1). With the exception of H8 @ < .OS), all of the hypothesized
paths are strongly supported @ < .Ol) using a one-tail r-test for the one-way causal paths
(see Haire, Anderson, Tatham and Black, 1992).
420 Journal of Retailing Vol. 72, No. 4 1996

TABLE2

Substantive Parameter Estimates and Goodness of Fit Summary Statistics


Standardized
Parameter Estimate t-value
0.618 *
0.773 8.459
0.802 8.416
0.895 *
0.913 21.256
0.890 20.296
0.823 *
0.597 9.296
0.881 11.685
0.915 *
0.926 25.204
0.960 27.676
0.887 *
0.880 19.205
0.908 20.169
0.897 *

0.240 3.344
-0.140 -2.145
0.539 8.170
0.170 2.630
0.364 5.213

-0.111 -1.713a
-0.261 -4.023
0.164 2.505

Goodness of Fit Indexes


xii4 173.42 l.p= 0.084)
GFI 0.946
AGFI 0.922
RMSR 0.083

Notes: a. Significant atp c .05. All other values are significant at p c .Ol_
* Indicates the initial parameter estimate was set to 1 .O for model estimation purposes.

TABLE3

Construct Correlation Matrix

T13 % rll 53 52 51

ll3 1.000
r12 0.315 1.000
% -0.287 -0.298 1.000
53 0.148 0.386 -0.119 1.000
52 0.600 0.218 -0.236 0.132 1.000
51 -0.124 -0.028 0.270 0.001 -0.166 1.000
Retailing Hedonic Consumption 421

The correlation matrix among the latent constructs is presented in Table 3. Since all the
correlations among the latent constructs are low, multicollinearity does not appear to be a
problem.

DISCUSSION

Variety-Seeking. Variety-seeking tendency has a positive influence (~11 = 0.240) on


promotion proneness (Hl), which has a weak negative effect on repatronage intentions (p14
= -0.111, H8). This suggests that variety-seeking consumers consider promotions as a
salient attribute in their patronage choice and, as a result, do not intend to repatronize fre-
quently. Stated differently, consumers who seek variety are not likely to repatronize the lei-
sure service without additional promotions.
From a retailing perspective, management must determine if the marginal return pro-
vided by variety-seeking consumers offsets the cost of the promotion since variety-seekers
may be “entertainment hoppers” who patronize simply for the stimulus of the promotion
and thus may require a continuing flow of promotions to attract them. The likelihood of
converting these customers into loyal customers seems low, given that this segment is seek-
ing stimulation from a variety of sources.
Loyalty. Loyalty to the service provider has the strongest influence on repatronage
intentions (yZ4 = 0.539, H3). Loyalty to the service provider also has a negative (yzl =
-0.140) influence on promotion proneness (H2) as expected. Loyalty to the service provider
has a positive influence (yZ2 = 0.170) on the perceived value of service provision (H4).
These results suggest that loyal consumers perceive a greater value from the leisure ser-
vice and are not as influenced by promotions as are other consumers. This would suggest
the possibility of a segmentation strategy for promotions in that loyal consumers may not
require the same level of promotional activity to retain their attendance. To the extent that
these results show that loyal customers do not consider sales promotions in their decision-
making, retailers may be wasting their promotion dollars if their customer base is largely
committed (in this case, approximately 55% of those surveyed). Some loyal customers may
consider sales promotions geared toward the less loyal customers as extraneous and
detracting from the basic entertainment, as when a loyal sports or theater spectator becomes
irritated by the “hype” associated with an event they enjoy in its pure form.
Perceived Value. Perceived quality of the service environment significantly influ-
ences the perceived value of the service (yX2= 0.364, H5). As one would expect, consumers
who perceive higher quality in the service environment perceive the leisure service to be a
better value for the cost. This suggests that investment in improving the service environ-
ment will increase consumers’ perceptions of quality which should result in increased repa-
tronage as can be seen from the positive influence (&, = 0.164) of perceived value on
repatronage intentions (H7). The perceived value of the service provision, in contrast, has
a negative influence on (pZ1 = -0.261) on promotion proneness (H6), suggesting that
efforts by the retailer to improve the perceived entertainment value will reduce consumers’
desire for sales promotions to augment the experience.
422 Journal of Retailing Vol. 72, No. 4 1996

Leisure retailers opening a new facility may have “Grand Opening” sales promotions,
replete with prizes, contests, guest appearances and a variety of discounts. Although not
specifically tested here in terms of new facilities, this study may suggest that consumers’
tendency to use sales promotions in determining whether or not to patronize the leisure
establishment may be decreased if the new facility is sufficiently attractive. Spectacular
casinos and otherwise attractive leisure facilities may serve as a search cue (Berry and Para-
suraman, 1991) which denotes good value, and therefore reduce the need for expensive
sales promotions to induce patronage to new leisure outlets. Thus, retailers may need to
consider the tradeoff between upfront expenditures on the facility versus initial, and per-
haps recurring, sales promotion expenditures required to persuade consumers to “try” the
leisure service despite the lower quality facility appearance.
Overall Model Implications. In general, these findings suggest that those customers
who are apt to be attracted by sales promotions for retail leisure outlets are generally not
loyal, perceive that the value and the service environment offered by the outlet is inferior,
and patronize the outlet (infrequently) for the stimulation offered by the sales promotion
offered in conjunction with the typical entertainment. Leisure services which are not oper-
ating near capacity should consider the trade-off between spending on sales promotions and
advertising over a given time period (e.g., five years) to attract these periodic patrons versus
expenditures which are more likely to positively influence customers’ value perceptions
over the longer term. As the model suggests, improving the service facility through reno-
vation, relocation or enhanced atmospherics should increase consumers’ value perceptions.
The improved facility and perceived value then reduces the need for sales promotions to
entice customers to patronize.
Sales promotions objectives are typically positioned as either maintaining customer loy-
alty or boosting short-term sales, although typically the latter comes at the expense of the
former (Levy and Weitz, 1995). An implication of promotion-proneness, as conceptualized
and measured here, is that a sizeable portion of consumers (1 l-12% in this study) who are
most likely to respond to these promotions are simply shifting their patronage from one
night to another or are patronizing primarily for the sake of the promotion. Properly
designed sales promotions may, however, boost short-term sales while also building cus-
tomer loyalty. If sales promotions of leisure services tend to attract variety-seekers, then the
sales promotions could be designed not only to stimulate, but also to reinforce positive
aspects of the leisure experience that are likely to increase loyalty or perceived value of the
primary service offering. Contests, giveaways, and other premiums should in some way be
related to the service. For instance, sporting events are often sponsored by restaurants,
which in turn, offer coupons, contests, or drawings for free dinners. Instead of simply using
the giveaways as the sales promotion, the promotion could be reinforcing and developing
involvement and loyalty by giving away a limited number of free meals with members of
the team. Conversely, minor league baseball teams which provide patrons with free movie
passes may attract the variety-seeker, but may do little to build loyalty and repatronage
among this segment. In general, the objective of sales promotions should be not only to pro-
vide an immediate sales boost, but also to improve loyalty through frequent patron cards,
contests or drawings to win more tickets, or other means.
Finally, these results provide evidence for the premise that the higher the perceived value
of a leisure service, the less likely are loyal consumers to be promotion-prone. Previous
Retailing Hedonic Consumption 423

research in sales promotion and information processing (Krishna et al., 1991; Walters,
1991) has typically overlooked the notion that a basic motivation for paying attention to
sales promotions is that consumers perceive that current prices do not represent a good
value. Thus, if the perceived value of the service or product is relatively high, one can
expect that consumers are less likely to see the need to watch for sales promotions. Other
efforts, beyond enhancing the tangible elements of the physical environment, to improve
value perceptions could also reduce customers’ desire for sales promotions. Although not
studied here, other research suggests that improving the service quality elements of the lei-
sure experience may positively influence perceived value (Parasuraman, Zeithaml and
Berry, 1988; Kerin, Jain and Howard, 1992). For instance, we have noticed that some
movie theaters offer food vending service in the theater aisles before movies begin. Simi-
larly, some professional baseball operations provide waiter/waitress service in reserved
seating sections to add value to their service. These kinds of service improvements typically
incur labor costs, but such enhancements may accrue long term perceived value benefits
and reduce the need for sales promotions. Further evidence is needed, however, to deter-
mine to what extent improving value perceptions influences consumers’ processing of sales
promotion information in specific product or service situations.

LIMITATIONS AND FUTURE RESEARCH

As with any study, some limitations exist on the generalizability of the results. Our study
focused on a sports team and as such may or may not transfer directly to other leisure activ-
ities. More research is needed into other leisure services, as well as other sporting event
locations. For instance, other leisure service operations are not as event-specific as sporting
events or theater showings. Assessing the effects of promotions and identifying promotion-
prone individuals in non-stop entertainment locales with a variety of service offerings such
as casinos and amusement parks may present a variety of problems. Nevertheless, our
results show promise in modeling leisure service promotions and provide several sugges-
tions for management of leisure services.
A second limitation of this study is that we focused on value-added sales promotions
within the leisure setting. We did not explore consumer reactions to price-cut sales promo-
tions in leisure settings. The hedonic nature of the leisure setting may dull price information
processing of price-cuts such that customers pay less attention to rational price appeals
when consuming services or products for fun. We do not know if previously researched ten-
dencies (e.g., coupon proneness, sales proneness) apply in leisure settings. Future research
may help answer such questions not examined in this study.
Due to the scope of this investigation, a third limitation of this study is that we do not
know if these tested relationships will also hold for value-added sales promotions for more
utilitarian-oriented services or products. As noted earlier, although extensive research has
been conducted on price-cut sales promotion, little is known about sales promotions for ser-
vices or for sales promotions which add value. Thus, ample opportunity exists to investi-
gate the “who” and “how” of consumer responses to these kinds of sales promotions in
different settings. For example, to what extent does promotion-proneness (of value-added
424 Journal of Retailing Vol. 72, No. 4 1996

or price-cut sales promotions) relate to variety-seeking, loyalty, and perceived value for
customers of hair salons, auto mechanics, and dry cleaners?
This research was primarily positioned with regard to spectator amusements. Another
interesting extension might consider the promotion-proneness and patronage decisions of
active participant operations such as golf courses, bowling alleys, fitness centers, and tennis
camps where Americans spend significant amounts of free time and money. Although we
would expect similar relationships, the sales promotions for these types of services may dif-
fer in their timing frequency and form of value-added or price-cut promotions.
This study directly suggests that research is needed into the possibility of converting vari-
ety-seekers into loyal consumers of the leisure service. More specifically, (1) can these
individuals be converted? and (2) what is required for conversion to loyal consumers? It
may be that individuals who seek high variety may not become loyal consumers and thus
will continue to pose a dilemma for management. Conversely, sales promotions which are
related to the service provision may help build customer loyalty. Retailers could benefit
from knowing how to develop sales promotions which do more than provide short-term
sales benefits.
Research is also needed into the possibility of promotion segmentation. Our research
suggests that loyal consumers are not promotion prone and thus it may be possible to seg-
ment and target differently the loyal and the variety-seeking consumers. What kinds of pro-
motions are sought by variety-seekers when compared to the sales promotions which are
preferred by loyal customers? Retailers need to better understand which kinds of promo-
tions are attracting which kinds of customers.
This study indicates that nearly half of the respondents are to some extent promotion
prone with regard to the given leisure event, while over 10% of respondents indicate high
promotion-proneness. The extent to which a particular leisure market is promotion-prone
may be dependent upon the degree to which consumers have (not) been inundated with
sales promotions. Future research may determine that environmental factors such as com-
petitive actions or organizational factors may explain the degree to which consumers are
promotion-prone within various leisure markets and for specific leisure service providers.
Lastly, the model indicates that the quality of the service environment influences value
perceptions of the service provision. More research is needed to accurately measure the
aspects of the service environment which are most likely to improve quality, and hence,
value perceptions in leisure settings. Leisure retail operations investing millions of dollars
into facility improvements need to know which factors most influence customers’ percep-
tions of the environment.

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