The Influence of Price Discount Versus Bonus Pack on the Preference for Virtue and Vice Foods

Executive Summary by Arul Mishra, Assistant Professor of Marketing in the David Eccles School Of Business at the University of Utah, and Himanshu Mishra, Assistant Professor of Marketing in the David Eccles School Of Business at the University of Utah.

Human beings have always had a complicated affair with food. Eating is necessary to stay alive, so nature has made food difficult to resist. However, in recent times, overeating has led to one of the most pervasive problems developed society currently faces — obesity. Recent data indicates that 67 percent of the population in the United States is overweight, which includes 17 percent of children between the ages of 6 and 19, making obesity one of the most serious health concerns. Policy initiatives, such as increasing the availability of and providing subsidies for healthy foods (e.g., fruits and vegetables) and restricting or taxing unhealthy foods, have been proposed to increase the purchase of healthy food items. The food industry is blamed to a large extent for the current obesity problem and is expected to take constructive actions that can help consumers stay healthy.

The findings of this article provide one way through which both consumers and marketers can benefit. In this research, the authors explore how price- and quantity-based sales promotions can influence the consumption of vice foods (e.g., unhealthy food, such a chocolate cake) and virtue foods (e.g., healthy food, such as raisins). Specifically, the findings show that people prefer a bonus pack to a price discount for healthy food items, but they prefer price discounts to a bonus pack for unhealthy food items. For our research purposes, a bonus pack is defined as offering more of the product for the same price, and a price discount is defined as offering the same product at a reduced price.

We propose that consumers exhibit a preference for price discounts over bonus packs on vice foods because a price discount provides them with a reason (buying on a deal) to purchase, which helps mitigate their guilt and reduces the need to exercise self-control (i.e., not consuming at all). Therefore, consumers are better able to resolve the conflict between indulgent consumption and healthfulness. Conversely, because there is no conflict between consumption and guilt for a virtue food, people are happy to buy more of it  — a bonus pack. Indeed, the purchase and consumption of virtue food helps people achieve their goal of staying healthy. Five studies provide support for the proposed research and the underlying theory.

This work has several managerial and policy implications. Both bonus packs and price discounts are categorized as different forms of price discrimination strategies that retailers use to increase profitability because both provide a savings benefit to the consumers. The findings suggest that because consumers do not perceive these two promotions similarly, managers might benefit from offering a price discount for vice foods and a bonus pack for virtue foods. By offering bonus packs with virtue foods, managers can not only increase sales but also improve brand image; consumers will feel good after consuming virtue foods and might attribute the positive emotions to the brand. From a policy standpoint, this research provides insights that can benefit both marketers and consumers. At a time when consumers are looking for ways to increase virtue food intake and society is struggling with concerns of obesity and related health issues, marketers can guide consumption by providing a bonus pack instead of a price discount on virtue foods. These findings indicate that by providing a price discount on vice food, consumers can indulge their wants in moderation. By controlling their consumption of vice food, consumers may be faced with a detrimental situation of self-control failure. A price discount allows consumers to justify their purchase of a vice food, helps them consume vice food in moderation and reduces their chances of self-control failure.