Abstract:
The aim of this research study is to determine the effect of price promotions on
customer channel utilisation in retail banking and how different types of message
framing improve the effectiveness of price promotions. The goals of this research are
to: 1) provide additional empirical evidence of whether the prospect theory’s loss
aversion is applicable in price promotions; 2) to identify the most effective message
framing/s in price promotions.
Price promotions have been identified as the most effective mean of increasing sales
and utilisation by retailers. It is well accepted that price promotions increase in
effectiveness when coupled with the appropriate type of message framing. This
research confirmed the effect of price promotions to be true and applicable in the
retail banking industry. It showed that different types of message framing can
improve the results of price promotions.
An experiment was conducted with four groups to test the main effects of the different
types of message framing. The results of the study confirmed the first research
hypothesis, demonstrating that price promotions have a significant effect on the
customer channel utilisation mean. A significant increase in mean customer channel
utilisation was observed for both the positive goal-framed price promotion and the
risky choice framed price promotion (where promotion benefits are static and known
upfront by all customers).
The original ‘loss aversion’ premise of prospect theory (which postulates that
customers are more prone to take up negative-framed promotions than positiveframed
promotions) was refuted by the results.
The implications of the study for retail bank executives and marketing managers are
discussed in the final chapter. Recommendations are provided for the bank
executives and marketing managers. Recommendations are also provided for how
to carry out future research.
