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Executive Summary
The notion that targeted deals are more efficient than across-the-board sales promotions that provide unnecessary discounts to price-insensitive consumers has prompted a dramatic growth in customized pricing and sales promotions. Recently, however, questions have been raised regarding the efficacy of targeted offers in general and customized price promotions in particular. Thus, whether companies should rely on customized promotions remains an open question, highlighting the need for additional research into how consumers respond to targeted discounts as well as the contingencies that might affect their response to these offerings. In this regard, a variable that has received little attention in the literature is the relative exclusivity of targeted price promotions. Because such promotions are offered selectively to some consumers (i.e., deal recipients) but not to others (i.e., deal nonrecipients), targeted price promotions involve a level of exclusivity that surpasses that associated with more inclusive (i.e., undifferentiated) offers. An important question is whether exclusivity influences the response of deal recipients to targeted price promotions. To provide insight into this issue, the current research conceptualizes and empirically demonstrates that deal exclusivity can positively affect recipients’ evaluations of customized discounts, resulting in a preference for exclusive offers over inclusive promotions (Study 1). The authors also identify factors used in decisions pertaining to the delivery of targeted offers (e.g., customer demographics, transactional histories) that shape the specific conditions under which targeted deals may be viewed more, equally, or less favorably than inclusive offers. Specifically, in a retailing context, a preference for exclusive deals is observed for consumers adopting independent self-construals (Study 2) and for male consumers with a history of purchasing from the marketer (Study 3). In contrast, inclusive offers were favored over exclusive discounts by consumers with interdependent self-construals (Study 2) and female consumers who had frequently patronized the marketer in the past (Study 3). Finally, exclusive and inclusive offers were evaluated similarly when consumers had made minimal purchases from the marketer (Study 3). The authors also present evidence indicating that these exclusivity effects arise through a self-enhancement process (Study 3). In addition to its theoretical import, this research has considerable pragmatic implications. If exclusivity uniformly enhances consumer response, firms can improve the efficiency of their marketing efforts by offering targeted promotions because deal response gains would be achieved without an increase in marketing cost. However, in demonstrating that the effectiveness of exclusive deals is circumscribed to specific consumer segments and marketplace conditions, this research highlights the importance of marketers being aware of these contingencies as a means to better understand when targeted deals will yield desirable levels of return on investment.

Biography
Michael J. Barone (PhD, University of South Carolina) is Associate Professor of Marketing and University Scholar at the University of Louisville. Dr. Barone’s research, which focuses on branding and consumer decision making, has been published in the top marketing journals, including Journal of Marketing, Journal of Marketing Research, and Journal of Consumer Research. Based on his research productivity, he has received the “High Honors” distinction on the Honor Roll of Consumer Researchers and has been named one of the top 25 advertising researchers of the past decade. Mike serves on the editorial review board for several of the leading journals in the discipline and has been named “best reviewer” in this capacity. Dr. Barone has provided consulting services to a variety of companies (including Fortune 100 firms) and has served as an expert witness for numerous legal cases, including several involving intellectual property issues.

Tirthankar Roy (PhD, University of California, Los Angeles) is Assistant Professor of Marketing in the College of Business at Iowa State University. He was previously a member of the marketing faculty in the Ross School of Business at the University of Michigan. His research includes the use of multiple research methodologies to study targeted price promotions, repeat purchase reward programs, the impact of customer privacy legislation, bundling, and the limits of reputation mechanisms.

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