Does Discount Really Increase Sale? The Influence Of Discount Type And Level On Internet Travel Product: Corporate Image And Service Guarantee As Moderators

Modern market competition is violent, the enterprises, which are in condition of facing numerous entrepreneurs who provide analogous/similar products and services, in order to obtain consumers' favor and attention need to use effective promotions and thus have the opportunity to make a deal. Specialists say that discounts is one of the major instruments to increase short-term sale, in practice the enterprises mostly use sales promotion.The internet technologies are commonly used lately, because they can change consumers' purchase habits. Internet became a space of fight between enterprises and their internet marketing technologies so it can be said that the internet has already become another source of enterprise profits. Analyzing online markets we can point out that consumers usually take into consideration the three mentioned above ways of promotion.The travel industry management competition is violent too, thus most tourist companies like other industries use the sales promotion as the main marketing method. But the discount can have different influence on the consumers, as well as the consumers' attitude towards the discount. The research shows that the enterprises use the sales and discount promotion strategy to influence consumers' assessment of corporate and brand image, purchase intention and client's loyalty to the brand.At the same time we should say that because the online tourism product has such a special characteristic as high risk, the discount though lower the risk, but the low price can produce hesitation in service quality and thus influence the effect of the discount. In this case the central interest in the current research is to investigate whether the usage of discounts in online tourist product sales have a positive or on the contrary the negative effect on consumers' purchase intention; furthermore, we ask the question, can the discount influence company brand awareness or the reliability of the consumers? Besides, another question is whether the discount can produce an effect on service quality guarantee or service failure compensation.To perform the experiment for this research we used university students of northern Taiwan. The goal of this research is to answer clearly to the raised questions. Research management implication is also discussed.The main focus of this research is the students of Taiwanese univiersities. For the graduation travel 75 per cent of them choose to go travelling outside Taiwan, usually in tourist groups, so it can be said that Taiwanese students know about the package tourism. Thus, their experience is the main focus of our research.Because we have already chosen Taiwanese students experience in going traveling abroad, we try to investigate what is risk perception and how does purchase intention change when Taiwanese students go online and see group all-included tourism online products promotions through internet. Then we collect the material and in the end draw the conclusions.640 copies of the research questionnaire were printed, but when all of them were collected and invalid ones were deducted, the recycle rate of 80 per cent was found.The main finding is that discount type will influence consumers' perception. It turns out that when cash discount explanation is added in volume discount method, consumers risk perception shows that in this case volume discount method is better. The same is with the previous conducted researches which showed that cash discount model is better than volume discount model(Chen et al., 1998; Gendall et al., 2006; DelVecchio et al., 2007; Gendall et al., 2006; Li et al., 2007).Furthermore, this research shows that when selling group tourism all-included online products, consumers' receive high risk perception and low purchase intention. In fact, the higher risk perception is, the lower purchase intension will be. Previous studies showed that discounts attract consumers' attention (Bearden, Liechtenstein and Teel, 1984; Drozdenko and Jensen, 2005; Hu et al., 2006), lower risk perception(Chen et al., 1998; Gendall et al., 2006; DelVecchio et al., 2007) and increase purchase intention(Gupta and Cooper, 1992), thus, the more discount promotion appears the better it is for future sales. However, recent studies showed that when there's too much discounts it can on the contrary increase consumers' risk perception, and they may think that low price comes with low quality (Drozdenko and Jensen, 2005) and may change purchase intention (Bearden, Liechtenstein, and Teel, 1984; Drozdenko and Jensen, 2005; Hu et al., 2006).The finding of this research is that when speaking about online sales, high discount produces negative promotion results, low price from high discount will increase consumers' risk perception especially in the high price traveling service. High discount only makes them being afraid of purchasing the online traveling service.It is commonly known that good company image builds consumers' loyalty and decreases their uncertainty in purchase decision-making (Loudon and Bitta, 1988; Roberton and Gatignon, 1986). In this research we also found out that bad company image, on the contrary, would increase risk perception and thus change purchase intention and consumers' will. Therefore, online purchasing, company image is one of the main factors to influence consumers' will whether to buy package tour or not.Another finding is that in the case of selling package tour all-included online products a company whether promotes a service guarantee or not, the research result found that it is no difference between their risk perception and purchase intention. It means that when a consumer sees a guarantee service promotion on the web-page there's still a doubt in his mind. The guarantee can not lower the uncertainty feeling of consumers.To summarize, this research extended the results of the previous studies concerning the influence of discount type and level in traditional physical channel to the new virtual channel, internet. In addition, this research showed what can change consumers' purchase intention, risk perception when they are purchasing online. The corporate image is better than service guarantee. So it can be said that this study is a step forward in understanding consumers' psychology and purchase decision-making.