THE TRADE-UPGRADE FRAMING EFFECT ON PURCHASE DECISION MAKINGS

Abstract

When making decisions, consumers often do not follow principles of normative economic theories but those of behavioral ones. Framing effect – one of the most robust phenomena in behavioral research – has been found to influence consumers’ choices and judgment in purchase decisions. In price promotion practices, however, it is not well understood whether framing a product replacement purchase as a trade-in or an upgrade affects consumers’ purchase decision making process. This dissertation research aims to explore the trade-upgrade framing effect on product replacement purchase decisions and to examine the mechanisms through which such effect manifests itself. The results have demonstrated that consumers prefer a price promotion framed as upgrade to a financially equivalent one framed as trade-in, especially when the upgrade promotion is presented after the trade-in one. Furthermore, the framing effect and order effect are mediated by affect and influenced by cognitive focus, semantic cues, and systematic processing. The theoretical and practical implications are discussed at the end.