Typology and Ranking of Different Price Discount Formats: A Mixed-Methods Study

Objective
In recent years, various approaches have been used to implement marketing activities and achieve companies' sales goals. One of the most widely adopted strategies is using different discount formats. A key challenge for companies is the effective utilization of product-appropriate discount formats. The lack of coherent knowledge about the types of discount formats and their impact on sales motivates this research. This study employed a mixed-methods approach and was conducted in two consecutive phases: qualitative and quantitative. One of the key issues in price discounts is framing them correctly and using appropriate formats that align with the product and discount conditions to maximize their effectiveness. Therefore, it is crucial to provide a comprehensive list of discount format types and consult sales experts to assess their effectiveness.
 
Methodology
A mixed-methods approach was used, and the research was conducted in two consecutive phases. The first stage was carried out by systematically reviewing studies carried out in the last 10 years and using the three-step process of Turnfield et al. (2003), through which 87 articles were selected and analyzed. Then, the typology method was used for classification. To implement the typology stage, discount formats in the articles were coded using MAXQDA software, and a total of 55 codes for various discount formats were identified. This comprehensive list of discount codes is essential for the next step of researching and ranking discount formats. The codes of various discount formats were classified in a matrix based on the opinions of professors and experts, and the typology of discount formats was performed. The logic of the typology is based on whether the discount is cash or non-cash and the type of discount dependency (depending on the time of purchase, type of product, etc.). In the second stage, a quantitative study was conducted with a community of sales experts, and data was collected through a questionnaire. The discount formats identified in the first step were ranked, and the most effective discount formats on the company’s profit were identified, using the fuzzy TOPSIS method. Theoretical validity was assessed by gathering experts' opinions through theoretical pluralism. Quality was also evaluated by assessing reliability. To determine reliability, a doctoral student in Business Administration with a background in coding was invited to participate and we used the intra-subject agreement method of two coders (repeatability index), which was deemed acceptable with a reliability percentage above 60%. Moreover, the reliability of the codings was determined, and it can be claimed that the reliability of the articles’ analysis is acceptable through the systematic review. Of the 87 reviewed articles, 344 codes were extracted, of which 55 were non-repeated. The researchers asked the coding colleague to code 5 articles, and the results are presented in a table showing the reliability percentage. In the second phase, using the fuzzy TOPSIS technique, the decision matrix is purely a mathematical matrix through which the options are evaluated against the criteria. Therefore, the conceptual variable is not measured by criteria like statistical questionnaires, but only the score of each option in each criterion is determined by an expert. It does not represent a statistical questionnaire. Hence, since it is not a questionnaire, the validity and reliability do not apply to the decision matrix.
 
Findings
Based on the data analysis, in the first phase, the identified discount formats were classified into six categories, and in the second phase, the ranking list of ten selected formats was obtained. In the second stage of the research, after analyzing the data, managers and business experts were consulted to determine how and in what order they prioritized discount formats based on their impact on the company's profit. The results revealed the following prioritization: 1) Cash discount, 2) Percent discount, 3) Volumetric discount, 4) Event discount, and 5) Discount on customer performance.
 
Conclusion
If companies wish to implement discount programs in sales, they must first evaluate the suitable discount formats and then select the most appropriate one with careful consideration. Managing discounts by considering factors such as discount type, threshold, and timing can help prevent profit leakage and maximize the value provided by the firm