The Power of Purchase Limits
Anchors in Price Promotions
In our ongoing exploration of consumer behaviour we have stumbled upon a fascinating phenomenon reported by Wansink, Kent & Hoch (1998). They have shown that purchase limits act as anchors where consumers tend to adjust their purchase quantity downwards from the communicated purchase limit. And the result?
For example, a purchase limit of 4 can result in a volume uplift of 45%, while a limit of 12 can result in a staggering uplift of 158%. And when combined with discounts framed as losses (e.g. “Save $10”), purchase limits can be even more effective at driving sales.
Of course, there may be other factors at play as well, such as the scarcity effect. But by recognizing the power of purchase limits, retailers and consumer packaged goods companies can create more effective promotions strategies and drive greater volume. So if you are looking to boost your sales, consider adding purchase limits to your price promotions.
Author
Pim is the co-founder of RGM Consulting and a core member of the global executive leadership team. In the leadership team he oversees: sales, research & knowledge development, marketing, and delivery.
Pim has extensive experience supporting leaderships teams across the globe, having worked on projects in Europe, Latin America, and Africa. Through his work, Pim has developed expertise in revenue growth management, business turnarounds, innovation management and marketing. Furthermore, he has deep expertise in the consumer goods industry.
Expertise
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- Revenue Growth Management
- Business Strategy & Transformation
- Business Turnaround
- Innovation Management
Education
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- Master of Philosopy in Business Research (graduated cum laude)
- Master in Business Administration (graduated cum laude)
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