Certain Incentives vs. Uncertain Incentives

Abstract

Among sales promotion tools, both certain and uncertain incentives are frequently used by firms. On the one hand, certain incentives refer to incentives for which consumers can always get rewards. By contrast, uncertain incentives refer to incentives for which consumers can get rewards by lottery. Most studies on incentives have focused on risk-aversion among consumers and have claimed that consumers prefer certain incentives over uncertain ones, because the latter are associated with the risk of not always getting the desired rewards. However, in recent years, an increasing number of studies have shown more positive tendencies towards uncertain incentives. In view of the growing practical and academic interests in incentives, it is helpful to review the research findings on incentives to date, and to clarify the remaining problems. Therefore, this paper provides an overview of studies that show positive tendencies towards certain and uncertain incentives, pointing out that future studies are necessary to develop a new research stream.

Keywords

• sales-promotion
• certain incentives
• uncertain incentives
• uncertainty
• risk