Hypothesis 1: Given a certain discount, customers preference of a product category over

another will depend on the characteristic of the product category; whether or not it is a look-

and-feel product.

According to literature, Look-and-feel products, on average, have lower internal reference

price and wider acceptable price ranges as compared to non-look-and-feel products (Kang

and Jung, 2015). This was exactly what we found at discount level of 20% but at deeper

discount levels (50% and 80%), the percentage of customers preferring look and feel products

came down, contrary to our expectations. This discrepancy and the possible reason behind

this are explained in section .

Choice between Jeans and Watch at various discount

levels
80%
70%
60%
% repsondents

50% Jeans
40%
Watch
30%
20% Indifferent
10%
0%
0% 20% 50% 80%

Hypothesis 2: Customer preference for a product category at a particular discount will depend

on the maximum acceptable discount for that category.

Logistic Regressions were done independently for the choices at 20%, 50% and 80% against

the independent variables taken to be maximum acceptable discounts for the jeans and watch.

The results were not reliable as the R-squared coefficients were too low. For instance, as can

be seen below the Logistic regressions R-squared value for 20% discount was around 3-5%.

R-Sq (L) 0.029319

R-Sq (CS) 0.035115
R-Sq (N) 0.049841
Hence this hypothesis couldnt be proven. However, related to the maximum discounts, another

interesting trend was observed which is described in section .

Hypothesis 3: The customer preference of certain discount is based on in his inherent value

consciousness and his discount proneness.

No significant differences in the behavioural attributes of VC and CP could be found, even

after using various means to determine the same. Possible reasons could be the size of the data

(83 respondents) falling well short for a meaningful glimpse of each of these sub-categories.

Using t-test the means could not be proven to be unequal. For instance, in the table, the

comparison through t-test was done between Coupon proneness (CP) of 20% discount and 50%

discount. The p-value was higher than the alpha value of 0.05, implying that the null hypothesis

of equality could not be rejected. Hence this hypothesis could not be proven.

20%
Row Labels Average of CP Average of VC
Jeans 32.29787234 36.44680851
Indifferent 30.5625 36.375
Watch 29.9 35.85
Grand Total 31.38554217 36.28915663
50%
Row Labels Average of CP Average of VC
Jeans 30.95121951 36.12195122
Indifferent 29.92307692 32.92307692
Watch 32.65517241 38.03448276
Grand Total 31.38554217 36.28915663
80%
Row Labels Average of CP Average of VC
Jeans 30.8125 37.71875
Indifferent 31.63157895 33.78947368
Watch 31.8125 36.34375
Grand Total 31.38554217 36.28915663

t-Test: Two-Sample Assuming Unequal Variances

20% 50%
discount discount
choice choice
 Mean 30.95122 32.29787
Variance 24.39756 28.34413
Observations 41 47
Hypothesized Mean Difference 0
df 86
t Stat -1.23028
P(T<=t) one-tail 0.110974
t Critical one-tail 1.662765
P(T<=t) two-tail 0.221947
t Critical two-tail 1.987934

Hypothesis 4: The customers intrinsic behaviour of whether he displays loss aversion or not,

will determine his preferences for one product category over other at a particular discount

level.

The risk-averse category of customers were the only sizable segment in the survey-takers

from which meaningful insights could be drawn. It was not possible to compare across risk

segments because the other segments (mixed and risk-prone) had under 20 members falling

in their categories.

However, if the analysis is focussed only on risk-averse customers, then it can be observed

that at lower discounts, risk-averse customers are predominantly preferring jeans (touch-and-

feel product) whereas, at higher discounts there is more or less equal preference between

jeans and watch. This is counter-intuitive, because touch and feel products have a wider range

of acceptability and even according to our findings the maximum acceptable discount is

higher for jeans than for watch (see ). This discrepancy has been explained in section .

As a conclusion to this section, the hypothesis-4, as stated, cannot be proven.

20% choice
Grand
Row Labels Jeans Indifferent Watch
Total
Risk-averse 61.40% 14.04% 24.56% 57
Mixed 37.50% 37.50% 25.00% 16
Risk Prone 60.00% 20.00% 20.00% 10
Grand Total 56.63% 19.28% 24.10% 83

50% choice
Grand
Row Labels Jeans Indifferent Watch
Total
Risk-averse 47.37% 21.05% 31.58% 57
Mixed 43.75% 6.25% 50.00% 16
Risk Prone 70.00% 0.00% 30.00% 10
Grand Total 49.40% 15.66% 34.94% 83

80% choice
Grand
Row Labels Jeans Indifferent Watch
Total
Risk-averse 38.60% 22.81% 38.60% 57
Mixed 43.75% 31.25% 25.00% 16
Risk Prone 30.00% 10.00% 60.00% 10
Grand Total 38.55% 22.89% 38.55% 83