Managing Promotional Offers and Finding the Equilibrium

Will consumers buy at full retail price? Not if you’ve trained them to expect discounts. I’m a loyal customer of Borders who now waits for a discount before purchasing. Why? Because I buy so frequently, there's always a discount coupon waiting for me in my inbox. Now that I’m a platinum member and get an extra 10 percent off, I'm torn about making a purchase at a regular bookstore. I’ve come to expect 40 percent off every purchase I make at Borders. I even buy the Sunday New York Times there to save $2.00. The upside to Borders is that I’m loyal to their discounted prices. Note that Borders did file for bankruptcy in February.