Impact of “High Quality,Low Price” Appeal on Consumer Evaluations

Marketers frequently adopt a “high quality, low price” appeal in advertisements. However, the price–quality inference theory implies that this contextual appeal may not be well-accepted by consumers because it contains two contradictory cues: high quality and low price. This article investigates how consumers evaluate this appeal through two laboratory experiments. Study 1 shows that the appeal leads to favorable price perceptions and purchase intentions when the product price is high; it leads to high quality perceptions when the price is low. Study 2 shows that these effects are salient when consumers have a weak price–quality schema or a low need-for-cognition.     

EDITOR'S COMMENTS

ABSTRACT

The key to improving pricing methods lies in establishing a clear relationship between the price paid by customers and the value received. A company's understanding of how a decision in its pricing policy will affect the perceptions its potential consumers will have of these prices, is fundamental if it wishes to make sure that its offer is properly perceived. Thus, if companies identify the rules used by purchasers to price their products, they will be successful in getting the objective signal they send via their communication strategies to be perceived in the desired manner. This analysis shows that both monetary and non-monetary costs are considered by consumers when determining the final cost perception associated with the acquisition of a good, and that the understanding of the internal reference price is essential for determining the nominal price effect on the monetary component of total sacrifice.     

Plausible versus implausible tensile price claim: Selective accessibility model approach

Retailers frequently use exaggerated price discount advertisements with a tensile price claim (TPC; e.g., “Save up to 70%”) to attract consumers because they expect that once consumers enter a store, they will purchase low‐ or medium‐discounted products. Drawing on the selective accessibility model, this study investigated the way in which an implausibly high maximum level of savings stated in a TPC influences consumers’ expected price discount (EPD) and perceptions of actual price discounts across different types of TPCs (i.e., TPC stating a maximum level and TPC stating a range of savings). This study also investigated two situations in which consumers have previous knowledge of a product’s price discount versus when they have less or no knowledge of the discount. For both conditions, a single‐anchor TPC (i.e., “Save up to Y%”) that stated an implausible maximum level of savings led to a higher EPD and lower perceptions of the deal (i.e., perceived savings, price fairness, and perceived value) with respect to the actual price discount than did a TPC with a plausible maximum level of savings. In contrast, when the TPC stated two anchors (i.e., “Save X–Y%”) and consumers had knowledge of the price discount, their EPDs assimilated only toward the plausible anchor (X), and ignored the implausibly high maximum price discount (Y), resulting in a lower EPD and higher perceptions of the deal of the actual price discounts than a TPC that stated a plausibly high maximum level of savings. In contrast, when consumers had no knowledge of the price discount, their EPDs only adjusted toward the more plausible anchor (X), regardless of whether they perceived the maximum anchor as plausible or implausible. Thus, there was no difference in consumers’ perceptions of “Save X–Y%” between implausibly and plausibly high Y%.     

Higher quality or lower price? How value-increasing promotions affect retailer reputation via perceived value

Marketers often attempt to increase consumers' perceptions of value by raising the quality or reducing the price of products. Five studies demonstrate that consumers are generally more sensitive to lower-price promotions than to higher-quality promotions as they form their perceptions of retailer reputation (Study 1), that the perceived value mediates this effect (Study 2), that store image (prestigious vs. thrifty) moderates the effect (Study 3), and that perceived price level (Study 4) and quality level (Study 5) independently drive the moderating effect of store image.     

The impact of risk perceptions on the attitude toward multi-channel technologies

ABSTRACT

Several studies show that retailers experience favorable outcomes if consumers use multiple channels. Thus, retailers aim to encourage consumers to do so in a convenient way by offering multi-channel technologies (MCTs). However, not much is known about what affects a positive attitude toward such technologies. Our study investigates how different risk perceptions influence the attitude toward specific MCTs in comparison (check and reserve, click and collect, availability check). Moreover, we examine whether the customer’s general purchase channel preference moderates these effects. Results show that three risk dimensions have significant impacts on the attitude toward MCTs. These effects are generally worst for click and collect, as the negative effects (product quality and data risk) are highest, while the positive effect (product availability risk) is lowest, compared to the other two MCTs. Additionally, we generally find that the more a customer prefers buying via the online channel, the weaker the effects of the risk dimensions on the attitude are. Our findings provide implications on how to improve consumers’ attitudes toward the selected MCTs by influencing their perceptions of different risk dimensions.     

Understanding How Goal‐striving,Goal Orientation,and Shame Influence Self‐perceptions after Exposure to Models in Advertising

Marketers frequently use advertisements featuring thin models to promote the goal of self‐improvement to consumers. However, many of these appeals lead to detrimental effects on the self‐perceptions of the females who view them. This paper integrates components of goal‐striving theory and social comparison theory to explain consumer response to these advertisements and investigates how goal attainability may mitigate the negative effects of these ads. Additionally, this work investigates how a promotion‐focus goal orientation moderates the effects of the goal‐striving process and provides evidence of the mediating effects of shame. Finally, this work addresses a gap in the literature by examining how the interplay of model size and goal attainability impacts male consumers’ self‐perceptions. Study 1 reveals that high levels of perceived goal attainability mitigate the negative effects of exposure to thin models on self‐perceptions for females. Study 2 demonstrates that a high promotion‐focus goal orientation can lead to more favorable self‐perceptions for female participants exposed to a thin model with attainable goals, but it does not isolate participants from feelings of shame, which mediates the effects of goal attainability on self‐perceptions. Study 3 reveals similar findings for male consumers, but notably finds that shame does not play a significant role in understanding the comparison process for male consumers, suggesting key differences in the comparison processes between sexes.     

The influence of redundant comparison prices and other price presentation formats on consumers’ evaluations and purchase intentions

Two studies explore the conditions under which redundant reference price information (ARP) is likely to influence consumers’ perceptions of an advertised sale price. Study 1 suggests that an ARP enhances offer-value, but only for consumers who are not involved with the product. Study 2 incorporates a wider array of price presentation tactics (SP Only, SP+ARP, SP+%Saving and SP+ARP+%Saving) and investigates a range of responses (transaction value, acquisition value and subsequent purchase intentions). Again, results suggest that ARP only influences perceived transaction value, and saving information only impacts purchase intentions. Most importantly, these effects are seen only when involvement is low.     

The effects of competitive context on consumer response to price changes

ABSTRACT

This paper aims to understand how a brand’s price level, relative to its competitors, will affect consumers’ responses to price changes of the brand. The study uses experiments to examine brand choice responses to price increases and decreases across contexts differing in competitor brands and their respective prices. These experiments are conducted with six consumer goods categories. The research identifies three key factors that affect the size of responses to brand price changes – (1) passing a competitor brand’s price, (2) narrowing versus widening the price gaps with competitors, and (3) whether competitors are predominantly higher or lower priced brands.     

A structural analysis of value orientations,price perception and ongoing search behaviour: a cross‐cultural study of American and Korean consumers

The direct impact of value orientations on price perceptions has not received extensive investigation in previous research. We examined the impact of materialism, individualism and collectivism on American and Korean consumers’ perceptions of the positive and negative roles of price. We also examined the influence of price perceptions on consumers’ ongoing search behaviour. Using a structural equation modelling technique, results indicated that these value orientations positively and negatively influenced perceptions of the positive and negative roles of price, which in turn influenced ongoing search behaviour. Implications and future research directions are delineated.     

Do ethics drive value co-creation on digital sharing economy platforms?

PurposeSharing economy is surging and so are the consumers’ ethical concerns regarding such platforms. The current study examines the antecedents of consumers’ intention to co-create value that include consumers’ ethical perceptions constructs (i.e. privacy, security, fulfillment/reliability, shared value, service recover, and non-deception) and relationship quality constructs (trust, satisfaction, commitment), focusing on the digital sharing economy platforms.MethodologySurvey method was applied to gather data from n=348 consumers at digital sharing economy platforms. Structural equation modelling technique through Amos version 24. was employed in order to further analyze the data.FindingsResults reveal that consumers’ ethical perceptions as a second order construct comprising of privacy, security, fulfillment/reliability, service recovery, and shared value does not influence consumers’ intention to co-create value. However, relationship quality as a second order construct including commitment trust and satisfaction influences consumers’ intention to co-create value. Furthermore, relationship quality serves as strong full mediator between consumers’ ethical perceptions and their intention to co-create value.OriginalityThe studies on drawing relationships between value co-creation and relationship quality constructs have been popular yet to the authors’ surprise; seldom any studies have been conducted in examining the role of ethical perceptions in the settings of digital sharing economy platforms. Therefore, the current study closes this gap.     

When consumers penalize not so green products

To cash in on consumers’ willingness to pay higher prices for green products, several companies are promoting conventional products as green by highlighting a few green attributes. Through a theoretical lens, the authors investigate how consumers perceive such attempts. This research illustrates that not so green products make consumers sensitive to the monetary sacrifice associated with the purchase of such products. The current research shows that consumers have a negative attitude toward such products and they become concerned about the ethicality of the company when they encounter such products. Both implicit and explicit measures suggest that consumers notice the company's motive behind such practices which, in turn, impacts their price perceptions.     

An Exploration of U.S. Consumer Perceptions and Affect: Two Forms of a Soy-Based Food Product

ABSTRACT

This article focuses on a consumer comparison of fresh tofu and frozen tofu, and the investigation of consumer perceptions of and responses to, both products. A literature review of consumer perceptions and attitudes toward soy products was carried out. Consumer perceptions and affect were then qualitatively investigated using separate focus groups composed of “soy-users” and “health conscious” consumers. Extensive taste tests of the product, using five different recipes, comparing and contrasting frozen versus fresh forms of tofu were conducted to obtain sensory evaluations. The results indicate that many consumers are unfamiliar with the product, yet tofu is perceived to be an acceptable food for those inclined to use soy-based products, as well as those who are otherwise healthy eating conscious. In taste tests, it was found that the recipes in which tofu was disguised were preferred. In addition, frozen tofu was generally found not to be perceived as markedly different from the fresh product. Implications of the findings for marketing fresh and frozen forms of tofu are discussed.     

The Impact of Stress on Consumers' Willingness to Pay

Stress is a companion in most consumers’ lives and as such should impact purchase behavior in many ways. Drawing on construal‐level theory, which relates to information processing on different levels of abstraction, the authors propose that consumers’ stress deteriorates their evaluation of products. The latter effect results from a stress‐induced focus shift, from product characteristics with high levels of construal to those with low levels of construal (Study 1). This shift also decreases the price that consumers are willing to pay (Study 2), though the product category moderates the impact of stress on willingness to pay (WTP), such that the decline in consumers’ WTP is smaller for products characterized by lower levels of construal (Study 3). This research extends existing knowledge on the impact of relaxation on consumers’ WTP by including stress in the analysis. Effect sizes are similar to those in related studies. In terms of managerial implications, this study recommends decreasing consumers’ stress levels at the point of purchase and tailoring marketing mix activities to match prevalent stress levels, if firms hope to mitigate the negative effect of stress.     

Examining store atmosphere appraisals using parallel approaches from the aesthetics literature

ABSTRACT

Drawing on the aesthetics literature, this study examines how typicality, novelty, unity and variety help to explain consumers’ aesthetic pleasure and approach/avoidance behaviours. Comparisons are made between consumers’ perceptions of actual store designs in a recently remodelled fashion store and that of an older, established store prototype owned by the same retailer. The research findings establish how novelty, typicality and variety confer aesthetic pleasure and approach behaviours in-store atmosphere appraisals contexts where there is a limited introduction of novelty, with one established prototype. The findings also suggest that moderation effects explain that consumers who place a greater value on the importance of design evaluate the novelty and aesthetic pleasure association differently compared to consumers with less design value orientation.     

Deterring deviant consumer behaviour: when ‘it’s wrong,don’t do it’ doesn’t work

ABSTRACT

Tactics to deter deviant consumer behaviour have received limited attention in the literature despite deviance being an ongoing problem in the marketplace. Across two studies, the findings suggest there is a heterogeneous response to the rules placed on consumers’ behaviour, which manifests from an absence of consensus among consumers on what is right and wrong behaviour undermining the it’s wrong, don’t do it approach to deterrence. Further, risk perceptions of being caught and punished are low, if not absent, undermining the you will be caught and punished approach to deterrence. Alternate underlying mechanisms were tested and found to influence deviant consumer behaviour (perceived prevalence, perceived outcomes and moral identity), which could underpin alternate deterrence tactics, including social proofing, moral triggers and humanising the victim.     

The impact of advertising on consumer price sensitivity in experience goods markets

In this paper we use Nielsen scanner panel data on four categories of consumer goods to examine how TV advertising and other marketing activities affect the demand curve facing a brand. Advertising can affect consumer demand in many different ways. Becker and Murphy (Quarterly Journal of Economics 108:941–964, 1993) have argued that the “presumptive case” should be that advertising works by raising marginal consumers’ willingness to pay for a brand. This has the effect of flattening the demand curve, thus increasing the equilibrium price elasticity of demand and the lowering the equilibrium price. Thus, “advertising is profitable not because it lowers the elasticity of demand for the advertised good, but because it raises the level of demand.” Our empirical results support this conjecture on how advertising shifts the demand curve for 17 of the 18 brands we examine. There have been many prior studies of how advertising affects two equilibrium quantities: the price elasticity of demand and/or the price level. Our work is differentiated from previous work primarily by our focus on how advertising shifts demand curves as a whole. As Becker and Murphy pointed out, a focus on equilibrium prices or elasticities alone can be quite misleading. Indeed, in many instances, the observation that advertising causes prices to fall and/or demand elasticities to increase, has misled authors into concluding that consumer “price sensitivity” must have increased, meaning the number of consumers’ willing to pay any particular price for a brand was reduced—perhaps because advertising makes consumers more aware of substitutes. But, in fact, a decrease in the equilibrium price is perfectly consistent with a scenario where advertising actually raises each individual consumer’s willingness to pay for a brand. Thus, we argue that to understand how advertising affects consumer price sensitivity one needs to estimate how it shifts the whole distribution of willingness to pay in the population. This means estimating how it shifts the shape of the demand curve as a whole, which in turn means estimating a complete demand system for all brands in a category—as we do here. We estimate demand systems for toothpaste, toothbrushes, detergent and ketchup. Across these categories, we find one important exception to conjecture that advertising should primarily increase the willingness to pay of marginal consumers. The exception is the case of Heinz ketchup. Heinz advertising has a greater positive effect on the WTP of infra-marginal consumers. This is not surprising, because Heinz advertising focuses on differentiating the brand on the “thickness” dimension. This is a horizontal dimension that may be highly valued by some consumers and not others. The consumers who most value this dimension have the highest WTP for Heinz, and, by focusing on this dimension; Heinz advertising raises the WTP of these infra-marginal consumers further. In such a case, advertising is profitable because it reduces the market share loss that the brand would suffer from any given price increase. In contrast, in the other categories we examine, advertising tends to focus more on vertical attributes.

I guess that is fair: How the efforts of other customers influence buyer price fairness perceptions

Past research has demonstrated that consumers' price fairness judgments are influenced by comparisons between the offer price they receive and the prices paid by other consumers for the same product offering. In today's digital age, reference points for purchases are more prevalent than ever. However, investigations on how certain inputs of the transaction affect these judgments is lacking. Specifically, extant research has failed to account for how the purchase efforts of other consumers can influence one's own price fairness evaluations. Moreover, relatively little empirical research has endeavored to understand the simultaneous cognitive and affective processes that explain how consumers arrive at price fairness judgments. To address these gaps in the literature, we introduce two studies aimed at understanding the process through which the salient efforts of referent consumers serve to mitigate perceptions of price unfairness when two customers pay different prices for the same product. The findings support a dual‐process model whereby the efforts of other (referent) customers serve to simultaneously reduce buyer anger and increase buyer understanding of the price disparity, ultimately mitigating perceptions of price unfairness.     

Would you believe it? A detailed investigation of believability in comparative price advertising

Abstract

The construct of believability has been shown to be a key variable in consumers' evaluations of comparative price offers. This paper provides a detailed investigation of believability in the context of such offers. In particular, it investigates the impact of the presence of, level of, and type of advertised reference prices (ARPs) on believability across a range of product contexts. An experimental methodology is adopted for the study. Findings show that the presence of an ARP does not enhance believability but that the presence of a time limit does. Believability is also shown to vary inversely with the level of ARP but is not related to semantic cues, such as list prices, contained within the offer. The study provides evidence that the product context of the offer impacts on believability. Two interaction effects are also identified. The paper contributes to the extant literature by providing new insights into how consumers' believability is influenced by how a comparative price offer is presented. Such insights will be of interest to academics interested in pricing, practitioners seeking to ensure that their promotions have maximum impact, and policymakers hoping to ensure that consumers are not misled by dishonest comparative price advertising.     

Does shape in backgrounds matter? Effects of Shape–Taste congruence on product evaluations

While previous studies have examined the correspondence between shape and taste perceptions, the effects of shape–taste congruence on product evaluations remained underexplored. This research investigates whether and when shape–taste congruence in product display background can increase product evaluations. Study 1 shows that shape–taste congruence can intensify product evaluations. Study 2 shows that feelings of pleasantness work as a mediator between shape–taste congruence and product evaluations. Study 3 shows that consumers’ design sensitivity moderates the relationship between shape–taste congruence and product evaluations. Our results shed light into shape–taste perception and product display strategy, thus helping marketers and retailers to customize their brand strategy to communicate more effectively to customers.     

Currency Substitution and Price Endings: Right Digit Effect

ABSTRACT

The strategic manipulation of prices. rightmost digits has been a tactic used by retailers in the western world for decades. By studying the internationalization of pricing tactics in a global economy, our research adds a much needed contribution to the literature of price endings and pricing tactics in global markets. We find that at lower price levels, consumers exposed to a 99 ending price in a currency substitution market are more likely to purchase the product compared to consumers in the US market. At higher price levels, on the other hand, consumers in either market situation exhibit no change in purchase intentions. Thus, the 99 ending tactic has no effect on consumers when the product is expensive. The use of the right digit effect by managers in a currency substitution/ dollarized economy as a way of persuading consumers to buy is still likely to be more successful compared to the USA market. As such, firms in a dollarized economy should structure their pricing strategies while taking into consideration the type of product they are offering and the consumer market they are dealing with.