Consumer responses to offline and online low price signals: The role of cognitive elaboration

Low price signals (LPS), pricing tools where retailers promise to match or beat competitors' prices, have been increasingly popular in offline and online markets. We compare consumer evaluation of offline and online LPS as a function of how deeply they process the signals. Results of an experiment indicate that regardless of retail media consumers accept an LPS as an indicator of low price when they do not elaborate sufficiently on the signal. However, at high levels of elaboration, consumers challenge the assumptions underlying their acceptance of the signal at lower levels of elaboration whereby they become more skeptical of an online signal than an offline signal resulting in lower efficacy of the former. Implications of these findings for consumer vulnerability to false low price signaling are discussed along with other theoretical and managerial implications. Additionally, directions for future research are provided.     

Consumer responses to characteristics of price-matching guarantees: The moderating role of price consciousness

The present study develops and tests a conceptual model of consumer response to different types of price-matching characteristics (i.e., refund depth, length, and scope) across consumer segments with varying levels of price consciousness. A computer shopping simulation results show that a deep refund is interpreted as a signal of low prices by nonprice conscious consumers. However, price conscious consumers are found to associate deep refunds with increased prices, an unintended outcome for the retailer. The effects of price-matching characteristics on search and purchase behavior were also found to vary across more and less price conscious consumer segments.     

Offering low price guarantees to improve customer retention

Major retailers in the USA offer money back guarantees (MBGs) under which they return money to dissatisfied customers. Some of these retailers also offer low price guarantees (LPGs) under which they promise to refund price differences if buyers find a lower price after purchase. Some researchers have argued that LPGs should be legally challenged because they limit price competition and contribute to higher prices. This paper shows that adding an LPG to an MBG can help improve economic efficiency as both retailer loss and customer hassle costs from excessive returns are reduced. This reduction serves as a counter argument against those who believe that LPGs should be prohibited.     

Semantic cues in reference price advertisements: The moderating role of cue concreteness

Retailers use a variety of semantic cues to advertise discounts at their stores. In this paper we introduce the concept of cue concreteness and examine its impact on effectiveness of semantic cues. Four studies were conducted which concur with the findings of earlier research in this area and expand our knowledge about the effectiveness of semantic cues. Results indicate that between-store cues are perceived to be more effective than within-store cues at moderate price discount levels only when the cues are concrete in nature. In addition, a between-store cue resulted in more favorable evaluations than a within-store cue when the ad was viewed at home, but only when the cue was concrete. Implications for marketers and public policy makers are discussed.     

Consumer cynicism and perceived deception in vanity sizing: The moderating role of retailer (dis)honesty

While prior scholarship has acknowledged the overall positive influence of vanity sizing on consumer outcomes, no work to date has addressed the psychological process that occurs when consumers suspect retailers of dishonest sizing information. This is an important process to understand because perceptions of deceptive retailer motives lead consumers to react negatively to the product and the retailer, regardless of the retailer's actual motives. Thus, this research utilizes attribution theory to examine perceived deception as a mediator between consumer cynicism (a dispositional trait) and consumer outcomes. The results reveal that at higher levels of consumer cynicism, prior knowledge of deceptive sizing practices has an amplifying effect on the influence of consumer cynicism on perceived deception, while retailer honesty with sizing issues helps to block this influence. Further, perceived deception leads to reduced consumer outcomes, confirming prior findings in the literature.     

Brand expertise and perceived consistency reversals on vertical line extensions: The moderating role of extension direction

Vertical line extensions are a valuable growth strategy for many retail service sectors. Correctly positioning a new vertical line extension in the price/quality spectrum is an important decision that has considerable implications for bottom line profits. This paper examines the moderating role of extension direction on the effect of perceived consistency on vertical extension evaluations. In two studies, we show that a lack of perceived consistency acts as a reminder to consumers that the brand may be stretching beyond its expertise, increasing perceived performance and financial risks for upscale extensions but not for downscale extensions. As a consequence, higher consistency results in higher upscale extension favourability whereas evaluations of downscale extensions are similar regardless of their perceived consistency with the parent brand.     

The perceived autonomy–perceived service climate relationship: The contingency effect of store-level tenure diversity

Although prior research has examined the relationship between perceived autonomy and perceived service climate, a dearth of studies exist that have explored the boundary conditions of the perceived autonomy–perceived service climate relationship. To this end, this study draws on self-determination theory and the job characteristics model to develop a multi-level model that examines the relationship between perceived autonomy and perceived service climate and how this relationship alters at varying levels of store-level tenure diversity. Based on matched data from service employees and customers from a national chain of retailers, the findings indicate that perceived autonomy is positively associated with employee's perception of service climate. However, this relationship was qualified by a curvilinear (U-shaped) moderating effect of store-level tenure diversity. Perceived autonomy had a greater impact on perceived service climate at low and high levels compared to moderate levels of tenure diversity. Implications for advancing theory in service retailing are discussed along with strategic ramifications.     

Anchoring effects of advertised reference price and sale price: The moderating role of saving presentation format

This study investigates how consumers utilize an advertised reference price and the posted sale price (SP) as anchors to adjust their internal reference prices (IRP). As expected, the effect of SP on IRP depends on the magnitude and direction of deviation from the IRP. When the posted SP exceeds IRP, it exerts an upward pressure on IRP, whereas when it falls below IRP, it has a negative impact. Consistent with prior research, consumers rely at least partially on the advertised reference price to adjust their IRP. The saving presentation format also moderates the effects of gains and losses on IRP but does not influence offer evaluation directly. Results suggest that retailers can enhance evaluations directly by pricing their products appropriately relative to consumers' IRP and indirectly through the choice of saving presentation format.     

Effects of low price guarantees on consumer post-purchase search intention: The moderating roles of value consciousness and penalty level

While past research has focused on pre-purchase effects of low price guarantee (LPG), the present paper examines probable post-purchase consequences of such signals. Results of an experiment indicate that in an effort to enhance value from a purchase, consumers are more likely to engage in post-purchase search for lower prices when a purchase is made under an LPG. The experiment also indicates that presence of an LPG encourages post-purchase search intention only for consumers who are highly motivated to enhance value. Furthermore, it is seen that an LPG that offers higher refund leads to higher post-purchase search intention and this effect is also stronger for consumers with high concerns for enhancing value. The paper discusses several important implications of these findings for signaling theory and LPG-related retailing strategy.     

The effect of mixed versus blocked sequencing of promotion and prevention features on brand evaluation: The moderating role of regulatory focus

We investigate if presenting a brand's promotion and prevention features in homogenous blocks (e.g., two promotion features followed by two prevention features — a toothpaste that freshens breath, whitens teeth, stops plaque buildup and prevents cavities) as opposed to alternating their presentation order (a toothpaste that freshens breath, stops plaque buildup, whitens teeth, and prevents cavities) affects brand attitude. We find that alternating feature presentation improves brand evaluation among promotion-focused, but not prevention-focused, consumers. In mixed presentations, since each feature physically contrasts with those near it (e.g., promotion features bracketing a prevention feature), the resulting heightened distinctiveness increases the perceived variety of a brand's benefits and fits better with the advancement goals of promotion-focused consumers. We report two studies that support our predictions.     

Exchange rate determination: The role of factor price rigidities and nontradeables

This paper introduces factor (labor) markets into the intertemporal monetary model of Obstfeld and Rogoff and combines this richer market structure with a new utility-independent representation of nontradeables. This allows us to explore the international monetary transmission mechanism for factor price (wage) rigidities under different degrees of macroeconomic openness. Factor price rigidities imply similar properties for the international transmission mechanism as domestic producer price rigidities. Nontradeables give raise to interesting new effects under asymmetric monetary shocks: They create short-run PPP deviations, increase exchange rate volatility relative to price level volatility and reduce (positive) consumption and (negative) output comovements.     

Internal and external price search in industrial buying: The moderating role of customer satisfaction

Despite price's great relevance in organizational buying decisions, prior research primarily studies price search in business-to-consumer environments. This research conceptualizes both internal and external price search in a business-to-business setting and focuses on how price importance affects these two types as well as how customer satisfaction moderates the relationships. Results show that purchasing managers' satisfaction associates positively with the effect of price importance on internal price search. Also, their satisfaction negatively associates with the effect of price importance on external price search. Price search reduces the price premium paid by customers (especially external price search).     

The Impact of Store-Price Signals on Consumer Search and Store Evaluation

Always low price (ALP) and low price guarantee (LPG) are store-price signals that retailers frequently use to induce favorable store-price image and discourage consumers from comparing prices across stores. Although both policies signal low prices, only LPG is an obligatory promise to beat rival stores’ prices. Results of two shopping simulations show that when consumer search costs are relatively low, ALP may effectively discourage consumer search whereas LPG may trigger more search. Paradoxically, consumers tend to evaluate ALP stores less favorably (as having lower integrity and higher self-serving intention) than LPG stores even when both signals appear to be credible. These findings suggest that LPG is a superior tactic for creating a favorable store image while ALP is more effective for discouraging consumer search. The results also indicate that consumers visit fewer stores when the LPG is not a credible signal of lowest market price than when it is credible. This is because consumers are inclined to either claim discounts or refunds at the non-credible LPG store or to purchase at the competing store with a lower price rather than continue searching.     

The effect of organizational justice, perceived organizational support, and perceived supervisor support on marketing employees' level of trust

For more than four decades, research has investigated the relationship between perceptions of organizational justice and employees' work attitudes. This study used two data sets to examine how perceptions of organizational justice influence marketing employees' perceived support and trust. Specifically, this study examines the role of perceived support as a mediator between organizational justice and trust. The results indicate that in Study 1 perceived organizational support (POS) serves as a mediator between procedural justice and organizational trust. Interactional justice is both a direct and indirect predictor of supervisory trust through perceived supervisor support (PSS). Distributive justice is related indirectly to organizational trust through PSS and directly to organizational trust. In contrast to the results in Study 1, distributive justice is an antecedent to both POS and PSS while procedural justice is related directly to organizational trust.     

The moderating effect of individual level collectivist values on brand loyalty

In today's dynamic business environment the success of a firm often depends on its ability to create brand loyalty. While there is a large body of research exploring brand loyalty and its antecedents, little has been done to examine how the relationship between these antecedents and brand loyalty is moderated by consumer differences in individual level collectivist values. This understanding is important however as consumers high in individual level collectivist values have been found to make different brand choices than consumers low in individual level collectivist values. We develop and test theory that suggests consumer differences in individual level collectivist values have a significant moderating effect on the relationship between perceived value, perceived quality, brand trust and brand loyalty. The results show that consumers high in individual level collectivist values are significantly more loyal to a focal brand, especially when brand trust and perceived quality are at relatively low levels.     

The role of perceived control and gender in consumer reactions to download delays

An empirical study finds that perceived control strongly mediates the effects of perceived speed of a Web site download on consumers' attitudes and intentions to use the Web site. Moreover, results show that men are more likely to react positively to the perceived speed of a Web site download, whereas women are more likely to base their reactions on perceptions of control in the context of download delays. In contrast to past online research, the gender differences are intrinsic in two ways—they are context independent, and they are not caused by length of Internet experience, extent of Internet usage, or type of Internet connections.     

The impact of public guarantees on credit to SMEs

This article provides an in-depth evaluation of the impact of public credit guarantees to SMEs in increasing credit availability and reducing borrowing costs, without compromising their financial sustainability. Extensive econometric tests have been carried out by comparing the performance of the SMEs that benefited from such guarantees in Italy with a sample of comparable firms. The findings confirm the presence of a causal relationship between the public guarantee and the higher debt leverage of guaranteed firms, as well as their lower debt cost. Italy’s guarantee instrument has proved to be an effective instrument in these respects.

A meta-analysis of the impact of price presentation on perceived savings

Pricing is one of the most crucial determinants of sales. Besides the actual price, how the price offering is presented to consumers also affects consumer evaluation of the product offering. Many studies focus on “price framing,” i.e., how the offer is communicated to the consumer —is the offered price given along with a reference price, is the reference price plausible, is a price deal communicated in dollar or percentage terms. Other studies focus on “situational effects,” e.g., is the evaluation for a national brand or a private brand, is it within a discount store or a specialty store. In this article, a meta-analysis of 20 published articles in marketing examines the effects of price frames and situations on perceived savings. The results reveal many features that significantly influence perceived savings. For instance, while both the percent of deal and the amount of deal positively influence perceived deal savings, deal percent has more impact. Further, the presence of a regular price as an external reference price enhances the offer value of large plausible deal and implausible deals, but not of small plausible deals. Thus, high value deals should announce the regular price, but not low value deals. Overall, the results have several useful insights for designing promotions.     

The role of attributions in consumer perceptions of retail advertisements promoting price discounts

This study examines whether information in an advertisement promoting a price discount is capable of affecting attributions made about the price reduction and whether these attributions, in turn, affect consumer perceptions and evaluations of the sale. Findings show that price image of the retail advertiser had a strong effect on attributions pertaining to the merchant and a marginal effect on product attributions. The attribution variables, in turn, explained significant amounts of variance in criterion variables measuring consumer perceptions of value, attitude toward the ad, and shopping intentions, beyond the variance explained by the store and discount claim variables manipulated in the study. These results suggest the importance of the role of attributions made by consumers when exposed to ads promoting discounts.     

An assessment of value creation in mobile service delivery and the moderating role of time consciousness

This study focuses on the perceived utilitarian value of a new service delivery mode, the mobile channel. The authors develop a framework that incorporates three mode-specific benefits - time convenience, user control, and service compatibility - as well as two costs - perceived risk and cognitive effort - as antecedents of perceived value. Because of the pervasiveness of time criticality as a value-added characteristic of the mobile channel, they also investigate the moderating influence of consumers’ time consciousness. They empirically investigate the model using mobile brokerage services as an illustrative application. The results reveal that the identified antecedents, with the exception of service compatibility, have a strong impact on mobile channel value perceptions, which in turn influence behavioral intentions. The authors also find that time consciousness moderates the aforementioned relationships.