The effects of perceived scarcity on consumers’ processing of price information

This research examines how perceived scarcity influences consumers’ processing of price information. To explain the effects of scarcity, a conceptual framework which incorporates both the motivational and the interference effects of scarcity on information processing is developed. The results from two studies show that under scarcity, consumers’ perceptions of quality and monetary sacrifice exhibit different response patterns, depending on the relative price level and consumers’ motivation to process information. We provide insights into how these perceptions of quality and sacrifice are integrated to form perceptions of value. Additional analyses of thought measures provided further understanding of the underlying processes that influenced the evaluation of price information under scarcity.

The dual role of price: decomposing consumers’ reactions to price

Price plays two distinct roles in consumers’ evaluations of product alternatives: as a measure of sacrifice and as an informational cue. This article merges two streams of empirical research into the effects of price on consumers’ product evaluations by combining stated preferences, obtained from conjoint measurement, with data on self-reported measures in the form of beliefs or attitudes. It thus offers new, substantive insights into the dual role of price. Specifically, it differentiates between the informational and sacrifice effects of price using a choice-based conjoint approach and differentiates further among different subcomponents of these two main effects by combining choice-based measures with self-reported measures that pertain to potential sources of the dual role of price (price response drivers) and underlying consumer characteristics. Thus, this article presents a general procedure to quantify the impact of the dual role of price on choice shares for product alternatives within a market simulation. This procedure enables managers to simulate the choice share effects of changes in price response drivers, as well as modifications in segmentation and targeting strategies that involve changes in the levels of the price response drivers and thus the levels of the informational and sacrifice components of the price response of demand.     

The effect of shipping fee structure on consumers’ online evaluations and choice

This research examines how consumers respond to different shipping fee structures. Focusing on two of the most common shipping fee structures, flat rate shipping and threshold-based free shipping, we first demonstrate that offer evaluations are less (more) favorable with threshold-based free shipping when order value is below (above) the free shipping threshold compared to flat rate shipping. However, when an alternative more important referent is present, the effect of shipping fee structure is attenuated. Second, we show that although perceptions of shipping fees as a profit generator are higher (lower) under threshold-based free shipping relative to flat rate shipping for order values below (above) the free shipping threshold, providing a justification for the shipping fee by explicitly linking it to delivery costs encourages consumers to view the shipping fee as a cost of doing business rather than as a profit generator, thus raising offer evaluations.     

The determinants of consumers’ online shopping cart abandonment

Despite placing items in virtual shopping carts, online shoppers frequently abandon them —an issue that perplexes online retailers and has yet to be explained by scholars. Here, we identify key drivers to online cart abandonment and suggest cognitive and behavioral reasons for this non-buyer behavior. We show that the factors influencing consumer online search, consideration, and evaluation play a larger role in cart abandonment than factors at the purchase decision stage. In particular, many customers use online carts for entertainment or as a shopping research and organizational tool, which may induce them to buy at a later session or via another channel. Our framework extends theories of online buyer and non-buyer behavior while revealing new inhibitors to buying in the Internet era. The findings offer scholars a broad explanation of consumer motivations for cart abandonment. For retailers, the authors provide suggestions to improve purchase conversion rates and multi-channel management.     

The effects of extrinsic product cues on consumers’ perceptions of quality, sacrifice, and value

The authors report the results of two experiments designed to test the effects of extrinsic cues—price, brand name, store name, and country of origin—on consumers’ perceptions of quality, sacrifice, and value. The results of the experiments support hypothesized linkages between (a) each of the four experimentally manipulated extrinsic cues and perceived quality, (b) price and perceived sacrifice, (c) perceived quality and perceived value, and (d) perceived sacrifice and perceived value. The results also indicate that the linkages between the extrinsic cues and perceived value are mediated by perceived quality and sacrifice. R. Kenneth Teas is a distinguished professor of business in the Department of Marketing, College of Business, Iowa State University. He received his Ph.D. from the University of Oklahoma. His areas of research include consumer behavior and decision processes, marketing research methods, services marketing, and sales force management. His articles have been published in numerous journals, including theJournal of Marketing, theJournal of Marketing Research, theJournal of Consumer Research, theJournal of the Academy of Marketing Science, theAmerican Journal of Agricultural Economics, theJournal of Retailing, theJournal of Personal Selling and Sales Management, theJournal of Occupational Psychology, andIndustrial Marketing Management. Sanjeev Agarwal is an associate professor in the Department of Marketing, College of Business, Iowa State University. He received his Ph.D. from The Ohio State University. His areas of research include multinational marketing strategies, modes of foreign market entry, and sales force management. His articles have been published in theJournal of Consumer Research, theJournal of International Marketing, International Marketing Review, Industrial Marketing Management, theJournal of International Business Studies, theJournal of the Academy of Marketing Science, and theJournal of Personal Selling and Sales Management.     

Math anxiety and its effects on consumers’ preference for price promotion formats

This research examines whether preference for certain price presentations observed in past research could be explained by either consumers’ math anxiety or their math abilities. Previous research suggests that math anxiety not only increases tendencies to make computational errors but also influences cognitive abilities to make numerical judgments. In four studies we document an effect of math anxiety whereby price promotions, whose net prices are simply derived, like those in a dollars-off format, were preferred over a competing percentage-off format. We explain this effect in terms of consumers’ inability to expend cognitive resources due to their math anxiety rather than their math ability. We also identify a boundary condition with such effects of math anxiety occurring when price information is presented in a computationally complex manner and when consumers are making important product judgments.     

Choosing options for products: the effects of mixed bundling on consumers’ inferences and choices

For product categories such as cars, computers, vacation packages, and new homes, consumers usually choose not only the product itself, but also various options for the product. Sellers decide how to present these options to consumers, and they often sell options both individually and in bundles (mixed bundling). In this research, we examine how mixed bundling affects consumers’ inferences about the options and choices among the options. We demonstrate that as long as the seller’s motives for bundling options are not perceived to be negative by consumers, options offered both individually and in bundles are perceived to be more important and are more likely to be chosen than options offered only individually.     

An integrated model of sales managers’ communication practices

Drawing from several diverse streams of research, the authors develop the rationale and empirical background for considering the role of sales manager communication practices. Using a multifaceted conceptualization of communication as its base, the study justifies, proposes, and evaluates a model describing the relations among sales managers’ communication practices and salesperson ambiguity, satisfaction, performance, and commitment. The results support the hypothesized model and suggest that sales manager communication practices are associated with these important salesperson job outcomes. Mark C. Johlke is an assistant professor of marketing in the Cameron School of Business at the University of North Carolina at Wilmington, Wilmington, North Carolina. Dale F. Duhan is an associate professor of marketing and director of International Bussiness Programs in the College of Business Administration at Texas University, Lubbock, Texas. Roy D. Howell is dean of the College of Business Administration at Texas Tech University, Lubbock, Texas. Robert W. Wilkes is the United Supermarkets professor of marketing and marketing area coordinator in the College of Business Administration at Texas Tech University, Lubbock, Texas.     

The role of leadership in salespeople’s price negotiation behavior

Salespeople assume a key role in defending firms’ price levels in price negotiations with customers. The degree to which salespeople defend prices should critically depend upon their leaders’ influence. However, the influence of leadership on salespeople’s price defense behavior is barely understood, conceptually or empirically. Therefore, building on social learning theory, the authors propose that salespeople might adopt their leaders’ price defense behavior given a transformational leadership style. Furthermore, drawing on the contingency leadership perspective, the authors argue that this adoption fundamentally depends on three variables deduced from the motivation–ability–opportunity (MAO) framework, that is, salespeople’s learning motivation, negotiation efficacy, and perceived customer lenience. Results of a multi-level model using data from 92 salespeople and 264 salesperson–customer interactions confirm these predictions. The first to explore contingencies of salespeople’s adoption of their transformational leaders’ price negotiation behaviors, this study extends marketing theory and provides actionable guidance to practitioners.     

This ad’s for you: the indirect effect of advertising perceptions on salesperson effort and performance

Considerable research explores advertising’s role in influencing consumer perceptions and behavior. However, advertising’s impact on another key audience—the sales force—has been largely overlooked. Drawing from social identity and expectancy theories, and using survey and objective performance data across multiple wholesalers, the authors demonstrate that a salesperson’s perception of brand advertising has a significant effect on salesperson effort and performance by positively influencing the extent to which the salesperson identifies with the brand and his or her expectancy that such effort will generate results. These effects are moderated by internal communications and brand size. Model results suggest that advertising’s role may extend beyond “pull” to “push” by motivating salespeople to exert more effort on behalf of a brand. As a result, firms should take steps to proactively manage salesperson perceptions of brand advertising while also considering this dual role when assessing advertising effectiveness and efficiency.     

Remembering versus knowing: Issues in buyers’ processing of price information

A traditional assumption concerning how prices influence buyers’ purchasing behaviors has been that buyers know the prices of the products and services that they consider for purchase. However, empirical research during the past four decades repeatedly has discovered that buyers often are not able to remember the prices of items they had recently purchased. One conclusion that has been drawn is that buyers often do not attend to price information in purchase decisions. The authors argue that this conclusion may be incorrect in that what consumers can explicitly remember is not always a good indicator of what they implicitly know. Price information not consciously remembered can still influence internal reference prices and product evaluations. In this article, the authors discuss the conceptual and methodological ramifications of the distinction between remembering and knowing to reassess and refine our understanding of how buyers process and use price information. Kent B. Monroe is the J. M. Jones Professor of Marketing at the University of Illinois, Urbana-Champaign. He has pioneered research on the information value of price and is the author ofPricing: Making Profitable Decisions (2nd ed., McGraw-Hill, 1990). His research has been published in theJournal of Marketing Research, theJournal of Consumer Research, theJournal of Marketing, Management Science, theJournal of the Academy of Marketing Science, theJournal of Retailing, theJournal of Business, and theJournal of Business Research. He was chairman of the American Marketing Association’s Development of Marketing Thought Task Force from 1984 to 1988, was the editor of theJournal of Consumer Research from 1991 to 1993, is a Fellow of the Decision Sciences Institute, and serves as editor ofPricing Practice and Strategy. Angela Y. Lee is an assistant professor of marketing in the J. L. Kellogg Graduate School of Management at Northwestern University. Her research focuses on how people process information, both consciously and nonconsciously. She is particularly interested in studying the effects of exposure on memory, judgment, and choice behavior, and has examined changes in information-processing strategies adopted by individuals under different mood states and under different involvement conditions. Her research has been published in theJournal of Personality and Social Psychology andAdvances in Consumer Research. Her more recent work is forthcoming in theJournal of Consumer Research andPsychological Science.     

When one bad apple spoils consumers’ judgment of the brand: exposure to an employee’s non-workplace transgression and potential remedies

Four experiments investigate consumers’ moral judgments of a firm’s brand reputation when given information about an employee’s non-workplace transgression. To the extent that the employee is perceived to have power in the firm (i.e., control over resources and decisions), the employee’s offensive action damages the firm’s reputation and decreases consumers’ purchase intentions. These effects occur even though the action occurs in the employee’s private life and is unrelated to product quality. The results replicate for three types of products and three types of offenses. The employee’s perceived power in the firm provides the most consistent explanation of customers’ negative responses and is a better predictor than the alternative explanations tested (e.g., perceived status). Results also show that after an offense comes to light, firm reactions that decrease or eliminate the employee’s power in the organization—such as reducing decision-making responsibilities or firing the employee—can help restore the firm’s reputation.     

The impact of retail format diversification on retailers’ financial performance

For retailers, format portfolio management is a core marketing operation, but has received little attention in the marketing literature. This study analyzes the relationship between format diversification and retailer performance in a global setting, where retailers as part of their geographic expansion process often employ format diversification. The dual strategies of geographic diversification and format diversification substantially complicate the diversification-performance relationship. Using a six year panel data set for leading global retailers, we find a positive impact for geographic diversification, a negative impact for format diversification and a negative interaction for the dual strategies, supporting a single focus diversification strategy. We further show the consistency of our findings using a series of model robustness checks.     

The effects of supplier capabilities on industrial customers’ loyalty: the role of dependence

This research examines whether suppliers’ capabilities impact OEM customers’ dependence on the supplier and thereby generate customer loyalty. Using a sample of purchasing managers focusing on a single key component supplier, we examine three supplier capabilities, two dependence dimensions, and three aspects of customer loyalty. Core offering capability increases the customer firm’s benefit-based dependence. Operations capability has a more comprehensive effect, enhancing both benefit-based and cost-based dependence. Benefit-based dependence leads to relational loyalty and, through its effect on relational loyalty, to insensitivity to competitive offerings and future purchase expansion. Cost-based dependence motivates insensitivity to competitive offerings, but does not affect relational loyalty or purchase expansion. The supplier’s communication capability is associated with relational loyalty, but this effect does not flow through the customer firm’s dependence. The divergent pattern of antecedents and effects of benefit-based dependence and cost-based dependence may explain the inconsistent and insignificant research findings in previous research on dependence. Our results suggest that adopting a bi-dimensional model of dependence more fully captures the theoretical domain of dependence, thereby permitting researchers to better examine its role in supply chain, channel, and marketing relationships.     

Group influences of selling teams on industrial salespeople’s cross-selling behavior

Cross-selling offers tremendous benefits for both vendors and customers. However, up to 75% of all cross-selling initiatives fail, usually for sales force–related reasons. Yet prior research has largely ignored the role of salespeople in the field of cross-selling. Using a motivation–opportunity–ability (MOA) framework, this research addresses factors that determine a salesperson’s cross-selling performance, including the predominant role of the selling team as a social environment in which individual behavior occurs. A dataset of 231 industrial salespeople working in 55 teams reveals that 37% of overall variation in behavior is caused by differences across teams. The team-specific hypotheses, based on social norms and reputation theory, are tested with a hierarchical linear modeling approach with matched data from three sources. Individual cross-selling motivation has a stronger effect when a selling team has strong cross-selling norms, and in the specific context of cross-selling, selling team reputation can constrain individual behavior that might damage that reputation. Salespeople also develop beliefs about the reasons for their team reputation, including its cross-selling ability, which can reduce an individual salesperson’s reputational concerns and hence reinforce individual cross-selling behavior. These results have significant theoretical and managerial implications.