Pricing practices: A critical review of their effects on consumer perceptions and behaviour

With the present challenge to compete on price or product assortment, retailers and manufacturers are increasingly focusing on state-of-the-art pricing strategies which have their roots in behavioural economics and psychology. The current review is an empirical investigation on the relative effectiveness of various pricing practices on consumer perceptions and behaviour. Six pricing strategies were reviewed; drip pricing, reference pricing, the use of the word ‘free’, bait pricing, bundling and time-limited offers. The review shows that the former three have received a significant amount of attention and have a robust impact on consumer perceptions and behaviour. There is less research on the latter three; however, the available evidence does suggest that they, too, may be capable of influencing consumers’ choices. Finally, it is also clear that the effects of pricing practices can be moderated by a variety of factors. Overall, the current review indicates that sellers are able to influence perceptions and purchase decisions of consumers based on the manner in which prices are displayed. The implications of these findings for retailers, policy makers and researchers are discussed.     

How consumer ethnocentrism modulates neural processing of domestic and foreign products: A neuroimaging study

Consumer services literature offers substantial evidence that ethnocentric consumers tend to prefer domestic over foreign products. Yet no research to date has delved into the question how consumer ethnocentrism (CE) modulates the neural processing of products. This is the first study resorting to neuroimaging to explore to what extent CE levels affect the processing of domestic (Spain) and foreign (USA and China) products. The brain data yielded by neuroimaging reveal that highly ethnocentric consumers experience a greater degree of activation in brain regions linked to self-reference and reward when considering to purchase domestic products and a greater activation in brain regions related to risk in the case of foreign products.     

Effects of pricing and promotion on consumer perceptions: it depends on how you frame it

This research examined the extent to which different promotional frames increased perceptions of deal value. Price discounts dominate the sales promotions employed by marketers. The framing literature suggests discounts have robust positive effects on consumer perceptions of deal value. However, the current research showed that negative quality inferences moderated discount framing effects and undermined deal value, particularly when no assurance of product quality was provided. Every-day-low-price offers were also vulnerable to negative quality inferences, while free gift frames maintained quality perceptions and increased deal value. Product trial acted to further magnify promotional framing effects, according to a confirmation bias. These findings were consistent with an attribute framing mechanism.     

Segmentation of Malaysian shoppers by store choice behaviour in their purchase of fresh meat and fresh produce

Differences in retail store choice behaviour are examined for the purchase of fresh meat and fresh fruit and vegetables in Malaysia. In purchasing fresh meat, cluster analysis identified two groups of respondents who purchased the majority of the fresh meat they consumed from either modern retail stores or the traditional market. However, with regard to the purchase of fresh fruit and vegetables, cluster analysis identified three groups of respondents (modern retail shoppers, transient shoppers and traditional market shoppers). Although the clusters were labelled using similar terms, several similarities and differences were identified in the respective clusters for each food item. The findings indicate that store choice preference was based on the food product that the consumer intended to purchase.     

Consumer response to and choice of customized versus standardized systems

Recent research on customization suggests that a need exists to examine conditions under which selling customized versus non-customized offerings will be more beneficial to vendors. To this end, this paper empirically evaluates consumer response to and choice of customized systems (offerings that are integrated and customized) in relation to standardized systems (offerings that feature integration but not customization). Through a series of studies, we demonstrate that the relationship between a buyer's systems purchase strategy and their future repurchase intentions toward the seller is moderated by a buyer characteristic (that is, a consumer's insight into his/her own preferences, or the degree to which a consumer can confidently and consistently express his or her true preferences) as well as a seller characteristic (retailer reputation). Given that consumers who are experts have greater insight into their own preferences than novices, our work also suggests that this greater insight into one's own preferences is a plausible explanation for why experts are more likely to choose a customized system. The main practical implication of our research is that it prompts managers to challenge the contention in some mass customization writings that customized offerings have universal appeal. Although the participants in our studies also tended to be more attracted to customized systems in general, this proclivity was lower for consumers with less product category expertise. This is important because our results convey that repurchase intentions towards a vendor will be higher after the purchase of a non-customized system by those consumers who lack insight into their preferences. As such, firms should try to propose customized systems only to those prospective buyers who possess strong preference insight, and propose standardized systems to those buyers who do not.     

Developing a model of antecedents to consumers' perceptions and evaluations of price unfairness

Drawing on previous research in pricing, we propose three broad antecedents to perceptions of price unfairness. Consumers perceive price unfairness when (1) they feel that the firm is making excessive profits, (2) they are not able to understand the pricing structure applied, and (3) they sense the firm is acting in an immoral or unethical manner. Survey data were collected from 969 consumers to understand their perceptions of price unfairness. In the survey, respondents were asked to provide their perceptions of pricing practices for fifteen products or services. A content analysis of consumers' comments confirms a wide array of drivers of price unfairness discussed by researchers and uncovers a few under-researched antecedents.     

Consumers' perceptions of individual and combined sustainable food labels: a UK pilot investigation

Consumers are faced with an increasing number of sustainable food labels. These different labels may be complementary or add to the increasing competition of product information in consumers' minds. We investigate: (1) the perceptions that consumers in the UK have about sustainable labels vs. other labels, such as origin or nutrition labels; and (2) consumers' reactions to combinations of different sustainable labels. Overall, the findings from two focus groups conducted in the UK indicate that consumers have positive perceptions of organic and fair trade labels but tend to be sceptical about unfamiliar labels and general claims such as ‘climate friendly’. The results also indicate the importance of familiarity, trust and fit between combinations of labels as well as between associating a label with a brand. While the combination of certain labels can enhance the value of a food product, this study also indicates that other label combinations (e.g. private and sustainable label) can detract from a label's value. Implications and recommendations are suggested for managers to counter the image of greenwashing, and for policy makers to facilitate sustainable food choices.     

The relationship between domestic and outward foreign direct investment: The role of industry-specific effects

Previous research has been inconclusive as regards the effect of outward foreign direct investment (FDI) on domestic investments. In this article, we show that this inconclusiveness can be explained at a disaggregated level as a function of the way industries are organized. Based on a simple theoretical framework including monitoring and trade costs, we argue that a complementary relationship can be expected to prevail in vertically integrated industries, whereas a substitutionary relationship can be expected in horizontally organized production. The empirical analysis confirms a significant difference between the two categories of industry as regards the impact of outward FDI on domestic investment. The results may thus have profound policy implications. JEL no. F12, F21, F23, G34.     

Price-matching guarantees as signals of low store prices: survey and experimental evidence

Many retailers offer a price-matching guarantee that promises to pay consumers the difference if they find a lower price elsewhere. This article proposes that the effectiveness of a price-matching guarantee as a signal of low store prices depends on individuals’ beliefs about the degree to which other consumers in the market engage in price search, enforce price-matching guarantees, or both. Consistent with signaling theory, results of a survey and two experimental studies demonstrate that market level factors affect consumer beliefs about the extent to which others engage in price search and thereby the effectiveness of price-matching guarantees in lowering perceptions of store prices. The implications of the findings for retail strategy are discussed along with directions for future research.     

Consumer perceptions of risks of chemical and microbiological contaminants associated with food chains: a cross-national study

The development and implementation of effective systems to identify vulnerabilities in food chains to chemical and microbiological contaminants must take account of consumer priorities and preferences. The present investigation attempted to understand consumer perceptions associated with chemical and microbiological contaminants in four specific food chains (drinking water, farmed salmon, chicken and milk powder). To this end, ten focus group discussions were held in five different countries (Poland, Ireland, the Netherlands, France and Brazil). Consumers expressed higher concerns about chemical, as compared with microbial, contaminants. Chemical contaminants were more strongly associated with the potential for severe consequences, long-term effects and lack of personal control. Traceability was considered by consumers as a useful tool that offers the potential to improve consumer confidence in food safety.     

Consumer perceptions of refund depth and competitive scope in price-matching guarantees: effects on store patronage

The study investigates the effect of two characteristics of price-matching guarantees—the depth of refund offer and the scope of competitors eligible for price matching—on consumer perceptions of price-matching guarantee believability and value and consumer intentions to patronize the retailer. The results show that large refund offers built consumer patronage intentions by enhancing perceptions of the value of the price-matching guarantee, while simultaneously exerting a negative impact on patronage by reducing believability of the price-matching promise. The competitive scope also affected the patronage intentions by influencing the perceived value of the price-matching policy.     

Exploring origins of ethical company/brand perceptions: Reply to Shea and Cohn's commentaries

This article responds to key questions that Shea (2010) and Cohn (2010) raise on Brunk's (2010a) work on consumer perceived ethicality (CPE) of a company or brand and expands on suggestions for further research. In particular the response here (1) considers concerns of generalizability, impact of cultural context, and transiency of the domain of CPE framework, (2) offers new insights into the complex and dynamic nature of CPE and its formation, (3) discusses issues relating to ethical consumption behavior, and (4) concludes with a debate on managerial implications including real-life strategic as well as operational challenges of effective CSR management.     

Consumer perceptions of risk and uncertainty and the implications for behaviour towards innovative retail services: The case of Internet Banking

Research on the consumer perceptions of innovative offerings has tended to focus on products as opposed to services. Perceived risk has generally not been awarded a major role while uncertainty, which is viewed here as distinct from risk, has for the most part been disregarded. The study reported in this paper strives to identify some of the major risks and uncertainties associated with a new service, Internet Banking, during the early stages of its market development. The empirical research involved a qualitative study of a small sample of consumers and a survey of both adopters and non-adopters of Internet Banking. The survey employed a traditional research instrument, which involved the presentation of pre-identified risks and uncertainties. It was possible to identify several major ‘risks’ as well as ‘uncertainties’. We raise questions about whether or not the anxieties and concerns identified by such a process of consumer research are true reflections of the major influences affecting consumer behaviour towards new retail services. The adoption of a ‘perceived risk’ stance as against one founded on the view that consumers may lack certainty about outcomes and consequences has implications for both theory and practice.     

Chinese and British consumers’ evaluation of Chinese and international brands and factors affecting their choice

This paper examines Chinese and British consumers’ evaluations of Chinese, and international brands, and factors affecting their brand choice. The results support recent findings of a decline in Western brands’ preference in China. But, these are attributed to several factors. The findings show country of origin does not affect Chinese brand choice, has a great effect on British choice between Chinese and other brands; brand value, and brand familiarity influence Chinese choice whereas brand reputation, and brand trust determine British choice. Implications for Chinese domestic and international expansion strategies, demographics’ influence, and cultural differences are discussed.     

Scarcity signaling in sales promotion: An evolutionary perspective of food choice and weight status

Obesity rates are increasing worldwide, with an alarming number of associated co-morbidities and deaths. Evolutionary psychology explains this development with an inherent preference for fatty and sweet foods. Recent evidence shows that consumers with a low socioeconomic status are more prone to being obese, but also that consumers with few resources respond more to scarcity signals. Based on this background, this paper investigates whether overweight individuals with a low income respond more to scarcity signaling in terms of sales promotions than others.To this end, a large-scale online survey was conducted across four food product categories in the setting of an online supermarket. Results show that overweight or obese individuals with low income levels responded more strongly to scarcity signaling. The findings inform researchers in terms of explaining different responses to sales promotions and support practitioners in aligning sales promotions to target group-specific behavior.     

Modeling consumer engagement on social networking sites: Roles of attitudinal and motivational factors

This paper reports on a study that seeks to assess an extended typology of consumer social networking engagement behaviors. Drawing on uses and gratifications theory, this study assesses consumer engagement with social media, where consumer engagement incorporates consumer responses to marketing communications. The paper argues that certain motivations for social media use serve as antecedents to general attitudes toward social networking sites, which subsequently affects attitudes toward marketers' social networking sites. These attitudes then influence subsequent consumer engagement behaviors. The results show that social facilitation motivation, participating and socializing motivation, and information motivation positively influence consumers' general attitudes toward social networking sites, which had a strong effect on their attitude toward marketers' social networking sites. The relationship between attitudes toward social networking sites and engagement with social networking sites was mediated by attitudes toward marketers’ social networking sites also mediated. The current study brings together the online advertising perspective and the consumer motivation/gratifications perspective of using social media in branding and marketing into a conceptual model that holds up to empirical testing. The paper ends with a discussion of some limitations of the study and proposes avenues for future research.     

Consumer reaction to product recalls: factors influencing product judgement and behavioural intentions

In order to evaluate the factors influencing consumers’ responses to product recalls, two surveys were conducted among Brazilian automobile owners and two regression models tested. Results indicated that (i) product judgement was significantly affected by corporate social responsibility (CSR), blame attributed to the company and whether or not consumers had a car made by the brand considered; and (ii) behavioural intentions were significantly affected by CSR, consumers’ involvement with the message, perceived danger, product judgement and whether or not consumers had a car made by the brand considered. Findings revealed, however, that CSR is a better predictor of the product judgement than of the behavioural intentions, in accordance with recent studies indicating that CSR affects consumer judgements and behaviour differently. Finally, these two models are discussed and compared with previous research.     

An examination of the relationship between women's personal goals and structural factors influencing their decision to start a business: The case of Pakistan

Most of the work on women entrepreneurs in developing countries relates largely to those who are uneducated and very poor, working in the rural areas or the urban informal sectors. Few studies have attempted to study women entrepreneurs in the urban formal sectors in developing countries, the category of women corresponding to the women entrepreneurs studied in the Western world.Furthermore, most of these studies, conducted largely by international development agencies, have tended to focus on issues from a macroperspective. They assume that women entrepreneurs in developing countries are a homogeneous group, with similar experiences in starting a business.This study departs from earlier research in two major ways. First, it focuses on actual and potential women entrepreneurs in the urban formal sector. Second, adopting a symbolic interactionist approach, it tries to take a closer look at women's experiences in starting a business. Hence, it focuses on women's perceptions and the way they define their goals and the advantages and constraints they face in starting a business at a micro level.Data for the study were gathered through in-depth interviews of 33 participants of an entrepreneurship development program (EDP) run in Karachi, Pakistan. Sixteen of these were women who started a business after attending the EDP. The other 17 women did not start a business, although they had originally intended to do so.The study revealed that women wanted to start a business in order to achieve three types of personal goals: personal freedom, security, and satisfaction.Freedom seekers were mostly women who had experienced some kind of frustration or dissatisfaction in their paid work, and who now wanted to start their own business in order to have the freedom to choose the type of work, hours of work, work environment, and the people they worked with.Security seekers were mostly women who, triggered by some personal mishap (such as death or retirement of husband), wanted to start a business in order to maintain or improve their and their family's social and economic status. An important reason why most of these women opted for their own business rather than paid work was the flexibility that self-employment offered in terms of location (close to home, working from home) and hours of work, to which paid jobs could not cater.The satisfaction seekers were mostly housewives, with no previous work experience, who wanted to start a business in order to prove to themselves and to others that they are useful and productive members of society.The impact of structural factors on women's ability to start a business varied according to the dominant personal goal women had chosen. Structural factors influencing start-up were divided into three categories: internal resources, that is, women's qualifications and/or work experience; external resources, that is, finance and location; and relational resources, that is, family, employees, suppliers, and customers.The relationship between women's personal goals and structural factors influencing start-up led to the development of a conceptual framework that could help explain why some women, despite apparently unfavorable circumstances, succeeded in starting a business, whereas others even under apparently favorable circumstances did not do so.Understanding the different goals women pursue and how the relationship between these goals and the structural factors influenced start-up can be of great help to researchers, planners, as well as practitioners working to promote women entrepreneurs. This understanding can lead to the development of more finely tuned policies and programs of support that not only recognize that women have different goals for wanting to start a business, but that their needs and experiences in starting up vary according to their particular goals for business ownership.     

Identifying the critical factors of customer behavior: An integration perspective of marketing strategy and components of attitudes

The purpose of this empirical study is to operationalize the relationship of green marketing's influence on consumer attitudes via the mediating role of marketing mix towards green products to validate the proposed research model in the Taiwanese context of explaining consumers' willingness to be environmentally friendly. The model is based on structural equation modeling (SEM) from data collected from 977 online consumers. The findings revealed that green consumption intention was significantly and indirectly driven by attitude to green products. Additionally, the effect of perceived quality on marketing mix and consumer willingness in environmental concern is both significant and positive. However, when a restaurant has high consumer social responsibility (CnSR) for marketing mix, the consumer attitudes of cognitive, affective, and behavioral model (C-A-B model) is less effective. These findings have contributed to the revival of the theory of planned behavior (TPB) and offer a comprehensive understanding of consumer attitude, consumer social responsibility, marketing mix and perceived quality impact that a restaurant has on the ability to raise consumer willingness to purchase green products or food. We provides valuable suggestions to marketers to design from the perspective of green marketing policies and strategies in order to accommodate Taiwan's indigenous green restaurants.     

Behavioral changes of multichannel customers: Their persistence and influencing factors

This study addresses how behavioral changes following a new channel's adoption persist over time, and how their patterns vary among customers. We verify the roles of individual behavioral traits reflecting self-selection, marketing exposure, and loyalty in explaining these differences. Based on the elaboration likelihood model and attitude commitment theory, we develop hypotheses to predict these traits' effects on customers' membership in a particular segment with a unique post-adoption behavioral pattern. A latent class model is developed to empirically identify various customer segments and connect behavioral traits to the probability of segment membership. The results reveal that only 25% of the sample exhibits permanent behavioral changes, and most of these tend to buy from numerous stores with intense cross-buying. Approximately 43% of customers who temporarily changed their behaviors were strongly inclined to use multiple shopping channels and spend substantial amounts on hedonic products. The remaining 32% who did not change their purchases appear to be frequent buyers. We also discuss the work's implications for managing multichannel customers.