It's Not All Relative: The Effects of Mental and Physical Positioning of Comparative Prices on Absolute versus Relative Discount Assessment |
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Authors: | Pilsik Choi Keith S Coulter |
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Institution: | Graduate School of Management, Clark University, 950 Main Street, Worcester, MA 01610-1477, United States |
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Abstract: | In the context of three experiments, the authors examine the manner in which consumers compare a sale price to an explicit reference value. They find that a comparison of sale price to regular price may be more likely to involve an absolute (dollar amount) assessment, whereas a comparison of sale price to a competitor's price may be more likely to involve a relative (percent) assessment. The authors also find that vertical (i.e., columnar) placement of prices may result in a greater tendency to estimate discounts in relative terms. Conversely, horizontal (i.e., side-by-side) placement may result in a greater tendency to compute absolute numerical difference. The results provide important implications for retail managers in terms of framing and communicating price discounts. |
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Keywords: | Behavioral pricing Mental accounting Numerical cognition Price discounts Reference prices Comparative price promotion |
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