Spending propensity and price perceptions

ABSTRACT

This article presents a systematic investigation of how Spending Propensity moderates consumers’ perceptions of prices. Results from three studies are presented. Studies 1 and 2 reveal that, in the absence of any external cues, consumers who are predisposed to spending freely evaluate a posted price more favorably than those who are not. Such consumers also report anticipating less pain associated with spending than those who are not inclined to spend. Additionally, Study 2 informs that simple price communication tactics, without any real reduction in price, may be effective at mitigating the pain felt among those who are less inclined to spend. Furthermore, such tactics are capable of reducing, and even reversing, the gap between those who are not predisposed to spending and those who are. Finally, Study 3 explores how spending propensity moderates consumers’ perceptions of a discount.