Broadening the Scope of Reference Price Advertising Research: A Field Study of Consumer Shopping Involvement

Abstract

The current understanding of reference pricing requires broadening to reflect contemporary advertising practices and shopping behavior. A content analysis of 13,594 newspaper retail advertisements reveals that it is uncommon for reference pricing to be used alone in advertisements: 87.2% of the advertisements featuring reference pricing also include limited-time availability (i.e., “Three days only!”) or sale announcements in the headline or copy. Using dual-process theories of persuasion as a conceptual framework, the authors conduct three field experiments that compare the conditions under which the use of limited-time availability and sale announcements in advertisements that feature reference prices affects consumer price perceptions and store shopping intentions. The findings yield three insights for reference price advertising. First, reference pricing results in favorable price perceptions and store shopping intentions only when consumers are shopping for a product. Second, when consumers are shopping for a product, reference pricing paired with limited-time availability results in more favorable price perceptions and store shopping intentions than the use of either technique alone. Third, the use of sale announcements and limited-time availability in reference price advertisements has a favorable effect on price perceptions and store shopping intentions when consumers are not shopping for a product.