Cue-less consumers in factory outlet stores: reference price effects on consumer evaluations when semantic phrases are missing

Abstract

PurposePrior research has demonstrated that reference prices can affect consumer responses, but the reference prices examined have been presented along with semantic cues [e.g. manufacturer’s suggested retail price (MSRP) and Compare At]. This study is unique in investigating the effects of reference prices that do not include a semantic cue (i.e. “cue-less”) on consumers’ responses. It also studies consumers’ beliefs about factory outlet stores, a seldom-studied store type in which cue-less reference prices are used.Design/methodology/approachOne qualitative study and one experiment were carried out in this research.FindingsThe qualitative study revealed that a price tag including cue-less reference prices was unlikely to be viewed as a seller mistake or with suspicion, but nonetheless did confuse some respondents. The experiment demonstrated that while consumers find cue-less reference prices to be somewhat less believable that high MSRPs, these beliefs do not appear to come into play when consumers judge attractiveness (e.g. perceived value). Additionally, the results suggest that consumers believe that a product available for sale in a factory outlet store is likely to have been previously available at a different type of store.Originality/valueThis research advances the theory of the effects of reference prices on consumers’ responses by examining the common practice of not labeling reference prices with semantic cues. It also extends the literature regarding consumer beliefs about factory outlet stores.