Differential effects of price‐beating versus price‐matching guarantee on retailers' price image

Abstract

PurposeSeeks to study the effect of a low‐price guarantee (PG) on store price image and store patronage intention. Two kinds of low‐price guarantee are studied: a price‐matching guarantee (PMG) where the price difference is refunded and a price‐beating guarantee (PBG) where a retailer offers an additional compensation.Design/methodology/approachA questionnaire is used to collect information on 180 non‐student respondents in an experimental framework where low‐price guarantee dimension is manipulated through three advertisements for printers.FindingsFindings are: first, that PG indeed lowers store price image, increases the confidence that the store has lower prices and increases patronage intention; second, that, compared with a PMG whose effects are positive but rather small, a PBG further lowers the store price image on the low prices dimension without increasing the intention to search for lower price, this intention being already rather high in the PMG condition; third, that a larger effect is observed for non‐regular customers.Research limitations/implicationsResearch limitations are associated with the data collection. For greater reality the study uses an existing retail chain, so specific effects coming from this chain could influence the results but this bias cannot be evaluated as the experiment involves one retailer only.Practical implicationsPractical implications are that price image can be manipulated without any change in pricing policy by a low‐price guarantee and that the interest to adopt a price‐beating guarantee is real.Originality/valueThe contribution of this study lies in its focus on a large PBG level that retailers already apply and in demonstrating that a PG depends on the relationship between the consumer and the retailer with a stronger effect on non‐regular customers.