How price labeling strategy affects consumers' purchase intention? The role of perceived price difference in price assessment

Abstract

PurposeBy conducting an online experiment, this paper proposes and tests a conceptual model about the impact of price labeling strategy on consumers' perceived price difference and purchase intention. The authors also analyze differential influences of shopping channels and price levels on documented effects. The paper provides strategic suggestions for online grocery store managers to adopt profit-maximizing labeling decisions.Design/methodology/approachIn a between-subject experiment, the authors simulated a shopping task with eight scenarios by exogenously manipulating price labeling strategies (unit price/retail price), sales channels (online/offline) and price levels (higher/lower than the average price). Participants are randomly assigned to one of the eight scenarios and asked to report their perceived price difference between the stimuli product and the average market price and their purchase intention on the stimuli product.FindingsExperimental results show that compared to the unit price, the retail price increases the perceived price difference. It shows that the unit price increases consumers' purchase intention when the product price is higher than the average market price. However, these effects only exist in the online shopping context.Originality/valueThis paper extends the study of price labeling strategy to an online shopping context and examines the mediation effect of the perceived price difference.