Location, location, location: When and how low price locations improve consumer price perceptions

Abstract

AbstractDoes seeing a price in a physically low (vs. high) location prompt consumers to believe that the featured product is less costly? Recent research supports this possibility by showing that low price locations trigger “down=less” metaphors which prompt price perceptions that are monetarily “low” in magnitude. Extending such work, we offer a two‐stage model to account for price location effects and examine theoretically‐relevant moderators that influence the likelihood of “down=less” metaphors being activated (Stage 1) and being mapped onto a price magnitude judgment (Stage 2). Results demonstrate that price location effects will emerge under conditions where consumers (a) experience feelings of high (vs. low) power that encourage metaphor activation and (b) possess a high (vs. low) need for structure that encourages the mapping, or transfer, of these metaphors onto a price judgment mapping. A final study shows that “down=less” metaphorical influences do not affect price magnitude judgments in the presence of factors that inhibit either metaphor activation (i.e., feelings of low power) or mapping (i.e., a low need for structure). By identifying these contingencies, this research further specifies when price location effects are likely to arise, increasing our understanding of pricing in general and this locational phenomenon in particular.