Memory-Based Store Price Judgments: The Role of Knowledge and Shopping Experience

Abstract

This paper investigates the processes underlying consumers’ memory-based store price judgments. The numerosity heuristic implies that the greater the number of relatively lower priced products at a store that consumers can recall, the lower will be their overall price image of the store. That is, people use the number of recalled low-price products to judge the overall store price image. We show that this expectation holds only for knowledgeable consumers. Instead, less knowledgeable consumers use the ease with which low-price products are recalled (i.e., the availability heuristic) as a cue to make store price judgments. Therefore, the fewer low-price products they recall, the easier their recall task, and the lower their price perceptions of the store. Field studies using different manipulations tested and confirmed these predictions. Managerial implications for retailers are offered. Theoretical implications for behavioral price perceptions, memory-based judgments, and the use of heuristic cues are also discussed.